My contractor and I have an ongoing issue with the final payment of the contract and has filed a mechanic’s lien. The contractor demanded final payment before all of the items in the contract were finished.
Our main concern, among others, was the fact the contractor wanted final payment before they took all of the trash they piled on my patio for the duration of the contract. I wanted them to remove it before I paid them.
Now the contractor has stated that he is putting a lien against my property since I haven’t paid. I had to pay out of my own pocket for the trash to be removed due to my neighbor and HOA complaints. I’ve requested that the contractor not only reimburse me for that cost but also finish all of the outstanding issues like tucking the carpet around tile they laid and personal tools they needed to borrow and never returned.
I also had to put all of the outlet faceplates on myself because they left in a hurry due to another contract they started, according to one of the workers. I also wanted to be reimbursed for the materials that I paid for but they are claiming they paid for.
The contract states that I pay for all materials and any contractor costs would be approved by me. They are not abiding by the contract that they themselves wrote up and provided to me to sign. The contract also states that all disputes will be settled through arbitration but they went straight to a mechanic’s lien. What are my options? – Michael B.
A: I hear many variations of this story – where the work is incomplete or faulty and the contractor wants final payment. Usually things get resolved through negotiation and compromise before anyone takes legal action.
It’s unfortunate that the contractor took the step of filing a lien. This is a pressure tactic to force you to pay. It certainly raises the blood pressure of both parties and reduces the likelihood of negotiating a mutually agreeable outcome. It’s a heavy-handed approach akin to filing for divorce.
However, it’s still not too late to negotiate, and this is probably your fastest and least expensive option. Take a deep breath and remember that this is a business decision, not an emotional one. Choose the strategy that costs you the least in terms of time, money, and stress.
You can propose that you will pay a reduced amount to settle the contract and have the lien removed. Deduct a reasonable amount for trash removal and other incomplete work and provide documentation for these charges. In most cases, the contractor would rather settle and move on than have to deal with enforcing the lien.
If negotiation does not work, you have a few options (depending on state law) in increasing order of cost, time, and aggravation:
- You can contest the lien directly and try to have it removed. This is typically handled by the county courthouse.
- You can file a lien bond (surety bond) with the help of an insurance company.
- You can hire a lawyer to fight the lien in court. Not sure how this would play out with the arbitration clause, but lawsuits and binding arbitrations are very costly and time-consuming.
For a lien to remain valid, the contractor must follow state law precisely and meet all deadlines and notification requirements. The biggest deadline is for the lien claimant (the contractor) to file a foreclosure action against you before the lien expires. However waiting out a lien can be risky because, in theory, you could lose your home to foreclosure. This is pretty nasty stuff.
Since your dispute with the contractor has entered the legal arena, the best advice I can offer is that you should consult a lawyer. Mechanics liens are technical instruments, different in every state, and very specific in terms of the legal requirements for both parties. If deadlines are not met and proper notifications are not sent by certified mail, either party could be found at fault.
More importantly, your lawyer can speak with the contractor’s lawyer and usually work out a reasonable settlement. They both know the rules of the game and are not emotionally involved.
Nolo Press, a good source of legal self-help advice, offers these suggestions.
Best of luck!
Kris Agrawal says
Send the contractor your invoice for damage done
Ask him to pay
This will be deducted from the money you owe him
Dave says
Contractor Overcharged Us, Then Filed Lien
In a cost estimate provided before our remodel contract for two bathrooms was signed the contractor broke out $3600 of charges for an uncomplicated installation of three medicine cabinets and two vanities. items that had not been chosen at that point. We didn’t notice that items are also explicitly included as “vanity & medicine cabinet install” in another line item, Interior Finish Carpentry, which is billed at $5800 and covers basically just the vanity and medicine cabinet install as there’s very little to no other finish work in the project. The medicine cabinet install is also covered under Rough Framing. All told we’ve been charged $10K for work that maybe comes to two days labor if the people worked slow. That’s close to 10% of the cost of the overall project.
Can the contractor do this? Though we’ve repeated requested the full set underlying invoices repeatedly, these have not been shared. There are other clear examples of billing duplications on the invoices we’ve received that have further ballooned the costs. All told we believe we are owed money back. All we want is to do is to pay the fair amount but the contractor doesn’t seem interested in that and has issued a lien on our property. We haven’t paid the final bill because we don’t believe we owe any money. Frankly we feel like we are being extorted. What are our options?
buildingadvisor says
I’m assuming your job is some variation of a cost-plus (time and materials) contract with a non-binding estimate. In this type of work, the standard procedure gives you do have the right to see actual invoices from suppliers and subcontractors, as well as hours worked by the contractor’s employees, which should all add up to the numbers you are billed, once the agreed-to markup is added.
This may be spelled out in a written contract if you have one. Even if you don’t, the industry standard for cost-plus contracts is open book invoicing.
A lien is a legal instrument and there are legal procedures to contest a lien and have it removed. Lien laws vary from the state to state, but the three main ways to fight a lien are negotiate with the contractor, file a lien bond, or file a lawsuit, as described in this article in Nolo press, an excellent source of legal advice for consumers. In some states you can immediately dispute the lien within a fixed period of time, although procedures for this vary from one state to another.
Liens follow strict rules for timetables and filings for both parties. For example, the lien holder has to go to court within a fixed number of days to file a suit or the lien is in default. Check the contractor’s license. If is not current, the lien may be invalid. Contact your state’s attorney-general’s office or consumer affairs division for further information and/or speak with a lawyer familiar with construction law.
Fighting a lien can be expensive and time consuming, but so is suing to enforce the lien, so most contractors would rather settle than spend time in court – especially on a case they may lose if they cannot justify their billing.
Michael says
Gather Info To Help You Negotiate
How much do you owe this contractor?
How many days past due was your payment before he filled a Lien?
What’s the value of the remaining work? How much would it cost you to bring in another contractor?
Make a punch list of items not complete. List each item, room by room. Then take good clear photos of each item and number each photo to correspond to the listed item.
The contract doesn’t say anywhere who would remove the trash? Why did you assume it was the contractor that was removing trash?
How much was the total contract? And what was the scope of work you had contracted? Finally, did the contractor live far out of town, like more than a three-hour drive?
The art of negotiation comes in handy when issues like this come around.
JCM Framing Contractors says
Sounds Like Small Items That Could Be Resolved Without Lien
Sometimes the problem is with the lack of detail(s) in the contract itself. The homeowner might assume the contractor is carting the debris away and the contractor may assume they only have to pile the debris for the homeowner. As framing contractors, our contract has details spelling out what we are responsible to do but also what the homeowner is responsible to do.. Our customers are happy to know ahead of time what is required of them.
As far as filing the mechanics lien, chances are that this contractor has had a lot of deadbeat customers and is being overly cautious with everyone. We all hear about bad contractors but you’d be surprised to hear the horror stories of customers who don’t pay their bills either. Giving a credit line to customers can be risky for contractors. We too, have had our own bad experiences which have caused us to require down payments now.
Sometimes when the homeowner supplies materials, the contractor may, for the sake of time, pick up something small for the job. If the item was small, and it seems reasonable that it was purchased for your home, the contractor would be entitled to reimbursement (with a receipt), If it was a large expense or something that doesn’t make sense, then you probably want to discuss it further or even dispute it if it’s truly questionable.
I would suggest that you make a list of any items missed that you would like to see addressed and give that to your contractor. Out of fairness to the contractor, make sure you include everything in a single list so that he/she doesn’t have to make multiple trips back to fix minor issues. Include in your list any items that were borrowed but still need to be returned.
Most contractors don’t want to file liens, it’s time consuming and there’s an expense to file it. Your list of issues seem fairly small and easily settled between you and the contractor. I wish you both the best of luck settling this.