case history explains why consumers should know about liens:
signed a contract with ABC contractors for the construction of an addition to
his home. When the work was done, Jones paid the contracted price and started
enjoying his new addition.
A month later,
he received a “Notice of Intent to File Claim for Lien” in the mail from the
lumberyard where ABC Contractors obtained building materials.
Although Jones paid his bill, ABC Contractors did not pay the lumberyard. The
law allows a subcontractor or material supplier to place a lien on the property
where the work was done, if the contractor does not pay the bills. This can
happen even if the homeowner has paid the contract in full.
How liens work
a lien recorded against your home means you can not sell it until the debt is
paid. A lien on a car in the possession of a repair shop means you will not be
able to have your car back until the debt is paid.
and Mechanics liens are remedies created by statute to ensure payment to
contractors, subcontractors, tradesmen, laborers or material suppliers who have
improved the property of others. Two of the most common types of liens are home
improvement liens and motor vehicle repair liens. These liens provide home
improvement contractors with a security interest in the homeowner’s property,
and auto repair shops with a security interest in the car owner’s vehicle.
are important for consumers because they prevent contractors, subcontractors, and material
suppliers from trying to collect money from homeowners who have already paid.
Anytime prior to making
a final payment on a home improvement contract, consumers can get a lien waiver
from the prime contractor and lien waivers from each subcontractor and material
supplier. If payment is made in installments, consumers can request lien
waivers for the proportionate amount of the contract covered by each partial
waivers will prevent a subcontractor or material supplier from putting a lien
on your home if the contractor does not pay the bills.
requires that contractors inform consumers of their right to receive lien
waivers on a home improvement contract. Consumers can request a lien waiver
even if one is not offered. Consumers can specify that the lien waiver request
only applies to the final payment.
Lien waivers do
not waive any contractual rights for the property owner or contractor.
Notice of lien
contractors for home improvement must provide written notice of lien rights to
the consumer with the written contract. If there is no written contract, the
prime contractor must prepare and serve the notice within 10 days after the
first labor, services, materials, plans, or specifications are performed,
furnished, or procured by the prime contractor for the improvement.
for home improvements who do not directly contract with the homeowners must
provide written notice of lien rights to the homeowner within 60 days of when
the first work is done. For subcontractors, a late notice waives lien rights
for work already performed, but not subsequent work.
shops must also provide a notice of lien rights within 60 days of when the
first work was performed on the car, or lien rights are waived.
Notice of lien
must be filed within 6 months of the last work performed on a home or vehicle
or they are waived. All lien claimants must provide written notice to the home
or car owners at least 30 days prior to filing a claim. The notice must
describe the nature of the lien claim, amount owed, and a description of the
property and the improvements it relates to. Failure to provide timely notice
to the consumer will waive all lien claims.
have 2 years from the time the lien is filed to seek a court judgment to
perfect the lien. If no judgment is entered within 2 years, homeowners may have
the lien removed.
unauthorized improvements are never enforceable, nor are liens enforceable if
the contractor defaults or fails to perform under the terms of the contract.
Auto repair shops may not refuse to return a car because the owner has refused
to pay for unauthorized repairs or repair charges that exceed the shop’s repair
It is against
the law for any person to record or file a lien against real or personal
property knowing some or all of its contents to be false or frivolous, and is
liable to any owner of the impaired property for punitive damages of $1000 plus
any actual damages caused.