Before beginning construction, your contractor might give you notice about their right to construction liens. Liens protect contractors from missing payment should the property owner refuse payment. In most cases, this is because the property owner is displeased with the project quality and doesn’t think the contractor deserves payment. If your contractor files a lien against you, a construction attorney can help you navigate.
The basics on construction liens
A construction lien gives the contractor a security interest in your property. This makes you legally obligated to pay a specific amount of money to regain ownership. This puts a lien on your property title, making it nearly impossible to refinance/sell your property. You could face foreclosure or double payment if you paid the general contractor, but they didn’t pay the subcontractors.
How to tell if a lien is valid in California
A contractor must deliver a lien preliminary notice in person or through certified mail before work begins, supplies are delivered, or 20 days afterward. If given after 20 days, the lien can only require payment for work done 20 days before the notice is given and then afterward.
The claim should include:
- Services & products provided
- Specific value owed
- Names of the employer & property owner
- Address where work was done/supplies delivered
- Contractor’s address
- Completed and signed Proof of Service Affidavit
The lien must be filed within 90 days of work completion, when you begin using the project (which can be tricky to figure out), or when you “receive” the improvement. Anytime afterward makes the lien invalid.
How to deal with a lien
Seek a construction attorney or general consultant with experience defending against construction liens. They can help you resist foreclosure of a lien through one of the following methods:
- Contract negotiations
Some contractors will accept lower payment if it’s received quicker than what would be the complete payment. Others might provide extra services if you pay the full lien.
- Obtaining a lien bond
A lien bond removes the lien from your property title and attaches it to the contractor’s claim. You still owe payment, but it wouldn’t be tied to your property, which you could freely refinance/sell.
- Suing the contractor
To remove a construction lien and refuse any payment, you’ll have to testify with evidence that the contractor breached the contract or provided sloppy work. A construction attorney can help present a compelling case at trial.