Lein on house

[Nage Waza]

So, my buddy has a guy claiming he is going to put a lien on his home, because the contractor my buddy hired to build a garage did not pay him (for the concrete work). Is this even possible? My buddy paid the account in full, and has proof of that. Shouldn't this guy go after the contractor? What does my buddy have to do with that? What stops someone from putting a lien on my home? My friend had nothing to do with the people the contractor hired to do the work.

[kermitology]

Originally Posted by Nage Waza

So, my buddy has a guy claiming he is going to put a lien on his home, because the contractor my buddy hired to build a garage did not pay him (for the concrete work). Is this even possible? My buddy paid the account in full, and has proof of that. Shouldn't this guy go after the contractor? What does my buddy have to do with that? What stops someone from putting a lien on my home? My friend had nothing to do with the people the contractor hired to do the work.

So the guy your buddy hired (General Contractor) sub-contracted out the concrete work?

If the payment is made in full for the contractual obligation of the General Contractor then that should be on the GC should it not?

I forget the exact details of this at the moment (P. Eng exam was a while ago)

[BlackArcher101]

It's only possible if the company can prove they are owed money. If he can't show an invoice for it, then he's SOL. If he does put one on with the same amount your buddy paid, he can get it removed by showing proof of payment (but to that company). Unfortunately even though your buddy didn't directly hire the concrete workers and the contractor did instead, the work was still done on his property and they fully have the right to put a lien on it.

Sounds like the contractor possibly kept the payment that was to go to the concrete workers (happens too often, damn shady folk) and ran off with it. I believe the way this works is you will have to remove the lien with payment and try to get the money back in civil court from the contractor. Someone may want to confirm that though.

[kermitology]

^^ That actually sounds right to me..

[trubuilt]

I think if your friend held back 10% he would have been good (some builders I work for do this if we have a contract,but don't if we don't) also how long did the guy waited to put the lien on??? I think you only have 30 days. He should seek some legal help to clear this up.

[4X4]

Originally Posted by trubuilt

I think if your friend held back 10% he would have been good (some builders I work for do this if we have a contract,but don't if we don't) also how long did the guy waited to put the lien on??? I think you only have 30 days. He should seek some legal help to clear this up.

I think it's 45 days. Could be wrong though.

[Nage Waza]

How is any of that fair? He hired a guy to build something for him and then is simply told at a later date that there is going to be a lien on his house, even though he paid in full.

I don't understand how any of that makes sense.

[BlackArcher101]

Originally Posted by Nage Waza

How is any of that fair? He hired a guy to build something for him and then is simply told at a later date that there is going to be a lien on his house, even though he paid in full.

I don't understand how any of that makes sense.

But did the guy get paid directly or did your friend pay through the contractor?

[Kjesse]

Originally Posted by trubuilt

I think if your friend held back 10% he would have been good (some builders I work for do this if we have a contract,but don't if we don't) also how long did the guy waited to put the lien on??? I think you only have 30 days. He should seek some legal help to clear this up.

This is correct, except it is 45 days from either completion of his job or 45 days from the posting of a certificate of substantial completion. (90 days if its oil & gas work)

Assuming the general contractor was paid in full before a lien was registered, in the situation you described, your friend is only on the hook for up to 10% of the general contractor's contract for all subs who register a lien. Your friend had the right to hold back 10% of each progress invoice from the general contractor until the job was completed, to ensure subs were paid.

If that sub has been off the job site for 45 days and hasn't registered a lien, he's SOL going against your friend, but still has a claim against the general contractor.

Edit: Assume the contract for building the garage was $50K. If the sub has put $10K worth of concrete into the garage, but didn't get paid, the sub only has a claim against the owner of the property for $5K, 10% of the general contract. The owner had the right to hold that $5K back until he was assured by the general contractor that all subs had been paid (usually through a statutory declaration). If the owner didn't hold it back, and a sub isn't paid, the owner is potentially on the hook for $5K. This is to ensure that subcontractors aren't taken advantage of by unscrupulous general contractors.

[Nage Waza]

My friend only paid the contractor and only had contact with the contractor.

[Nage Waza]

Thanks everyone for your analysis...I will let him know what CP'ers say about this!

[zarrell]

Originally Posted by 4X4

I think it's 45 days. Could be wrong though.

45 is correct. I ran into a problem about a year ago doing some work for some crook who wasn't paying his trades. It started to creep up to the 45 days and I explained to the would be home owners that if I was not paid, either by the contractor or them a lien would go on the house. Good news was I was on good terms with the home owners and they both hated the contractor who was pretty much useless and I got paid from the home owners directly.

[Bring_Back_Shantz]

I think he should just declare himself a Freeman-on-the-land, and then try to pay with a rock he found on the ground by writing "This is real cash money" on it.

Sorry to derail, but it looks like you got the advice you needed, so now we can be funny.

[Gozer]

[JustAnotherGuy]

Originally Posted by Delgar

........

If the owner didn't hold it back, and a sub isn't paid, the owner is potentially on the hook for $5K. This is to ensure that subcontractors aren't taken advantage of by unscrupulous general contractors.

That is so messed up. So then the owner gets screwed by the subcontractor.

This is why I have not hired anybody to do some much needed work on my house. I have zero faith in the industry.

[fredr123]

Originally Posted by JustAnotherGuy

That is so messed up. So then the owner gets screwed by the subcontractor.

This is why I have not hired anybody to do some much needed work on my house. I have zero faith in the industry.

No, I think the owner gets screwed by the contractor. The sub is just resorting to any means necessary to get paid. The owner has the opportunity to exercise a hold back and, regardless, is not going to be on the hook for all amounts due and owing to the sub.

I do agree that the system is a little wacky.

[JustAnotherGuy]

Originally Posted by fredr123

No, I think the owner gets screwed by the contractor. The sub is just resorting to any means necessary to get paid. The owner has the opportunity to exercise a hold back and, regardless, is not going to be on the hook for all amounts due and owing to the sub.

I do agree that the system is a little wacky.

My mistake. I meant being screwed by the contractor, not the subcontractor.

So then how many times has a contractor refused to finish the job until they are paid in full. So there goes the hold back.

How does it make any sense. It is 100% up to the contractor to pay the subcontractor. Why would the owner be responsible for paying out the subcontractor? He has already paid for the work.

Anyway, doesn't matter to me. I am not hiring anybody. I am not sure what the solution for me will be. Maybe I need to get past this thought that everybody is a crook. lol

[fredr123]

Originally Posted by JustAnotherGuy

My mistake. I meant being screwed by the contractor, not the subcontractor.

So then how many times has a contractor refused to finish the job until they are paid in full. So there goes the hold back.

How does it make any sense. It is 100% up to the contractor to pay the subcontractor. Why would the owner be responsible for paying out the subcontractor? He has already paid for the work.

Anyway, doesn't matter to me. I am not hiring anybody. I am not sure what the solution for me will be. Maybe I need to get past this thought that everybody is a crook. lol

It's odd legislation with a weird history. I don't think anyone - owners, contractors, subcontractors - are particularly happy with the way it works.

[Nage Waza]

Thanks for all the great details everyone, this was all really interesting. My friend is very appreciative. Coffee is on him tomorrow.