Concrete Lien?

[edboyles]

Today I received a carbon copy of the letter from the concrete supplier to my contractor indicating that if they do not receive payment in 10 days that they will place a lien on the house (mine).

The slab was poured around June 10th so the contractor is clearly 60 days past due. The contract was paid in full on June 28th. The contractor did everything in a turn key job.

The concrete bill is $5300 on a $35000 shop. The builder is local, had good references including from the city here.

The location is south of Fort Worth, TX in the county.

How serious of a problem is this?

 

[bazzateer]

Ask a lawyer?

Speak to the contractor?

Do your laws allow you to put a lien on the contractor's home to counter the one on yours?

 

[Novadiecast]

Huge problem, This is why you should have asked for a lien waver. That would tell you that all of the suppliers have been paid prior to you making final payment to your contractor. If he does not pay YOU are responsible. Is he bonded? You could check with the city or county and might be able to pull off of his bond. You might end up having to sue him in court for the amount of the lien plus interest.

I am a licensed, bonded, and insured contractor.

 

[rwhite692]

Yes, huge problem that you don't have a lien waiver.

BUT Before you get all worked up, talk to your contractor, tell him about the notice you received and ask him to simply provide you with proof that he has paid the concrete company (such as a cancelled check). It might be a simple oversight, or simply that he is slow in paying his accounts. In this economy, contractors, suppliers and everyone involved on down the line are stretching payment terms to the limits (and beyond).

If he cannot (or won't) provide that, call the concrete company and get their side of the story. Be sure to treat them cordially and with all due respect...going off on them won't help.

If there is trouble, immediately start the process of getting legal representation for yourself.

 

[ddawg16]

You should have already been on the phone to the contractor.

I believe Nova is correct....but laws vary a little state by state....

First, I would make sure the concrete guy did not get paid....assuming the contractor talks to you...he should confirm one way or the other....in some cases a sub will try to 'double dip'....

If you can't get it off the bond then I would pay it....then take the contractor to small claims court.....better to go that route than deal with a lein against the house.

 

[fourfeathers]

Could be the concrete co just needs leverage to get paid. You raise hell, the Contractor pays up.

 

[James E]

Yes, very serious problem. Start holding your breath and hope that more liens don't start showing up on your property. You still have yet to hear from the framers, the roofers, the plumbers, the electrician, the sheetrockers and--biggest of all--the supply house that provided the materials.

 

[edboyles]

All the crews and all of the materials (except the concrete) was delivered by the general contractor (metal building) except for the concrete which had to have my address for the concrete trucks to show up.

I believe fourfeathers is spot on........ I will call the contractor tomorrow........since I received the copy today I wanted to make sure that he got his copy of it....

 

[jake00]

I distribute hardwood flooring.

had a contractor (good guy in the past) order wood for a job. we delivered it to the jobsite (gives us lien rights).

job went unpaid, heard all sorts of excuses, including "my mom got ran over by a gravel truck"...

Called the homeowner and told them we were liening the property... he told me I coudn't do that... Did it the next day...

 

[theroyz71]

Tell him to come get his concrete. j/k

 

[babzog]

had a contractor (good guy in the past) order wood for a job. we delivered it to the jobsite (gives us lien rights).

Called the homeowner and told them we were liening the property... he told me I coudn't do that... Did it the next day...

Why would you lien the homeowner? Not his fault (or his problem). Lien the guy who ordered the material - the contractor! He's the one who owes the money.

 

[theroyz71]

Probably because the contractor can change company names and carry on like it's business as usual while the homeowner is stuck. He can't sell the house until he clears the lein.

 

[OneTon]

Lien the guy who ordered the material - the contractor! He's the one who owes the money.

That's not how it works. The contractor's lien insures everyone gets paid and that the contractor doesn't pocket your money and split without paying his suppliers & subs.

 

[Ocho]

+1 on checking with your contractor first. Could just be a mix up or fourfeathers could be right.

If the contractor won't pay you need to lawyer up. Check with the city where the contractor pulled the permits. They should have to be bonded and insured to get the permit. Lien isn't a big deal until you sell your house, but is best to take care of it while things are "top of mind".

 

[Motown 454]

Ocho I agree I'm getting ready to build my garage the architect told me to let the contractor get the permit. Then he is responsable for the job, if I get it he could wak away with no recourse for me. Not sure if its same in all states.

 

[babzog]

Probably because the contractor can change company names and carry on like it's business as usual while the homeowner is stuck. He can't sell the house until he clears the lein.

But, the sub can put a lien on the contractor's house or place of business... aren't liens against property (ie: municipal roll #'s)? It wouldn't matter if he changes names.

That's not how it works. The contractor's lien insures everyone gets paid and that the contractor doesn't pocket your money and split without paying his suppliers & subs.

How does a sub putting a lien on the house of the guy who's already paid, ensure that everyone gets paid? The homeowner stiffed noone but the implication now, is that he did.

 

[logical]

I'm a little suprised by the reactions here. I contracted my own house build a few years ago and had a dozen of these including concrete. All you do is get a lein release before you pay the contractor.

BEFORE !!!

In the case of my concrete, my concrete guy did most of his work 20 miles away and didn't have credit established with the close by concrete supplier so they put a lein (actually it's usually a notice of lein and not an actual filing) on the person who will posses the concrete (me).

I lein like this is a pre-emptive strike saying "if I don't get paid I reserve the right to own some of your house since I haven't been paid yet for the concrete that your contractor used on your house. It isn't at this stage a lawsuit against you.

 

[oldwino]

Lien laws differ in different states. Not sure about Texas, but at least in California a supplier must send a "notice of intent to lien" to protect their legal rights. This is not a threat, just a notice to protect their rights. If for some reason your contractor doesn't pay his suppliers you are liable as their (in this case) concrete bettered your property. Before any progress payment just insist that suppliers have been paid and get a lien release.

 

[OneTon]

How does a sub putting a lien on the house of the guy who's already paid, ensure that everyone gets paid? The homeowner stiffed noone but the implication now, is that he did.

Because the homeowner will have to pay the sub to have the lien dismissed. Homeowner pays twice. Contractor laughs all the way to the Bahamas.

 

[OneTon]

But, the sub can put a lien on the contractor's house or place of business... aren't liens against property (ie: municipal roll #'s)? It wouldn't matter if he changes names.

The sub didn't do work at the contractor's house or place of business. The sub did work at the homeowner's house. If the sub wants to place a lien against a contractor for non-payment, they will have to go to court and get a judgment. Then, with that judgment, they can file a "lien", but it's not automatically a "lis pendens" against his property (depending on the state), it is only a judgment against the contractor.

A contractors (or mechanics) lien automatically creates a lis pendens, without having to file suit.

 

[OneTon]

Lien laws differ in different states. Not sure about Texas, but at least in California a supplier must send a "notice of intent to lien" to protect their legal rights. This is not a threat, just a notice to protect their rights. If for some reason your contractor doesn't pay his suppliers you are liable as their (in this case) concrete bettered your property. Before any progress payment just insist that suppliers have been paid and get a lien release.

As I recall, in California a "mechanics lien" is typically recorded prior to commencement of the project. Upon completion, and once paid in full, the contractor/sub/supplier would record a "release of lien". If the release of lien isn't recorded, you don't pay the contractor his final cut until it is.

 

[bobscogin]

Why would you lien the homeowner? Not his fault (or his problem). Lien the guy who ordered the material - the contractor! He's the one who owes the money.

The legal system views it differently. The contractor may have ordered the concrete, but the homeowner receives the benefit of having it, thus he becomes indebted to the concrete supplier if the contractor hasn't paid.

Bob

 

[e-tek]

A lien isn't very bothersome in the short term, unless you need to sell your house. You can live forever with a lein on your house, so don't sweat that part of it. Just do as has been discussed and get payment straightened out.

 

[OneTon]

You can live forever with a lein on your house, so don't sweat that part of it.

Well...until you try to re-finance or change title (e.g. living trust, etc.). It's best not to have it there.

 

[94legaleagle]

I assume you (the homeowner) hired (contracted with) the contractor to build you a shop. I also assume the contractor (NOT you) contracted with the concrete guy (ie: the contractor you hired SUB-contracted out the concrete work to the concrete guy) -

I will assume that the contractor's bill INCLUDED the cost of the cement that the concrete guy now is attempting to collect for from you - you say you paid the contractor in full

If my assumptions above are correct, then the contractor, NOT you, are liable to the cement guy - the cement guy can try, and he might initially succeed, in putting a lien against your house, but YOU will win in court, either if you sue the concrete guy to remove the lien, or you will win if the concrete guy sues you to collect

been there, fought this battle before

 

[OneTon]

Once again, depends on your state. What's good for "A", may not apply to "B"...

From the web:

Creation and perfection
Under the statutes, the lien is usually created by the performance of labor or the supplying of material that improves the property. Just what type of contribution counts as a valid basis for a mechanics lien varies, depending on the particular state statute that applies. Some common examples are:

Laborers, carpenters, electricians, mechanical/HVAC contractors and plumbers working on the project site;
Lumber yards, plumbing supply houses and electrical suppliers;
Architects and civil engineers who drew up the construction plans and specifications; and
Offsite fabricators of specialty items that are ultimately incorporated into the project.
Often, there is no simple dividing line that is useful in every state, or even in every case, for determining this eligibility. Deciding whether a party has a legitimate lien right may depend on examining court cases that have either upheld or rejected lien claims in the same state.

Unlike other security interests, in most states, mechanic's liens are given to contractors and material suppliers who may or may not have a direct contractual agreement with the owner of the land. In fact, this is often the norm because in most cases, the owner of the land contracts only with a general contractor (often called a "prime contractor"). The general contractor, in turn, hires subcontractors ("subs") and material suppliers ("suppliers") to perform the work. These subs and suppliers are entitled to liens on the owner's property to secure their payment from the general contractor.

However, to have an enforceable lien, it usually must be "perfected." This means that the holder of the lien must comply with the statutory requirements for maintaining and enforcing the lien. These requirements, which contain time limits, are generally as follows:

Providing the required preliminary notice to the property owner disclosing the entitlement to the lien (some states).
Filing notices of commencement of work (some states).
Filing notices in the required public records offices of the intention to file a lien if unpaid (some states).
Filing the notice or claim of lien in the required public records offices within a specified period of time after the materials have been supplied or the work completed (all states). The law varies from state-to-state on both the triggering event and the timing of this. Some states require the filing within a period measured from the time when the claimant completes its work, while others specify the event as being after all work on the project has been completed. The filing time periods after the triggering event vary, with 4-6 months being common.
Filing a lawsuit to foreclose the lien within a specified time period.

 

[srmofo]

Ill be honest this is the first time I have ever heard of a release lein. Thats good to know for the next time

 

[OneTon]

I bought a home from a builder who went belly-up. 119 days after closing, the alarm installer and propane installer show up on my front door with their hands out. I explained I did not have the home built, I bought it from the builder. They didn't want to hear it and were about to slap a lien on the home for non-payment. Some research revealed subs had 120 days after closing to file a lien. I told them to come back tomorrow...

And, I always thought closing was "absolute"...who knew?

 

[blue dog]

Are you sure it is not a preliminary lien release being sent from the concrete co. That is standard practice for companies supplying materials to construction jobs. First thing you need to do is have a discussion with the general, and go from there.

 

[jktruck150]

Keep up the updates....this makes me very curious.... I want to know the result!!

 

[kvom]

I avoided all of this by paying for my materials directly. My contractor ordered the stuff, but I had the bills sent to me.

 

[twostory]

The two times I have used a concrete contractor, I asked them what concrete supplier they would be using. Then I call the concrete company's accounting dept. I asked how them how timely does contractor XYZ pay his bills. They both had excellent payment history for several years. The last contractor pays his bill ahead of time to get a discount. After the bills were paid, I got a "lein release" from the concrete company. The concrete company told me they very rarely are asked for a "lein release".

 

[brownbagg]

The concrete company here will and in the past have jack hammer a slab for non payment. the will do it out of meanness. push a house off the slab and take the slab back. and they can do it legally, it in writing on the concrete ticket that you sign.

 

[gabeancounter]

Texas Property Code, Chapter 53 - Subcontractors and Suppliers to the Original Contractor
A subcontractor or supplier to an original contractor only has two sources of funds that it may collect from the owner: trapped funds and retainage. Trapped funds are those original contract funds that the owner has not yet paid to the original contractor at the time that the owner receives a funds trapping notice from the claimant. The form of the funds trapping notice may be found at The Construction Report web site: http://www.theconstructionreport.org Texas law requires that the owner retain 10% of the original contract amount in retainage until 30 days after the project is fully completed. If the owner has paid out 90% of the original contract funds to the original contractor before receiving a funds trapping notice, the owner has no liability for such payments. Likewise, if the owner waits 30 days after project completion to pay out the retainage, the owner has no liability to lien claimants. The owner's property is security for payment, and is not independently liable.

 

[ddawg16]

Texas Property Code, Chapter 53 - Subcontractors and Suppliers to the Original Contractor
A subcontractor or supplier to an original contractor only has two sources of funds that it may collect from the owner: trapped funds and retainage. Trapped funds are those original contract funds that the owner has not yet paid to the original contractor at the time that the owner receives a funds trapping notice from the claimant. The form of the funds trapping notice may be found at The Construction Report web site: http://www.theconstructionreport.org Texas law requires that the owner retain 10% of the original contract amount in retainage until 30 days after the project is fully completed. If the owner has paid out 90% of the original contract funds to the original contractor before receiving a funds trapping notice, the owner has no liability for such payments. Likewise, if the owner waits 30 days after project completion to pay out the retainage, the owner has no liability to lien claimants. The owner's property is security for payment, and is not independently liable.

Translation? OP is off the hook since he has paid all the money?

 

[gabeancounter]

Translation? OP is off the hook since he has paid all the money?

I mainly handle liens in the southeast, but yes, I would believe so.

 

[dcovey]

It happened to me on my garage in Kentucky. Builder (Kip Lambdin (DBA), RJ's Construction, Berea)did not pay the bill at the lumber supply and they went to a lawyer who filed a mechanics lien against my house.

Fortunately (?) since it took him 8 months to finish the garage I had not paid him the final payment. He was not happy when I called him and told him I was deducting the amount owed and any charges and fee's to get the lien taken care of. Of course he had no choice.

I still got hosed by him in the end as he didn't get the inspections required and later the code people would not issue a OC. So far it has cost me an additional 4200.00 to rework the garage, still waiting to see if it has passed inspection.

Dave

 

[jbutlr]

State to State varies. Here in CA, if you have a contractor working for you, he orders concrete for your property, he does not pay, you get the lien. We have a set time limit in which we have to submit a prelim in order to protect ourselves and you receive a notice. Regardless if the the contractor is paid in full, if you do not a material release from me and I have not been paid, I am coming after you for the money. It a crappy situation for the homeowner but the contractor is ordering on your behalf.

 

[James E]

If these responses prove anything it's that the laws vary WIDELY from state to state.

In my state, the lien is on the property, no matter what you've paid to the GC. Subs can repo their supplies or items ONLY if it's not attached to the property. Once it's installed, the only recourse for the sub is legal action.

Jackhammering a slab for non-payment would be a definite no-no.

Interesting story--my company loaned money to a borrower to erect a duplex. It was two pre-fabbed two-story houses that were joined and set on a common foundation. The borrower didn't pay the modular home company (lender advanced funds without inspecting--lost his job over that).

Anyway, after months of non-payment, the modular home company came out with a crane and a flat bed truck and dismantled half of the duplex and carried it away. Yes, the picture you're imagining right now is probably pretty accurate. We were left with half a duplex, pipes sticking out of the ground out of an empty foundation wall, housewrap on the common wall flapping in the wind. It was a mess. Modular home builder got into alot of trouble for that one.

 

[southernfriedcj]

In Georgia a lien release in no good unless it is done AFTER the materials are paid for. We used to have all our sub's suppliers file lien releases before we cut the check. We learned that is not correct. Now we pay the material bills on behalf of our turnkey subs.

"...a lien must be filed within three months from the last time the contractor was on the property performing work. Additionally, there are certain notice requirements that must be met to make a Georgia construction lien valid.

"Once a lien is filed, a lawsuit must be filed within one year from the date that the debt became due in Georgia--not one year from the date of the lien filing."