Not sure what its called, perhaps release of lien?

[chaosracing]

I am looking for the proper wording to give to my concrete contractor. He just poured my garage floor (which was caused by delays on his part) and I just found out that he changed the name of the company. I used to work in commercial roofing and saw this type of business practice with smaller companies as a way to screw suppliers out of money. I am now a little concerned that if I give him the final payment, that a month or few months down the road I will be getting letters from his concrete supplier about not being paid and that I will have to pay them or they will put a lien on my property (It has been done before to people I know)

What should I be asking for to cover my **** so I do not have to pay even more for something like this???

Thanks

 

[Bruce 993 SEA]

You need lien releases from the contractor, sub contractor and suppliers before paying contractor.

If in doubt, make checks out jointly to both parties.

 

[The Cobbler]

can you call the concrete company directly and ask them if they have any concerns? they may not want to talk to you tho.

 

[gnpenning]

Always get a lien release.that covers supplies, labor and any subs. Any quality company has no issue signing at final payment.

 

[Augus7us]

I'm sorry if this is a bit off topic but I don't want end up in a situation like this, but don't understand it.

If I enter into a contract with a contractor who does my driveway for example. How would the supplier of concrete, whom I've never spoken to, hold me liable for the contractor screwing them out of money?

I may be missing something here so please educate me if so.

-Clint

 

[Ro_Ja Boy]

^ I had a nice conversation with the concrete people about this when I got the notice of right to lien. They said "it's standard" and I told them while it might be standard, it doesn't mean that it's right. Someone like myself who was new to this process did not like or appreciate it.

 

[ConCretin]

I am now a little concerned that if I give him the final payment, that a month or few months down the road I will be getting letters from his concrete supplier about not being paid and that I will have to pay them or they will put a lien on my property (It has been done before to people I know)

What should I be asking for to cover my **** so I do not have to pay even more for something like this???

You are right to be concerned. You definitely want a lien waiver from all lower tier suppliers who could file a lien against your property. The challenge you face is that your contractor probably doesn't have the ability to pay for your concrete until you pay him and the down stream suppliers aren't going to waive their lien rights until they are paid. I'd call any suppliers directly and find how much they are owed and write two party checks for those amounts.

I'm sorry if this is a bit off topic but I don't want end up in a situation like this, but don't understand it.

If I enter into a contract with a contractor who does my driveway for example. How would the supplier of concrete, whom I've never spoken to, hold me liable for the contractor screwing them out of money?

Most state's have laws regarding mechanic's liens that allow contractors and suppliers to attach a lien to a property they have improved with labor or materials. Usually a notice of lien and the lien itself must be filed within a statutory time frame (hence the notice Ro Ja Boy received) and then the lien must be perfected with a successful lawsuit.

Once the lien is perfected, the contractor can demand payment through the sale of the property. As you can imagine the contractor is usually paid by the homeowner before this happens.

If homeowner has paid a GC and a lien arises from an unpaid lower tier of sub or supplier, the homeowner may in fact end up paying twice. It seems unfair to the uninitiated but it is longstanding and well established law.

This is why it's vital for homeowners to limit their exposure by demanding lien waivers from all lower tier entities for each progress payment before making a subsequent payment.

 

[chaosracing]

I'm sorry if this is a bit off topic but I don't want end up in a situation like this, but don't understand it.

If I enter into a contract with a contractor who does my driveway for example. How would the supplier of concrete, whom I've never spoken to, hold me liable for the contractor screwing them out of money?

I may be missing something here so please educate me if so.

-Clint

The supplier knows your address, so if they are not paid by contractor, they know who got the materials and can go after you, even if you paid the contractor in full. This is what concerns me with a sudden change in name from my concrete guy, especially with some of the delays and excuses I have gotten.

 

[chaosracing]

You are right to be concerned. You definitely want a lien waiver from all lower tier suppliers who could file a lien against your property. The challenge you face is that your contractor probably doesn't have the ability to pay for your concrete until you pay him and the down stream suppliers aren't going to waive their lien rights until they are paid. I'd call any suppliers directly and find how much they are owed and write two party checks for those amounts.

Yeah I understand that he may not have the ability to pay for the concrete without the rest of my money, but honesty thats not my problem. I was in business for myself and I always paid subs or suppliers first and right away so as not to have any issues down the road. That meant sometimes I had to dip into my own personal funds before being paid by the customer. My current boss does the same thing, everyone else gets paid before him (he has a line of credit to use for big jobs though)

My main concern is the excuses I had gotten for my nearly 3 week delay and now finding out through his advertisements and website, NOT from him, about the name change.

 

[chaosracing]

can you call the concrete company directly and ask them if they have any concerns? they may not want to talk to you tho.

Yeah I thought about that, but your right, they may not talk to me.

 

[James E]

The concrete supplier will tell you if your job has been paid for.

You can also ask your GC why he changed the company name. No need to jump to conclusions yet.

 

[chaosracing]

The concrete supplier will tell you if your job has been paid for.

You can also ask your GC why he changed the company name. No need to jump to conclusions yet.

I am going to try calling the supplier, luckily my wife was still home when the first load showed up and sent me a picture of it.

Like I said above, I am just a little concerned after getting several excuses for my 3 week delay, and he still has to pour an apron yet and I got another excuse since it was supposed to be poured this past friday. Plus he changed the name before I sent him the deposit money, but had me make it out to the original name. Not jumping to conclusions, just looking to protect my ****.

 

[mcbane]

If your contractor says he can’t pay for the concrete without your money then offer to pay the concrete supplier directly with a deduction from what you owe the contractor.

I frequently ask to pay suppliers directly so I avoid this hassle. Of course if your contractor orders the wrong stuff and you pay for it that is a different hassle

The ideal contract is net 30 day invoicing according to an agreed upon progress payment schedule and requires supplier and subcontractor releases (in some states every employee is a subcontractor) to be submitted with invoices. It also has a 20% retention until final sign off. That way when final inspection fails you still have some money as leverage.

The problem with the ideal contract is that most contractors are scared off by legalese or want to charge a lot extra. So in the real world most of us have loose contracts and trade some potential cost savings for the stress of dealing with the low bidder.


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[TexMedium]

It isn't EJDS Masonry is it? If so, RUN DO NOT WALK from this yahoo! He is bad news!!!

 

[Bighead38]

Have you tried asking him about the name change? It is possible that there is a good reason. It’s possible he’s doing it for the wrong reasons but you never know.

 

[Vintage Veloce]

Find out what the concrete cost from the contractor's supplier. Make sure no other subcontractors were involved, like pumpers or finishers. Hold that much back until you get a signed release from those suppliers. Obviously get a release from the contractor with the first payment. If the contractor wants payment, he will do it.
Lots of Lien Release forms available for download from the internet, but look for one specific to your state first.

 

[The Cobbler]

do you have a local home builders association? they could/would probably advise you on how to handle it

 

[slice]

Had stucco person working on my new house. I had him sign all lien waivers per the bank. Every time he got a check. Low and behold 3 months after I fired him and kicked him off job, I get a call from his supplier. Them: We need payment for x address so n so did not pay us. Me: I have all signed lien releases. Them : click. Never heard from them again.

 

[ConCretin]

Yeah I understand that he may not have the ability to pay for the concrete without the rest of my money, but honesty thats not my problem.

It may become your problem. If you don't pay him, you open your self up to a lien from him. Your concerns about potential liens aren't an adequate reason for non payment. If you pay him and he fails to pay for the concrete, you open yourself up to a lien from the supplier and end up paying twice.

That's why I suggested a two party check. You fulfill your contractual obligations to the contractor and have some assurance lower tier subs and suppliers are paid. Ideally you would get executed lien waivers from subs and suppliers before you make final payment but this depends on your contract and your contractors ability and willingness to pay. I'd ask him for supplier lien waivers or tell him you'll be writing two party checks.

Lien laws put homeowners in a very difficult position especially on smaller jobs where there is only one payment at the end. If you pick the wrong contractor, you expose yourself to significant financial risk. People should protect themselves whether or not there are any warning signs like you've seen. You are getting a jump on the potential problem while you still owe money which gives you an advantage. Good luck.

 

[ConCretin]

Had stucco person working on my new house. I had him sign all lien waivers per the bank. Every time he got a check. Low and behold 3 months after I fired him and kicked him off job, I get a call from his supplier. Them: We need payment for x address so n so did not pay us. Me: I have all signed lien releases. Them : click. Never heard from them again.

You may have gotten lucky. Your stucco guy's lien release has no bearing on the lien rights of lower tier subs and suppliers. Unless that supplier signed a lien release, they had every right to file a lien. They probably just figured it wasn't worth the trouble.

 

[driftpin]

Florida uses a 'Notice of Commencement' (NOC) which protects the homeowner against liens from unpaid subcontractors or material suppliers. Many jurisdictions require the NOC to be on-file before the permit is issued by the building dept. It is a recorded instrument with the county government.

I expect there is something similar in other states.

An example:
https://www.hollywoodfl.org/DocumentCenter/View/84/18-Notice-of-Commencement?bidId=

 

[mike in tucson]

For my house in Dallas, I received a lien notice a year after I moved in. Upon investigation, a half assed roofer (who did not work on my house) used several houses in the neighborhood as destinations for shingles he bought. My house had shingles that the shingle supplier did not sell. I called the law office that filed the lien. I asked the lawyer how much revenue their office generated, what kind of profits the realized, etc. He asked why I was asking these questions and I said "I've always wanted to own a piss-ant law practice in Waco Texas and it looks like I will own yours soon." The lien was cleared two days later.

 

[rburke65]

I know this is different, but I paid the driver for the concrete company, and I paid the finisher.

 

[BFBOB]

The supplier knows your address, so if they are not paid by contractor, they know who got the materials and can go after you, even if you paid the contractor in full. .

Not necessesarily. It varies by jurisdiction. In Missouri, a homeowner can not be compelled to pay for construction materials or labor twice. If you paid the contractor, his suppliers or subs can not come after YOU for HIS failure to pay.

For businesses, it's different.

Check the LAW WHERE YOU ARE!! Don't take any advice here as gospel- where you are is crucial.

 

[Vintage Veloce]

In some states this is called a "lien waiver" instead of a "lien release".

 

[1mikeg]

As a former landscape contractor in CA, I always required a "final" release of lien from my suppliers and subs when I paid them. I submitted these to my clients when submitting progress or final payments requests. This assured them that all subs and suppliers had been paid. Took some extra work on my part, but these lien releases covered both my client and myself.

 

[b-boy]

Is a straight-up contractor looked at differently than a general contractor?

For example, if I hire a guy to just fix my roof, is that different than if I hire a guy to remodel my house. The second guy will need to bring in additional contractors (electrical, plumbing, carpentry), but the first guy probably won't.

 

[chaosracing]

Is a straight-up contractor looked at differently than a general contractor?

For example, if I hire a guy to just fix my roof, is that different than if I hire a guy to remodel my house. The second guy will need to bring in additional contractors (electrical, plumbing, carpentry), but the first guy probably won't.

Depends on your location. Here in PA all contractors (no matter what kind)are now required (just in the past few years) to obtain a license. The second guy or General Contractor is just the guy you hire to complete a certain job, sometimes he has to bring in other contractors (Subs) or perhaps the GC can perform those themselves. All depends on their skillset and workers.

 

[chaosracing]

Thanks for all the replies. I did try looking to see what PA requires, but thats confusing as well. But I think Vintage Veloce is correct that in PA its called a lien waiver. Still trying to find out though if he paid the concrete company or not. If I find out he paid them for the job, I will not pursue any further, thats my main concern. I will also be asking for a signed final payment copy of the contract as well though.

 

[Trey T]

There's something appalling about the implementation of contractor's lien being discussed here. First of all, the homeowner should never associate themselves w/ the subcontractor(s) in anyways - primary contractor shall always provide direction/negotiation/management/liabilities for the subs. When the homeowner (or client) do any of those, the contract b/t you and the primary contractor is already broken. This is how it's done in commercial/industrial service contracts.

One of the key thing that homeowner need to have is identifying who's the primary and subs.

 

[chaosracing]

In my case, the concrete guy is a primary contractor to me, not a sub through another contractor.

 

[ConCretin]

There's something appalling about the implementation of contractor's lien being discussed here. First of all, the homeowner should never associate themselves w/ the subcontractor(s) in anyways - primary contractor shall always provide direction/negotiation/management/liabilities for the subs. When the homeowner (or client) do any of those, the contract b/t you and the primary contractor is already broken. This is how it's done in commercial/industrial service contracts./QUOTE]

I would generally agree but verification of payment is the exception. An owner has every right to protect his property and ensure lower tier subs and suppliers are paid. It is reckless not to.

As a subcontractor doing commercial/industrial work we are regularly asked to provide lien waivers from ourselves and our suppliers through the date of the previous payment period before we are paid for the current period.

 

[Vintage Veloce]

The other fairly obvious option is to determine if your contractor has paid the supplier yet, and if not, to pay the supplier directly and deduct that from the contractor's payment. Of course, you would need some kind of written acknowledgement from the contractor that this was OK, before doing that.
(I paid the concrete delivery directly myself.)

On the "appalling issues", I find it appalling that subcontractors and suppliers are allowed to put a mechanic's loan on the client at all! It's nuts! The contractor could do any strange thing and you might end up unknowingly with a lien against your home. I do understand how the primary contractor should be allowed to place a lien to ensure payment, but the subs should be solely the financial responsibility of the contractor. Sadly, it is not that way, and so the homeowner must be very careful about subcontractors and material suppliers.

 

[driftpin]

Not-necessary in Florida, where the 'Notice of Commencement' properly-filed at the county courthouse, protects the homeowner from any and all subcontractor/supplier liens.

I am not an attorney, for legal advice contact an appropriate attorney.

The other fairly obvious option is to determine if your contractor has paid the supplier yet, and if not, to pay the supplier directly and deduct that from the contractor's payment. Of course, you would need some kind of written acknowledgement from the contractor that this was OK, before doing that.
(I paid the concrete delivery directly myself.)

On the "appalling issues", I find it appalling that subcontractors and suppliers are allowed to put a mechanic's loan on the client at all! It's nuts! The contractor could do any strange thing and you might end up unknowingly with a lien against your home. I do understand how the primary contractor should be allowed to place a lien to ensure payment, but the subs should be solely the financial responsibility of the contractor. Sadly, it is not that way, and so the homeowner must be very careful about subcontractors and material suppliers.

 

[jhelrey]

What about general construction like painting, and flooring? Both used subs. Before I make final, should I be getting lien releases?

 

[ConCretin]

As has been mentioned lien laws are the enacted by the states and while the basic concept is similar the details vary considerably especially with regard to required notices and time limits. I was curious about the notice of commencement that has been mentioned by several posters since my state doesn't use them and found this;

http://www.myfloridalicense.com/DBPR/pro/cilb/documents/florida_lien_law.pdf

It appears that a notice of commencement provides some additional protection to the homeowner by restricting the amount and timing of potential liens but it's far from blanket protection. I also thought site provided a good overview of how homeowners can protect themselves.

Edit - One final thought. Make sure the contract with your GC has provisions requiring him to provide lower tier lien waivers as a condition of payment and given you the right to issue two party checks to lower tier subs and suppliers.

 

[ConCretin]

What about general construction like painting, and flooring? Both used subs. Before I make final, should I be getting lien releases?

Theoretically any entity that provides labor or materials that improves the value of your property can file a lien if they are not paid. In reality, it costs money to prepare and file a lien and the lien expires if a lawsuit is not filed within a certain timeframe, which obviously takes more money and effort. Most subs and suppliers aren't going to go to all this effort to recover a minimal sum

It's obviously a judgment call but the homeowner needs to evaluate the risk of a lien with the headache of chasing lien waivers from minor subs or suppliers.

 

[Trey T]

There's something appalling about the implementation of contractor's lien being discussed here. First of all, the homeowner should never associate themselves w/ the subcontractor(s) in anyways - primary contractor shall always provide direction/negotiation/management/liabilities for the subs. When the homeowner (or client) do any of those, the contract b/t you and the primary contractor is already broken. This is how it's done in commercial/industrial service contracts./QUOTE]

I would generally agree but verification of payment is the exception. An owner has every right to protect his property and ensure lower tier subs and suppliers are paid. It is reckless not to.

As a subcontractor doing commercial/industrial work we are regularly asked to provide lien waivers from ourselves and our suppliers through the date of the previous payment period before we are paid for the current period.

You know, I thought about what I said reread some of the postings and I might be wrong. It depends on how the contract is setup for initial procurement process thru work completion and invoicing. There are two parts of the service contract, technical (RFP thru invoicing) and legal requirements (insurance and bond). What I failed to think about was the legal requirements to protect a homeowner (client) from future frivolous lien demand or law suit, simply because we already have legal instrument setup already and I don't come across non-payment issues often enough.

If there's no bond, there's a risk from the start that subs will not be paid. Ultimately the client will get the hit.

 

[tjpavlov]

The GC who built my house had some big financial troubles a couple of years later. I know about six people who had liens placed on their homes from a materials supplier.

 

[cullen]

So your telling me that a supplier extends credit to a contractor that the customer is on the hook for?
Wow, never heard of this at all. This practice should be illegal.