Homeowners Beware: A Lien Can Be Placed on Your Home Even If You Already Paid the General Contractor
As a homeowner, one must maintain the home. To maintain the home, many homeowners seek the help of a contractor to perform services they cannot do, such as fixing the roof, extending the patio, or even painting the garage. Oftentimes, the contractor will delegate his or her work and hire subcontractors to complete the work. This original contractor–subcontractor relationship is usually unknown to the homeowner, resulting in a mechanic’s lien on the property if the original contractor fails to pay his or her subcontractors.
A subcontractor can easily place a lien on a property by following several steps. First, the subcontractor must file an affidavit with the county clerk of the county in which the property is located by the 15th day of the third calendar month after the day on which the indebtedness accrues. The indebtedness accrues on the last day of the last month in which the subcontractor performs the work. Second, the subcontractor must send a copy of the affidavit by registered certified mail to the homeowner and original contractor by the 15th day after the date the affidavit is filed with the county clerk. Third, the subcontractor must also give written notice of the unpaid balance to the homeowner and original contractor by the 15th day of the second month following each month the subcontractor performed work. Fourth, if the property is a homestead, a homeowner’s main residence that is exempt from forced sale for collection of debt, the subcontractor must also file the contract entered into between the homeowner and the original contractor with the county clerk.
If the homeowner receives notice from the subcontractor within the requisite timeframes described above, the homeowner may immediately withhold payments to the original contractor of an amount necessary to pay the claim. The homeowner can withhold payments until the time for filing the affidavit of mechanic’s lien has passed or until the lien claim has been paid or released. If the original contractor does not give the homeowner notice it intends to dispute the claim within 30 days of receiving written demand from the subcontractor, the homeowner may pay the subcontractor directly.
Therefore, to better protect yourself and your home, you must know your rights. First, you can require, as a condition for payment, an affidavit that the original contractor pays each of its subcontractors in full for all labor performed. In signing the affidavit, the original contractor becomes personally liable for any loss or damage resulting from any false or incorrect information in the affidavit. Second, during the progress of the work and for 30 days after the work is completed, you must retain 10% of the contract price of the work or 10% of the value of the work. If you withhold the 10%, you will not be liable to the subcontractor for any amount paid to the original contractor before you receive notice of the claim. Third, you can request a list of subcontractors the original contractor intends to use on the project at your home. The original contractor is required to supply updated information on any subcontractors it adds after the list is provided.
Thanh Le is an associate attorney at Nguyen & Chen, LLP, whose practice focuses on litigation and corporate law. She obtained her Bachelor of Science in Biotechnology from the University of Houston and her Juris Doctor from South Texas College of Law, both with Magna Cum Laude honors. She is also fluent in Vietnamese and has spent her time volunteering at Houston Volunteer Lawyers, LegalLine, and Veterans Legal Clinic.