A "waiver of lien" can protect the homeowner from all the headache. A contractor who provides it "releases" and "waives" rights to placing a lien on the property, guaranteeing that "all suppliers" connected to the job "have been paid."
There's a piece of paper that can stand between a homeowner and a construction calamity, between being done with a job and having it come back to drain you of more money.
The waiver of lien is easy to get, yet many consumers don't hear about it until it's too late.
Such was the case with the Harney family. A year after their kitchen renovation was done and paid for, they received a notice of lien on their home. It demanded payment of $3,900 within 10 days or the home would be foreclosed upon.
At the root of the problem was a dispute between the Harney's general contractor, DaVinci Construction and Design, and the company the supplied the cabinetry, Home Building Supply. In a contentious lawsuit, the general contractor accused the subcontractor of libel, slander and breach of contract. The sub countersued, leaving the Harney's stuck squarely in the middle. When DaVinci allegedly didn't pay Home Building Supply, that company came after the Harney's home.
"The purpose is to protect the interests of contractors, subcontractors, material suppliers when they haven't been paid after performing work on a particular piece of property," Meacham explained.
The problem in many cases is that the homeowners have paid the general contractor, who they assume will pay everyone else.
But a "waiver of lien" can protect the homeowner from all the headache. A contractor who provides it "releases" and "waives" rights to placing a lien on the property, guaranteeing that "all suppliers" connected to the job "have been paid." It's a crucial document that many even in the industry don't comprehend.
And while the Harneys are worried of what might happen, their lawyer is not.
"They can't do this," said attorney Dan Edelman, pointing to a relatively new state law that says that if consumers have paid once, and can prove it, they cannot be made to pay again.
"It's to protect homeowners against exactly this type of problem. If the homeowner deals with the contractor in good faith and pays them, that ends their obligation," Edelman said.
The Harneys hope that law helps, but now know that a waiver of lien would have saved them from a lot of sleepless nights. Their lawyer said he plans to file a complaint to get the lien lifted.
"I think a lot of people don't even know about it, and their jaws just drop when you say, like, 'You can lose your house,'" Kate Harney said.
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