Protect Yourself
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Jamie Mehrhoff WOW Team Office: 314-966-4700 JamieM@kw.com |
Keller Williams Realty Southwest 10805 Sunset Office Drive Saint Louis, MO 63127 Fax : 314-966-4715 |
Protect Yourself With A Lien Waiver
A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation.
A lien waiver is a legal instrument that a property owner or contractor uses to protect their property. It is a document which when signed by a subcontractor or supplier relinquishes their right to attach a lien to the property. Generally, the entitled party will sign a lien waiver upon receipt of payment for the goods and services that they provided. It is imperative that an owner, owner-builder or contractor use lien waivers when paying for any goods and services used on the property. Otherwise they can be double-billed for thousands of dollars of material or labor costs. Here is a common example:
Fred Homeowner hires Jim Contractor to build an addition to his house. They agree upon a price of $10,550 for the job and that Jim will be paid upon completion of the job. All agreements are put in writing. So far, Fred has made the right decisions...don't give money upfront to the contractor, and put everything in writing. It takes Jim about 35 days to complete the addition. At completion Bill is happy with the work and writes Jim a check for $10,550. About 3 weeks later, Fred receives an invoice from ABC Building Supply for $5200, for the amount of materials used in his addition. Fred figures that it is some kind of mistake because he already paid Jim $10,550, which covered labor and materials. After talking with ABC Company, Fred finds out the supplies were never paid for.
He figures that since he paid Jim for the materials, it's Jim's problem, not his. WRONG! Jim skipped town and didn't pay his bills...now it's Fred's responsibility. If he doesn't pay ABC, they can place a lien on his home. If Fred doesn't pay, ABC can foreclose and sell his property. So Fred ends up paying twice for the materials. How could Fred have protected himself? He had a few options. He could have gotten a materials list from Jim and purchased the materials himself and had them delivered to his property. Or he could have insisted that he pay for the materials himself with a separate check. His third option is to have Jim bring him lien waivers from all subs and suppliers before paying him for the check for $10,550. This is probably the best option.
Protect yourself from paying for the job twice...ask for lien waivers upfront!
Taken from infoforbuilding.com.
