Is it normal to have mechanic lien's in the home building process?
I figured you people are smart and stuff so I was wondering if anyone had experience with this. I got a certified letter today notifying me that a mechanic lien was placed on a new construction home I'm building. Apparently one of the subcontractors hasn't been paid for months. The lien is on something the builder invoiced me for months ago, I paid it, but I guess they never paid the vendor. There have been several indicators that the builder hasn't been doing well financially. I'm worried they may not have the resources to finish the project. It's obvious they haven't been applying all of my funds to my project. Is there anything I can do to monitor this? At this point I'm worried my builder is doing some sort of home construction ponzi scheme.
33 Replies
P
PWR2LZ
2y
career and it is NOT normal for a mechanic's lien to be issued. It is a symptom of bad cash flow management AND being undercapitalized. As others have suggested, you need to consult w/ an attorney ASAP and do not pay your GC any more money until this lien gets removed. Follow Guy's suggestion to pay all future invoices directly to the subcontractors and any material suppliers. I would also suggest reporting the GC to your state's professional licensing board which oversees the building industries, and reporting the GC to his liability insurance company. I'd also recommend asking the GC's employees (if applicable) if they have been getting paid on time. Good luck going forward, and please keep us posted.
(In response to this post by TekkNerd)
H
Hurley09
2y
My brother had a nightmare experience with his GC and ended up firing him. Seems like every few weeks he hears another story from another client of this guy's and how this guy is continuing to be "awesome."
(In response to this post by TekkNerd)
2y
I don't really care about name dropping them. Their name is Joy Design Build, they have great reviews but I think they aren't doing well as a company these days.
(In response to this post by Hurley09)
2y
built the builder had to sign a lien release waiver at every draw, and that included subs so any liability would fall back to them. If you have a construction loan I'd be surprised they aren't doing the same because they could get stuck with some ish too because you won't be able to close.
If you're paying out of your own pocket, in addition to talking to your GC I'd get a real estate attorney involved immediately. Good luck.
(In response to this post by TekkNerd)
2y
are rare, and a means of last resort. I wouldn't pay the contractor any more until this get sorted out . A lawyer would be very helpful. You didn't say how much this is for?
(In response to this post by TekkNerd)
2y
(In response to this post by Hokebury)
TekkNerd, were you the poster who said you’d never build a home again?
If so, I guess this latest experience further solidifies your opinion.
(In response to this post by TekkNerd)
2y
(In response to this post by RoswellGAHokie)
1y
(In response to this post by TekkNerd)
1y
There haven't been any additional liens after they paid that one, but the builder was still slow, so I lawyered up and sent them a pretty strong letter highlighting the items that were deficient, and providing a deadline to address them. While they didn't address all of them by the date, they did pick up the pace, and it appears they are moving even faster now. I think they should be done by late Summer or early Fall.
(In response to this post by HokieBoater)
1y
It's tough to get an attorney to give a crap. Most real estate attorneys just want to do closings and buy a boat. None of the shark attorneys in my area even cared. They flat out told me they only wanted in when the crap truly hit the fan. The best I could do was find a guy that was willing to send threatening letters, which seemed to do the trick. Being completly honest, I really only feel so comfortable sharing more about myself or my professional contacts on this forum.
(In response to this post by HokieBoater)
2y
Sounds like your GC is screwing his subs and putting you on the hook for it.
I'd be on the phone with the builder asking "WTF, I paid you already for this, why is this sub putting a lien on my property?"
Hopefully you've kept good records.
** Edited by vthokieq at 3/20/2024, 12:56:26 PM
(In response to this post by TekkNerd)
H
HOKIERIT
2y
(In response to this post by vthokieq)
H
HOKIERIT
2y
attorney says...." to put some teeth behind it and show him you are are not playing around. He says this goes back to LAST April. Must be a hell of a house if they are still building it one year later...something smells funny to me, although I know NOTHING about it other than what he said.
** Edited by HOKIERIT at 3/21/2024, 9:32:51 AM
(In response to this post by vthokieq)
2y
…until AFTER consulting with lawyer. Then you say he shouldn’t wait on any of it when I replied I wouldn’t wait to speak to GC. So which is it? 🤷🏻♂️
(In response to this post by HOKIERIT)
H
HOKIERIT
2y
could drop that fact to GC... I wouldn't wait 5 minutes on EITHER call... Time sounds like it may not be his friend at this point
(In response to this post by vthokieq)
2y
I would contact my attorney to get his input on what to do. I have never been through anything like this, but I had the following ideas.
- Ask the contractor who are the subcontractors working on the job and contact them directly. Ask about whether they are getting paid and ask them to copy you on invoicing.
- pay material suppliers and subcontractors directly. Ask for them to sign lien waivers.
** Edited by Guy LeDouche at 3/20/2024, 2:15:05 PM
(In response to this post by vthokieq)
2y
So I guess it's coming up on almost a year those guys haven't been paid. I get why they're upset and filed for the lien.
(In response to this post by vthokieq)
2y
But yes, pick up the phone and go medieval on the GC.
(In response to this post by TekkNerd)
2y
it.
(In response to this post by Spudnut)
2y
(In response to this post by Hokebury)
2y
down.
(In response to this post by vthokieq)
2y
(In response to this post by Stork)
2y
getting placed. Again, get a lawyer immediately.
(In response to this post by TekkNerd)
2y
mechanics liens.
(In response to this post by TekkNerd)
2y
are taking draws. They will shut off the draws until the lien is taken care of.
One solution is to write checks to the GC and each subcontractor with both names on the pay to line.
(In response to this post by TekkNerd)
2y
fairly normal.
I'd also say it may be worth talking to an attorney to see how to resolve it and protect yourself.
(In response to this post by TekkNerd)