Question on a deadbeat builder/renovator

[OldDutch]

I thought I'd tap the collective here to see if anyone has had any experience with the following situation.

Our basement was damaged in the flood, and we hired (based on good referrals) a general handyman to fix up our basement. He did the whole renovation, and did a great job too workman wise.

However, he got parts of the work contracted out. Although we paid him in full and quickly, one of his sub-contractors was left hanging by him for a small amount. Now that sub-contractor is looking to put a lien on our property.

I am pretty angry that we are getting the short end of the stick here. I don't think the sub-contractor should have a right to put a lien against us, we paid our bills. Is this normal? If so, has anyone had experience getting the main contractor to pay up? Do I need to bring him to small claims? Does anyone know what avenues I can pursue to either block the lien, or put my own lien on the contractor?

Although it is a small amount I feel it is the principal of the thing. I feel like I am getting screwed and have no recourse. Anyone been through this or work in the industry that can share advice? Any would be appreciated!

[CaptainCrunch]

IF you paid him for the work done and it was his job to pay the contractors and that's in any statement of work or quote that you got, you can tell the sub to pound sand. You aren't responsible for covering the sub.

Tell hm to deal with the general.

Its not your problem, I doubt that he can put a lien on your property unless he can show that you agreed to pay him directly.

You might want to consult a lawyer though.

[Hevishot]

Post the name of the "contractor" so this does not become a common occurance.

[19Yzerman19]

Creation of lien

6 (1)

Subject to subsection (2), a person who

(a) does or causes to be done any work on or in respect of an improvement, or
(b) furnishes any material to be used in or in respect of an improvement,

for an owner, contractor or subcontractor has, for so much of the price of the work or material as remains due to the person, a lien on the estate or interest of the owner in the land in respect of which the improvement is being made.

[troutman]

http://www.mross.com/law/digitalAsse...012_Online.pdf

[Hockeyguy15]

TIME TO REGISTER LIEN

A lien is deemed to exist from the moment work is started or materials are supplied. However, a
lien expires if it is not registered within the time prescribed by statute. Subject to the exceptions

set out below, a lien for materials, services or wages may be registered at any time up to 45 days from the date the last materials, services or wages were provided or the contract was abandoned,
failing which the lien expires.

Would they even be able to do that, it sounds like it has been more than 45 days?

[OldDutch]

Thanks guys. I'll try and provide as much info as I can.

It was for a glass shower door the sub installed, the sub owns a glass company. The amount is the balance owing which is half of the total install price.

It was installed April 17, so I am looking at Hockeyguy wrote. That is over 45 days. In fact I have an invoice right here with that date.

So I guess I am home free on the lien? However, if he files it is there a way I am sure there is a way I can dispute it?

[You Need a Thneed]

Originally Posted by Hockeyguy15

Would they even be able to do that, it sounds like it has been more than 45 days?

There are ways around that though.

In the commercial world, contractors give statutory declarations - which is a oath said before a commissioner of oaths given saying that they have paid their subcontractors and suppliers in full. We should not pay out holdback or any invoice after the first until we have a signed stat dec in hand.

In this scenario, I'd talk to a lawyer. Depending on how small the amount is, maybe you just want to pay them directly. Perhaps putting the money in trust with a lawyer might keep the lien off.

[OldDutch]

Originally Posted by You Need a Thneed

There are ways around that though.

In the commercial world, contractors give statutory declarations - which is a oath said before a commissioner of oaths given saying that they have paid their subcontractors and suppliers in full. We should not pay out holdback or any invoice after the first until we have a signed stat dec in hand.

In this scenario, I'd talk to a lawyer. Depending on how small the amount is, maybe you just want to pay them directly. Perhaps putting the money in trust with a lawyer might keep the lien off.

I just spoke with a lawyer, he seemed very knowledgeable. The glass guy sent me an email this morning clearly stating it has been over 60 days since end of the job, and attached an invoice date in April.

He said right there is a very good case that he has no right to place the lien. He can try and lie on the affidavit, but when it gets to court I can show the email and it will be thrown out. Plus he may face a penalty for filing a false affidavit, plus reimbursement of my legal fees.

I feel like I have a strong case, and agree that he needs to follow up with the GC for payment, not me. If he wants to lie and be a jerk fine, but I am done with the extortion and dirty tactics by these flood reno guys. This isn't the first that has tried it with me.

[Hack&Lube]

I don't get why the guy is going after you and not the general contractor that subcontracted him in the first place. Have you discussed that with him? You mentioned that this isn't the first time. What happened earlier? Was it the same guy?

[CaptainYooh]

Originally Posted by OldDutch

...
However, he got parts of the work contracted out. Although we paid him in full and quickly, one of his sub-contractors was left hanging by him for a small amount. Now that sub-contractor is looking to put a lien on our property....

This is exactly the reason Builder's Lien Act of Alberta was created, to protect the little guy from being screwed. Unfortunately, over the years, most guys (both big and little) have realized how powerful the Act is in creating threats and multiple nuisances to the property owners. Nowadays, liens are used and overused all the time. This was a general rant.

In your case, if you did not ask your prime contractor for a StatDec (in which a contractor swears under oath that he had done all the work he's being paid for and he paid all of his workers and subs), you could be on the hook for the lien amount. (A purposely false StatDec is a criminal offense.) You will still have the case and claim against your prime guy (and good luck suing him and collecting on the judgement).

One thing, you do not necessarily have to pay the lien amount directly to the sub. You can pay it in court (plus some fees) and have it placed in trust and have the lien removed from your property title within a week or so. Then your sub has six months to file a statement of claim against you. If he doesn't, you get your money back. Just go see the court clerk.

You should also file small claims against your prime and your sub now and ask to have the case heard concurrently. If it's simple enough, you do not need a lawyer for this, although it is wasting time and effort. Good luck.

[You Need a Thneed]

Originally Posted by Hack&Lube

I don't get why the guy is going after you and not the general contractor that subcontracted him in the first place. Have you discussed that with him? You mentioned that this isn't the first time. What happened earlier? Was it the same guy?

I would certainly assume that the subcontractor has tried to get the money out of the contractor that hired them. Registering a lien is a legal method for them however. Usually a method of last resort.

[flambers]

Originally Posted by OldDutch

Our basement was damaged in the flood, and we hired (based on good referrals) a general handyman to fix up our basement. He did the whole renovation, and did a great job too workman wise.

However, he got parts of the work contracted out. Although we paid him in full and quickly, one of his sub-contractors was left hanging by him for a small amount. Now that sub-contractor is looking to put a lien on our property.

I am pretty angry that we are getting the short end of the stick here. I don't think the sub-contractor should have a right to put a lien against us, we paid our bills. Is this normal? If so, has anyone had experience getting the main contractor to pay up? Do I need to bring him to small claims? Does anyone know what avenues I can pursue to either block the lien, or put my own lien on the contractor?

Although it is a small amount I feel it is the principal of the thing. I feel like I am getting screwed and have no recourse. Anyone been through this or work in the industry that can share advice? Any would be appreciated!

Unfortunately the Sub Contractor has every right to place a Lien on your property.

Example above is a text book case of why Lien's are used.

Below is an example of how to avoid these scenario's.

1) Owner hires a General Contractor.
2) Work is Substantially completed.
3) Owner holds back ten percent until its verified that the General Contractor has paid all outstanding invoices (i.e. Sub Contractors are paid).
4) Hold back is released.

[GP_Matt]

I always assumed that an individual hired a general contractor so that he doesn't have to worry about stuff like this.

[rotten42]

He can do the lien. My cousin had this happen to him on a renovation. It sucks!

[Calgary14]

Just curious, did you know he was planning on sub contracting some of the work out? If it was me that hired a contractor to do a job, I'd assume the work would be completed by him (unless otherwise stated in the original agreement).

[Kjesse]

Thanks to Troutman for linking my firm's very helpful (IMHO) lien guide.

If you hire a contractor, you have the right to hold back payment to the contractor on his invoices in the amount of 10% per invoice. This is something you should do every time, but not many homeowners do. (I haven't even done it with my own home renovations... but I was aware of the risk.) You would then pay the holdback you've maintained over the course of the series of invoices once the work is complete, and once you know either, (1) all the subs have been paid or (2) the 45 day period to register a lien has lapsed, you release the holdback to the contractor.

In exchange for the "right" to hold back that 10%, all of the subs can only recover from the owner 10% of the full value of the contract-- this is the trade off in the Builders Lien Act... without lien rights, the subs would not have the ability to claim against the owner because there's no contract between them.

So for example, assume a contractor has quoted your reno job at $20,000. He has the work done, and you pay him in full. As it turns out, he didn't pay his subs, and they register a total of $5000 in liens on your land. Your liability to the subs (with whom you don't have a contract) is limited to the holdback you could have withheld... $2000.

There are lots of different possible scenarios. Stick with the lawyer's advice you got not the advice you get on a forum, including mine . Sounds like the sub may have been out of time with his lien, if so, there's an easy and inexpensive way to deal with it.

[You Need a Thneed]

One other very important factor to consider when hiring contractors to do work on your house, is to make sure you have given "prime contractor" responsibilities to one of them (usually your general contractor). If you don't, you yourself are the prime contractor for safety purposes under the law, and thus hold the responsibilities of that designation. If there every happened to be a serious injury or fatality at your house, you could be looking at very large fines.

[OldDutch]

Man, what a great thread, thanks to everyone.

Quick update, I talked with the sub contractor today. Explained that he himself emailed me and said the work was done 60+ days ago. So while it was his right to put a lien, that window has closed. I told him to go ahead, but it was a dead end.

He actually was really good about it. He told me that he didn't realize that he was only hurting me and not the main guy. He just had run out of options. So he actually apologized and said he wouldn't put a lien on. In return, I told him I would try and hound the main guy to collect payment. The main guy has some future work lined up with me and I am going to threaten to take it away if he doesn't pay.

Big thanks to everyone here. I actually learned a lot from everyone especially Troutman, Delgar's firm (Big thank you), hockeyguy, YNAT. What a great thread I will pull up to make sure I am doing things right next time.

10% hold back I had no idea and why! Just the little things. Love CP such a great community.

[Dynamic]

A guy I worked with had this happen to him. His house burnt down in slave lake, he pays the general in full with his insurance money, he built the house, had subs come in and in the end he started getting notices in the mail about leins being put on his house. The general contractor had charge accounts set up all over the place and in the end he skipped town and turned up building houses in edmonton. He was out something like 60 thousand bucks to finish the place. I'm not sure how it ended because I didn't want to ask but the fact that this general was still building houses baffles me.