How do I get rid of a mechanic's lien that is not owed?

03/10/2009 - Category:Contractors - Construction Liens - State: OH #15529

Full Question:

How do I get rid of a mechanic's lien that is not owed? Our son contracted to have a bathroom remodeled, and paid $7500 to contractor. Balance according to contractor is $600. Work is not complete and was to be completed 4 weeks ago. Contractor has made promises to finish, but has not. Finally, son fires contractor.

Answer:

By virtue of express statutes in most states, mechanics and material men or persons who furnish materials for the erection of houses or other buildings, are entitled to a lien or preference in the payment of debts out of the houses and buildings so erected and to the land, to a greater or lesser extent, on which they are erected. It is used to enforce payment in order to clear the title to the property, because property with a lien on it cannot be easily sold until the lien is satisfied (paid off). The filing requirements and statutes of limitation for these liens vary according to the law of each state. Liens can generally be removed by the payment of the amount owed. This payment can occur at any time up to and including the stage at which the closing documents for the sale of the property are signed.

The priority of liens on a construction project does not depend upon the time of completion of the particular job, but rather everything relates back to the first visible commencement of the work. This stipulation means the final work, such as painting, is equal in priority to the initial work of laying a cement foundation. Therefore, during the entire work of construction, the owner must obtain lien releases or waivers of lien from each subcontractor and material supplier. Without these waivers or releases the real estate is subject to liens of all the subcontractors, even if the general contractor, though paid in full, fails to pay the subcontractors. People having a home built can require contractors and subcontractors to provide lien releases or waivers as part of a written project contract. The contract can mandate a lien release be issued before the contractor receives payment for services, in which case it is called a lien waiver. Although the terms lien waiver and lien release seem to be interchangeable, a release demonstrates completion and payment, so as to prove any claim has been satisfied, while a waiver demonstrates a relinquishment of a known right. Waivers are typically obtained prior to commencement of any work, whereas releases are subsequently obtained. Waivers of lien must be in writing, give a sufficient description of the real estate, and be signed by the one with authority to file or claim a lien. No payment needs to be made in advance if the subcontractor agrees to release the land from the lien and rely only on the credit of the owner or general contractor for payment of the debt. If payments are made to a general contractor in stages for work performed by subcontractors, the homeowner can obtain lien releases from the various subcontractors as their part of the project is completed. In addition to signed lien releases, those building homes should keep records of what has been paid to contractors, which contractors worked on the job site and when. Unfortunately, unethical contractors can easily file fraudulent liens for incorrect amounts. Accurate record keeping can help the homeowner ensure lien releases from all necessary parties.

Liens can be discharged after a certain length of time. Therefore, if a property owner is in no hurry to sell the property, and the lien holder is not seeking to foreclose, it may make sense to do nothing and wait until the lien expires. If the lien is not renewed, the cloud on the title will no longer exist. If a person pays and satisfies a lien in order to have it discharged, a written, legally sufficient release or satisfaction must be obtained and recorded in the appropriate government office to clear title to the property.



Please also see the information and forms at the following links:

http://definitions.uslegal.com/m/mechanics-lien/
http://lawdigest.uslegal.com/real-estate-laws/contractors-and-liens/7355
http://lawdigest.uslegal.com/contractors/construction-liens/4213/
http://www.uslegalforms.com/constructionliens/ohio-mechanic-lien-forms.htm

03/10/2009 - Category: Construction Liens - State: OH #15529

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