Question
Last year I did a kitchen for a builder. Delivered, installed complete but never got my final check, $3800. Shame on me for delivering without it, but he was a friend. Two months later I'm still not paid. I mechanics lien the homeowner, but only send a copy to my builder friend hoping to settle without incident. I get no response. I contact the homeowner and go over all the details and finally send them the lien papers.
The plan was this: the builder's work was not completed in other parts of the house, so there was still money owed that they could hold back on my behalf, then pay me direct.
Today, a year later, I get a phone call from the homeowner requesting I remove the lien. The builder never returned to the job to finish. They had paid him in full up to that point, which includes the kitchen. He has since stopped doing business, so they have no recourse with him, and I should remove the lien so they're not paying twice for their kitchen. So I'm left holding my hand on my butt. I told him I'd get back with him. I know what my gut is telling me, but what do you think?
Forum Responses
(Business and Management Forum)
From contributor G:
One bad guy... two good guys. Classic question: Which of the two good guys should suffer because of the bad guy? Who was in the position to have prevented the bad guy walking off with your final money? Is your gut telling you that the homeowners should not have "paid him in full up to that point" without a full release of liens from all subs? (On the other side, did you put the homeowners on notice by complying with the lien requirements of the state where you did the work?) Not legal advice, just a suggestion about where your head and gut should be at...
I liened a home recently and got paid when the homeowner needed to refinance the home to complete it. The bank would not until I was paid and removed the lien. They need to sue the builder for the amount they are going to pay you for removing the lien.
Again, do not remove the lien just because they ask you, without payment. Their problems are not yours, but you are theirs (not by your doing).
I have never heard of any jail time, just big fines - governments only want the money; they don't care about the victims.
The homeowner can sue the contractor in small claims court (very little cost and no lawyers allowed). Not paying you is a contract breach. You can't force payment for a SC judgment, but you do then have a legal claim that you can take to a court that can force payment plus costs and fees.
If you have followed the rules, there shouldn't be a problem getting most if not all you are owed. Don't be afraid of the legal system; generally it works.
I have sued in small claims twice and collected both times, and once in tax court where the IRS lost. It takes time, and if you're busy you might not want to spend it this way. All it takes for people of poor character to continue hurting others is to get away with it.
I have a lien right now on a huge developer that is ready to break and when they do, I will finally get my money, three years later.
Know your rights for your future business dealings and never remove a lien until you have your cash. If the homeowner is that naive, tough.
If he agrees, then you at least see half of the money owed and the homeowner is only out half of the lien amount. Like in all compromises, no one is completely happy, but maybe everyone walks away with a deal they can live with. You could still pursue suing the contractor for the difference... an amount you could probably handle yourself in small claims court.
I have a former friend that owes me $1750 for a large cabinet they ordered 8 months ago. He's an electrical contractor making very good money, and he liens all of his jobs, and complains if someone doesn't pay him, but he won't pay me, the cabinetmaker.
After completing the kitchen install there was one final piece of cabinetry to be made unrelated to the kitchen. I purposely left it out of the initial project to shorten my completion time. When I had not been paid by the builder, the homeowner asked if I would do this direct to them so they could get the home finished and move in. Like a dope I agreed, thinking I might have some leverage and still get paid. They knew I wasn't paid in full for the kitchen. They also knew I was planning to lien as a result to force the builder. There was also work left unfinished by the builder. I even offered to send one of my guys over to complete the work so I might get back some of the balance due. All fell on deaf ears - they "had already paid the builder." By this time I already had the lien in place and showed them the copy sent to the builder. They were well aware of what was going on. Oh, that last cabinet? Kick me in the teeth. I was not going to deliver it unless they paid all the balance in full. They raised such a fuss because they had contracted me direct for this, and since this piece had nothing to do with the kitchen, I shouldn't hold up completion. They were going to work out the kitchen with the builder. Begrudgingly and against my better judgment, I delivered and installed the last piece. What a dope!
I don't know if there was any bond posted for the project by the builder; I suspect not. So there's no recourse there. I thought of negotiating a partial settlement but that's going to be tooth pulling as well. I know this guy. One card I might play that I thought of earlier today is a referral. The wife works in real estate and has often said she would refer me. They do like my work! A referral that led to a sizeable project could be enough to clean the slate. That might be my best shot. I wouldn't release the lien until after I got deposit from this referral. It would be a win-win for them. A referral is painless - they know the work is good so they're not putting themselves out on a limb. I'd have another project in house.
You said: "They also knew I was planning to lien as a result to force the builder." But the lien is not against the builder, it is against the house! A lien gives you a special right - if you need to go to court to enforce the lien and you win, then that right is to be able to force the sale of the house to pay you off. That is big leverage. Usually that is so big a stick that homeowners - and especially lenders and banks - will not make final payments until they see the lien releases in hand, because otherwise they are in line after you. If the house goes to forced sale to satisfy a lien, you get your money before the bank or owners get anything. If your lien is on file first. Even if you are not first, they will not want the house sold. The lien is not against the builder. The builder's contract should provide, and bank lending documents do provide, that they don't settle up until all liens are released.
Make sure you do the lien correctly in the first place, and watch for time limits! (There is some legal stuff here that you really need to know, and that either means you look it up or talk to an attorney for advice on how to lien and what to do later.) If you do it right the state has given you a whole lot of leverage. And if you have or can still lien for the later cabinet, then it will be covered as well.
Even if the owners sold the house to someone else, if you did it right your lien is there. Remember - the lien is on the house.
1. It is not fair for the homeowner to have to pay twice.
2. It is not fair for you not to get paid.
3. The problem happened because the owners paid the builder in full, as you said earlier, without getting lien releases. They made the problem, they can work it out with the builder. They gave your money away! It is up to them to get it back, or you foreclose on the house.
Lastly, how do you know the builder was in fact paid the full contract price? Did he tell you he got all his money? Did they show you their final check and the contract? Doubtful.
And, you really believe them that they would be willing to give you a referral after they talked (conned) you into delivering that final cabinet?
They played you last time, and would be more than willing to do so again with a referral. (And they will probably tell their friends how they can also get a $3800 discount on their project.)
Please reread your last post out loud to yourself, then tell us if you really want to be a dope again. Remember, those are your words, not mine. There are better ways to spend your time than chasing possible work from this source. Leave the lien in place, protect your rights with regard to this project, and move on to better opportunities.
The goods are in his house. He has a dispute with the contractor. You have a dispute with the customer. The contractor was a hired representative of the customer.
Leave the lien in place. Threaten to sue the homeowner in small claims court. If it goes to court it will cost you less than $50. Connecticut raised its small claims to $5k a few years ago. Often you can get a cheap attorney to write a threatening letter to the customer for $100.
Who's to say the homeowner is not lying to you? The onus is on the homeowner to pay. The key to this whole problem is your contract. Please describe it in detail.
The last cabinet I did for them direct did get paid in full, but I lost my leverage by not insisting on getting paid the kitchen balance prior to delivering that item. I was in a very awkward spot. They were paying me for the work I did for them direct, but not for the work done for the builder on their behalf. Part of me was working in good faith (slap me on the back of the head), the other with a weary eye for getting taken.
I don't believe there was ever a bond posting on this job although it was a very significant reconstruction to this home. I'll have to do some homework on that. I would think the owner would have mentioned that. I do question their interpretation of paying the builder in full but I have no way to substantiate that, nor should I care.
Contributor A is right - here in CT the GC is responsible for paying subs and is required to get release of lien forms from each sub upon final payment. That never happened though.
I'm wondering if this isn't coming up now after all this time because they're trying to refinance for a better rate. This crappy economy might be offering them opportunity and I've become an unexpected stumbling block? They've had this lien in their possession for a year and only now they want to address it. This conversation should have happened 11 months ago if they were concerned.
Leave the lien in place. If they want to refinance they will be forced to pay you in full. I too am in CT and although I don't know the law, what I've seen in the past shows that the lien is not released until you do so. Even though you are owed a lot of money you are actually the one in control right now. Sooner or later I think they will cough up the money to clear the lien.
I've gone back to reread all of your posts several times now and each time I get more PO'ed over this and the owner's arrogance. The "nice guy" side of me wants to let them off the hook in an amicable way, which will probably mean I take a hit to some extent. That's also the guy I should have slapped in the back of the head in the first place. The realistic side agrees with you all and is screaming "are you crazy?!" So not to give up the only leverage I have, I'm leaving the lien in place. I'll know soon enough if this sob story is a ploy for them to refinance. I'm thinking more and more that's got to be what's going on. It could also mean I might actually get my money!
Also, I did in fact call the city in reference to expiration of liens and they assured me that they stay in place only until formally released by a Release of Lien form, and that can only be issued by the lien holder, me.
