CONTRACTOR PUT A B.S. LIEN ON OUR PROPERTY, NEED ADVICE.

CONTRACTOR PUT A B.S. LIEN ON OUR PROPERTY, NEED ADVICE.

Rehabber · Yucaipa, CA · Member since 2013 · 52 posts · 2 votes

Ok, here's the story. We are rehabbing out of state. This has proven to be extremely difficult and stressful. We hired a contractor to do a job for $1300. He did the job, we paid him, but there was much more that needed to be done. Yes we should have gotten a lien release when he did the first job, but we didn't. So we came to a verbal agreement, backed up with emails, to finish all the other things we listed in emails for $2200 using the same terms as the contract which states he gets paid when the job is DONE. Well, he took WAY too long, and kept trying to add more and more stuff and demanded he be paid partially for his week's "work". Well, we got zero pictures, and I had a guy inspect the work and they did almost Nothing for 4 guys and a week. And what they did do looked like crap. So we were going to fire him, but he assured us he'd have it done by Tuesday (this was a Friday). We said, ok, we aren't paying you partial until it's all done, so get it done and we'll pay the 2200 on Wednesday. The agreed. The next day, he quit, demanded we pay him 2200 plus 200 in gas which we never agreed to at all. We told him he gets nothing, since he breached our agreement and quit. This son of a ***** files a lien for $3400, a THOUSAND more than we EVER discussed. We called the county clerk and they were utterly useless. They said we had to pay it or bond around it or hire a lawyer. No one seems to care that this is blatant extortion and fraudulent. This guy did this because we are 1500 miles away. I'm not about to pay some guy 3400 bucks who did about a days worth of work and did a terrible job to boot.

Does anyone know how we can have this removed and not hire a lawyer?

I cannot believe someone can just say you owe then money and tie up the house.

And no, we will not wait a year, we can't. And no, I don't want to bond around it. We do NOT owe this money.

Surely some of you have been here before. Valuable lesson learned here I know.

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Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y

Please post more info so people can make relevant suggestions.  What state is the property in? What type of lien did the contractor file?  

Here in CA, a mechanic's lien has to be perfected through a court case, and the contractor has to be licensed in order to file the court case.  Anyone can file the mechanic's lien though.  So the property location makes a big difference.

$3400 is pretty small and not worth any legal dollars IMO. You could file in small claims and do it DIY, but your with your travel cost, court fee and process serving, you'd probably not come out ahead.

This thing is going to cost you money one way or another, so get clear about your goal and your budget. If it were me, I'd likely settle with the contractor for a lien release. If you are ready to sell and the title company is willing to bond around that lien, I'd might go that route if the cost was low enough.  I suggest putting your righteous anger aside as this is business and that attitude will not serve you.  

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  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Jeff Wells,

    The problem I see here everyone like to used email. You should have got everything in writing and sign on everything that was supposed to be done and only pay after you inspect the work. A mechanic's lien is very strong in California just like Texas, and if you do decide to bond around it, the insurance company will do a personal credit check, and the bond must be three times the amount owed. The best way out for you is to pay it and get a sign release.


    Joe Gore

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y

    Please post more info so people can make relevant suggestions.  What state is the property in? What type of lien did the contractor file?  

    Here in CA, a mechanic's lien has to be perfected through a court case, and the contractor has to be licensed in order to file the court case.  Anyone can file the mechanic's lien though.  So the property location makes a big difference.

    $3400 is pretty small and not worth any legal dollars IMO. You could file in small claims and do it DIY, but your with your travel cost, court fee and process serving, you'd probably not come out ahead.

    This thing is going to cost you money one way or another, so get clear about your goal and your budget. If it were me, I'd likely settle with the contractor for a lien release. If you are ready to sell and the title company is willing to bond around that lien, I'd might go that route if the cost was low enough.  I suggest putting your righteous anger aside as this is business and that attitude will not serve you.  

  • Rehabber · Yucaipa, CA · Member since 2013 · 52 posts · 2 votes
    12y

    Welll I'm sorry about my "righteous anger". I do not enjoy being extorted.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    If you decide to sell they will just pay the mechanic's lien out of your funds at closing. Lesson learned to do it in writing all the way.


    Joe Gore

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    Apparently the county clerk was not "utterly useless" as they told you Exactly what you need to do.  Their job is not to solve your problem, but handle/process/maintain public records.  If you don't like those choices, pay the lien.  Bonding it off is the most common solution.  Also, you'll need to know the penalties for someone filing a fraudulent lien and threaten the contractor with that.  He filed this lien because he's used to owners caving in, after he files them.

  • CA · Member since 2011 · 762 posts · 182 votes
    12y
    Originally posted by @Account Closed:

    If you decide to sell they will just pay the mechanic's lien out of your funds at closing. Lesson learned to do it in writing all the way.


    Joe Gore

     Do you really think a writing would have made a difference?  I think he files liens routinely knowing owner will pay rather than fight.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Wayne Brooks,

    If the investor and contractor have an agreement, he did not file a fraudulent lien, he was only protecting his rights. If I was the contractor, I would have to file a different lien that cannot be bonded around, but that is another chapter.


    Joe Gore

  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    12y

       You probably will need to settle but I would be inclined to first find out your position and negotiate it down if possible.  Do you have proof of the first payment?    To get it settled you might need to get the anger out of it when working on it.  He won't have to deal with your anger,  there is nothing to be afraid of if you are that far away.  you can get it settled and then file a complaint against him.   Do you have his contractors license number ?  

    It gets to me too when someone takes advantage like this.

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y
    Originally posted by @Jeff Wells:

    Welll I'm sorry about my "righteous anger". I do not enjoy being extorted.

    No need to apologize, though I suspect you are not sorry.  None of us in the business enjoy bozos that waste our time and money.  It's a choice how to deal with it, though.  And checking anger can help with the rationality needed in these situations.

    Can you post the state the property is in, so that people in your farm area can give you specific resources?

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y

    @Jeff Wells  Is the property in OK?  If so, there are advance lien notices to the owner required in certain situations that your contractor may not have done, or done correctly.  It may invalidate all or part of the lien in this situation.

    I suggest starting a new thread with the state in the subject line so you can get state specific information. 

  • Real Estate Agent · Zachary, LA · Member since 2013 · 50 posts · 26 votes
    12y

    There is much to be said about not litigating on principal, or righteous cause to anger. There were several helpful suggestions about settling. I'm sure between us in this forum, we could paper the walls with those who owe us money.

    You said it yourself that it is stressful rehabbing out of state and that you are 1500 miles away. Where are your boots on the ground? Do you think you bit off more than you can chew and might need to pick up the phone and settle your differences, that maybe it's not the county clerk's fault he/she seems utterly useless? Your evidence of the contractor's poor work ethic is minimal and circumstantial at best. That the contractor didn't provide you with pictures seems like a stretch of an accusation when you don't have any trusted overseer on location or apparently didn't budget for the plane ride to your work site.

    Ultimately, we all understand your frustration with the contractor, but it's to be expected. How well did you vet your contractors if at all? You've still got the power to make this right, and I think you already know your options: pay a lawyer to clean up the mess, pick up the phone and settle, or pay the contractor.

  • Flipper/Rehabber · West Hartford, CT · Member since 2013 · 128 posts · 52 votes
    12y
    I just learned that in CT, a contract between a homeowner and their contractor needs to have a few pieces of information included if it's to stand legal action. The contract must contain a start and finish date, signatures of both contractor and HO, and business license #. Without it, a contractor will have a difficult time trying to record a mechanics lien against the property. These stipulations may be area specific but it's worth asking your attorney about.
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @Jeff Wells I'm sorry you are having such a bad experience with a contractor. Unfortunately this is one of the problems with dealing with out of state properties. You should be glad it's only $3400. Each state has different lien laws, find out yours. However; attorneys don't come cheap, so settling out may save you money. 

    Did you check references? Contractors license? Bond? Insurance? IF he is actually licensed, and depending on the State, you may be able to file some type of complaint and force him into arbitration 

    If you are going to have properties out of your area, you should set up some type of site, like co-construct, Buildertrend, etc. where you require contractors to post regular pictures of progress where you can see the work being done, handle any change orders etc. These types of things do not eliminate problems but help mitigate risk. 

  • Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
    12y

    Might I suggest that you ask the contractor if he is willing to negotiate through a mediator and both of you agree to live with the mediator's decision?  Do this in writing,signed and notarized by both of you.

    As is common in disagreements, I suspect there are 3 sides to this story.  The mediators job is to figure out the truth. 

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    Why would the contractor do a mediator? Does the agreement state that each party can go to mediator. Pay the contractor because you don't want him to get a lawyer because it will cost you more.

    Joe Gore

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    12y

    Call the State Contractors License Board and see what recourse they have. Have an attorney send a demand to drop lien in lue of further legal action including a criminal fraud case.

    thanks, 

    Matt

  • Rental Property Investor · Liberty Hill, TX · Member since 2014 · 285 posts · 166 votes
    12y

    Not to be argumentative as no one likes to be ripped off but,

    How did you find the contractor?  Is he licensed?  Did you check the state site to see the status of his license.  Was the contract formal i.e. written and signed by both parties.  Unless you have a written and very clear contract you are likely out of luck.

    Did you check any of the state regulations regarding contractors.  Some are very specific.  Some states license contractors by very vigorous testing both their specific trade and then business ability  such as CA.  Idaho has only a registration and proof of insurance.  CA has warranties for work by licensed contractors, ID does not.  My point is you may have learned a very valuable lesson very cheaply.  When you hire someone you don't know and don't have a written contract with that person spelling out exactly what is expected by what date you are asking for a problem.  Communicating by email certainly doesn't take the place of a written and signed contract or change orders to the original contract.

    You must treat this like a business and do all the necessary steps.  Sorry to speak plainly but as the owner, boss and manager of your project you must take responsibility and learn from your mistakes.  I hope you get this worked out quickly and as painlessly as possible.

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    12y

    For 3400 it is all posturing and small claims court tops. When your attorney adds words criminal fraud his civil attorney or himself will likely back down at that point. If not the bogus contractor will be dealing with cutting his losses instead of you. At that junction he will be consulting a criminal attorney.....contractor+criminal attorney = $$$+ bad reputation. His cost would be enormous. I think Joes advice is solid too. Just my two cents.

    thanks, 

    Matt

  • Mark B.Pro Member
    Rental Property Investor · Morgan Hill, CA · Member since 2012 · 212 posts · 64 votes
    12y

    Acknowledging that people take advantage of others and it is not often profitable time or money wise to correct the wrong, sometimes the other party needs to gain clarity on where the truth is. It certainly wasn't worth my time to write up a dispute with an appraiser because the appraisal will not likely be changed, but I bet after the state forced them to take a class on appraising income properties their future appraisals were more thoughtfully written.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    I suggest pay and let it be a lesson.


    Joe Gore

  • Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    12y

    State law governs Mechanic's Lien issues.  Here the liens can be filed up to 6 months after the work is completed with no advance notice.  One big problem is that a general contractor can sign a release but bring subs on the job without the knowledge of the owner and if the subs are not paid, a lien could be placed on the property even for work already paid for.

    Also vendors and suppliers like Home Depot or Lowes can lien a property for material used on the job site.

    You can report contractor misconduct to the state licensing boards, if contractors are licensed in your state or area, or if there is criminal activity you can file with the state's attorney general or district attorney.

    Other than that filing legal action will probably involve getting an attorney to represent you.

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    ATTENTION PROPERTY OWNERS! If you are having ANY work done on your property, find out what the lien laws in your state are. MOST states, not all, require a notice be sent to the property owner (pre-lien notice), that shows they are going to be doing work on your property.

    The following may help you, but, consult with your attorney to make sure you can do it in your state, and what else needs to be done to protect yourself from liability, etc. 

    Ask the general contractor what work he/she will be doing, and what is being subbed out; to who, and amount. In the contract put that you want that information before any work by subs is started. As part of the agreement, stipulate that you will pay subs directly.

    When you pay subs, have them sign a lien release, BEFORE you give them a check. 

    It is a lot more work doing this, however; it can save you a lot of headaches and money in the end. ONCE AGAIN, TALK TO YOUR ATTORNEY THAT KNOWS THE LAWS OF YOUR STATE! 

    Most problems can be avoided if you CHECK CONTRACTORS LICENSES, BONDS, INSURANCE AND REFERENCES. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    12y

    Best of luck getting this taken care of.  For the benefit of the community, it would be great if you posted up your end decision and result.

    It's after the fact but a situation like this is where a solid project manager would play a great role.  I'm out of state and have a trusted, experienced & reputable project manager overseeing my renovation projects.  Not to say the contractor can't go and pull the same crap but it's a big mitigating factor and well worth the extra fee to have him running the show and keeping an eye.

    Best of luck with this.

  • Investor/Realtor · Hoover, AL · Member since 2010 · 1k+ posts · 459 votes
    12y

    Tough place to be...Try to negotiate settlement with contractor.  If no resolve, seek legal advice.  He's probably done this before.  Also make sure you have pictures of all the work..Report to Better Business Bureau...

  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    It's more than likely cheaper to pay the contractor than hire an attorney, etc. Also, if you are planning on selling the property, you don't want a lien on it. 

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