We are back to our discussion of mechanic's liens. Specifically, we were discussing what a homeowner may or must do when he or she learns of a lien. As we said in our Sept. 22 post, the lien is only valid if the contractor or subcontractor gives the homeowner proper notice.
With subcontractors, the homeowner must understand that the property is subject to a lien if the contractor does not pay the subcontractor. The subcontractor must give the homeowner notice no later than 45 days after the work is commenced or the supplies are delivered. And, the sub must deliver the notice to the homeowner in person or by certified mail.
We have said it before: It doesn't seem fair that a homeowner should be liable for someone else's debt. The catch is that the homeowner is the beneficiary of the contract between the general contractor and the subcontractor.
Minnesota law does, however, recognize that a homeowner should only have to pay once. There is no legal reason a homeowner should, for example, pay both the contractor and the subcontractor for the same work. This holds true, too, if the homeowner has a valid lien waiver from the sub (also discussed in our Sept. 22 post): If the sub has given up the right to file a lien against the property, but the general contractor fails to pay the sub, the sub's complaint is with the general. The homeowner is off the hook.
There are ways for homeowners to protect themselves from surprise liens. Homeowners should obtain from the general a list of all the subcontractors the general plans to use or could potentially use. The list should include what tasks the sub will perform or what materials the sub will provide. Homeowners should retain all the notices from subcontractors they receive during the project and then check those notices against the final bill. If the homeowner has not received a lien waiver from one of the subs, it is reasonable to withhold payment until the waiver is received.
One of the best ways for homeowners to protect themselves is to work with an experienced construction or real estate attorney. The attorney can review all of the contracts to make sure the appropriate notices and waivers are included and can draft alternative language if necessary. A small investment up front can spare a homeowner the hassle and expense of litigation later on.
Source: State of Minnesota, Office of the Attorney General, "Citizen's Guide to Homebuilding and Remodeling," accessed online Sept. 19, 2014