I was recently asked a question by someone I met at my daughter’s school; I thought I would share Kim’s story and my answers with you.  I suspect that with the construction market slow down and the money woes, this blog will be helpful to many people in a similar situation or more preferable help keep you out of this situation. 

Kim hired a contractor to install a new roof on her home. The roof was completed a couple of months ago and she paid her contractor in full. Today she received notice that a lien has been filed on her home by the supplier of the roofing material, because the materials had not been paid for.  Her question was how this can happen? And what should I do know? Well unfortunately Idaho state lien laws are, in my opinion very outdated and not always fair to the home owner. The first thing a competent attorney will ask you is, Is the contractor registered with the State of Idaho? If not they have no right to file a lien. The second thing to be asked would be has it been more than 90 days since the material had been delivered?  Idaho law says that a contractor or supplier has 90 days from the date of substantial completion or delivery. If the answer is yes they are registered and it has been within 90 days, the supplier has a right to file a lien on your property as a way to recover the unpaid material bill. It is obvious what happened Kim paid her contractor who intern kept the money probably to pay other bills and did not pay for the material. What now?  The first thing I would do is contact the roofing contractor and advise them that a lien has been filed and give them the opportunity to make it right by paying the bill. If the roofing contractor refuses to do so or is going out of business or filing bankruptcy it is time to contact an Attorney.  The money will have to be recovered from the roofing contractor through the court systems. The other complication is that Kim is trying to refinance her house and she was wondering how this will affect her refinancing. The answer is simple, the lien will have to be paid or she can bond around the lien, bonding means that one and a half times the lien amount will be held in an escrow until the dispute is settled. Either way, it is money out of Kim’s pocket for now. The easy way to avoid this problem is to insist upon paying the supplier directly for any material used in correspondence with the job being done. Some Contractors will not like this because they do not want you to see the material bill due to the fact they hide some profit within the bill. A reputable contractor will not care who pays for the material and will be happy to accommodate your wishes. Another option to protect yourself is to get lien waivers from contractors that are being paid, however there is still some loop holes. I suggest paying the supplier directly and having the supplier sign a lien waiver. In fact everyone you pay should sign a lien waiver. Do everything you can to protect your money.  When getting bids for work around your home, get a bid that includes labor and material as separate amounts. This will give you the best comparison from one contractor to the next and weed out any profit on the material bids. I believe that contractors that are paid in full by customers and do not pay for the materials should be criminally prosecuted, but that is for another blog.             If you need help with a home improvement project call Lewis Estates for a referral, we use only the best contractors and will stand behind our referral. I would love to hear your comments.  Steve Lewis

This entry was posted on Wednesday, October 22nd, 2008 at 10:12 am and is filed under Construction. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.