How to Avoid Having a Lien Recorded Against Your Home after Construction
By Clint Wilson
During the remodel or renovation of your home, here are some steps to take to help ensure that your property remains lien free after construction is complete. First, it’s worth mentioning that during construction, various subcontractors and materialmen may have sent you preliminary lien notices. These notices are meant to inform you which subcontractors and materialmen, if not paid in full, have the right to record a lien against your property. If any subcontractors or materialmen have previously provided you with a lien notice, you will definitely need to obtain unconditional lien releases upon completion of work.
With that said, the home improvement agreement between you and the general contractor should already provide for most of the following, however, if it does not (or if there was no agreement), here are some items worth requesting from your general contractor to help ensure your home remains lien free after construction.
- Conditional lien releases from those subcontractors and materialmen that have completed their work (or portion thereof) but have not been paid in full. Conditional lien releases should be submitted by the general contractor with each application for payment or invoice. “Conditional” means that they will release their lien rights upon getting paid. Each conditional lien release should be followed by an unconditional lien release once payment has been made.
- Unconditional lien releases from those subcontractors and materialmen that have been paid in full. Unconditional lien releases from subcontractors and materialmen that have completed their work and have been paid in full should accompany subsequent applications for payment or invoices.
- Unconditional lien releases from all subcontractors and materialmen once the general contractor has been paid in full, or preferably, prior to final payment being made. Note that pursuant to an agreement with the general contractor, the owner might have negotiated for the right to withhold some portion of the general contractor’s fee until the owner is provided with all unconditional lien releases and the project is complete. As such, the general contractor will need to ensure that all subcontractors and materialmen are paid and have provided unconditional lien release prior to receiving its final payment.
- Notice of Completion. Also, depending on the project, a Notice of Completion recorded by the general contractor against the property. The Notice of Completion will limit the period of time that any subcontractor or materialmen can file a lien against the property from 90 days to 30 days.
Hopefully by asking for these items, or better yet, having the general contractor required to provide these items in your home improvement agreement, you can avoid having a lien recorded against your property. Avoiding a lien is always easier than removing one from your property and it is prudent to seek legal advice for your specific situation.
Please Note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.