Can anyone give me advice with a fradulent mechanics lien?

9 Replies

Jurisdiction: Indiana

I signed a contract with a guy back in December. The contract stated that I would furnish $20k towards renovations to the house in my name. The work would be done within 60 days. In return he would recieve 30% of the sales price after home sells. (My contribution will be taken out of total plus home cost). After the first month he had jacked off all of my money. He no longer was able to finish the project. 8 months and an almost $20k later from my behalf, I got the home done myself with other contractors. He has been in and out over the past 8 months acting as if he has been contributing much knowing his percentage is on the line. The house is now listed for sale and he came out of no where and sent me a notice of intent for lien. ($65,000). I found out he is unlicensed, and was also broke the whole time. Never pulled permits like he should have and showed me a fake GC certificate. What do I need to do?

A couple of different issues here....

State lien laws are Very specific in timelines that have to be followed for filing liens.  Read your state statutes.

Your “contract” with this guy is sounds you are the owner and this guy is the contractor?  Not sure what “I would contribute $20k to the renovation”’re paying him $20k for a specific scope of work?

Much will depend on Exactly how your contract was worded, and documentation along the way.  I’m guessing you never properly terminated his contract for cause/breach of contract.

There are typically severe penalties for filing fraudulent liens and perhaps illegal contracting without a license issues.  Your fault though for getting fooled by a “fake gc Certificate”.

He may or may not file an actual lien....many scumbag “gc’s” try this threat. 

You will definitely need an attorney if he does file a lien.  Since you are apparently looking to resale quickly, this could be a major issue....which is what he is counting on.  If you were holding long term and didn’t need to sell/refi, there would be different strategies.

Didn't you have some sort of contract with this guy? If he is a unlicensed contractor, how would he have filed a mechanics lien against your property? It sounds like you basically gave this guy 20k and he bailed on you. Why wouldn't you have addressed any of these issues during the 8 month period where he was "in and out" before the work was completed? 

Do you have a copy of the fake gc certificate? You definitely need to talk to a lawyer

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@Wayne Brooks I truly appreciate the in depth response. Truly do. First time flipping. The $20k was for materials and labor to get work done. It was not for him. The verbage was that I get my contribution back before his 30% cut. No I did not terminate the contract and at this point still do not know how. I'm assuming I won't get a 2nd piece of mail if a lien is actually placed, due to already receiving the notice of intent?

@George W.

Long story short, I have felt threated by this guy. I just wanted to get the house donr with or without him. Earlier on I did not know who to turn to or what to do. He slowly came back and did minor work here and there. Frankly I did not have time or knowledge to get it handled myself. I had one contractor come in 4 months in then didn't want to keep working due to bigger projects. A month ago a found another crew that was legit and got the rest handled for a large chunk of change. As far as filing an actual lien, from what I read there is no license or certification required in Indiana to file.

@Arthur Boand So what was his 30% for, managing the rehab?  I’d get a lawyer now, try and scare him into not filing a “fraudulent lien” if you can.  We have no idea what your contract with this guy looks like. In most states, if he files a lien he is required to send you a copy, but I’d be checking the county records regularly.

@Wayne Brooks

Thank you for the help again. Attorney got it all handled. Sent the guy a notice to foreclose within 30 days. No suite was filed. Just filed affidavit of service to release lien. Title company wired the funds today after closing after showing them documents filed.