by Bruce L. Dorner
This question is more common than you can imagine. Home remodeling is increasing at a rapid pace and anyone with a truck and toolbox can become “Tim the Toolman.” Occasionally these contractors take on jobs that are beyond their personal skills. They need to subcontract some portion of the work.
When the job expands and the costs go beyond the initial estimate, the homeowner points to the flat-fee contract and tells the contractor to finish what was promised. (Of course you got it in writing, didn’t you?) The contractor spent your money to buy supplies and feed his family, so he doesn’t have the money to pay the subcontractor. Now, the subcontractor can’t feed his kids. Next thing you know, the subcontractor contacts the home owner and threatens to place a lien against your house to collect for his portion of the finished work.
Is this fair? Well, to the subcontractor all he wants is to be paid for the good work he did. To the homeowner it is an insult, since the money was already paid to the general contractor. And, to the general contractor, he just ducks and tries to avoid everyone. Next thing you know, everyone has a lawyer and they are all standing in a courtroom pointing fingers at each other.
How can you avoid these problems? Start with the basics. Interview several contractors and get recommendations. Visit jobs they have completed and talk to the owners. Be sure that the work you want done is within the skill set of the contractor. Get the deal in writing and establish a payment schedule as the work progresses. Be sure you can hold back some portion of the payment until all the work is done and accepted. Hire an attorney to help prepare or review the contract and to advise you if any problems arise. Consider having the contractor provide lien waivers for all subcontractors. As work progresses and changes are needed, get them in writing with an agreed price. Take pictures before, during and after the work so you can show any discrepancies.
So, let’s drop back a bit and look at the legal underpinnings. For those interested, take a look at New Hampshire Revised Statutes Annotated Chapter 447. In essence, a contractor or subcontractor who provides labor or materials valued at more than $15.00 is entitled to a lien against the home and lot if he is not paid. This lien must be approved by a judge and is then recorded at the county registry of deeds and a copy served by the sheriff upon the home owner. The home owner is entitled to request a hearing at the court house to explain the situation. However, it is more common that the lien will remain in place unless the money is paid or the money is set aside with some third-party while the dispute is resolved.
There are a number of procedures which the contractor or subcontractor must address in order to establish the lien including giving proper notice of his intentions and making sure that the work was done within the past 120 days. The lien for labor or materials is given great deference by the law and will likely keep a home owner from completing a purchase or refinancing of the property. It may also have an impact on your credit rating. So, if you’re serious about home remodeling, give some thought to hiring a reputable contractor and use your lawyer to help you smoothly through the process.
This article provides general information only. It is not legal advice. You should consult with your own attorney before making any legal decision.