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Releases of lien: A vital component of any construction project

In the last two posts, our blog has spent some time discussing some ways in which homeowners can protect themselves from being victimized by unlicensed contractors. It's important to understand, however, that it's not just unlicensed contractors that homeowners need to remain vigilant about, but some of their licensed counterparts as well.

That's because scenarios often play out in which licensed contractors hired to perform construction or remodeling projects fail to remit payment to material suppliers or subcontractors.

While you may be tempted to dismiss these potentially litigious scenarios as none of your concern, this is a mistake. Indeed, either the subcontractor and/or the material supplier can file what is known as a construction lien.

To recap, a construction lien allows these parties to enforce their claim for payment of services through the property itself -- even if you have already paid the contractor in full.

What this means then is that your property could be sold against your will to cover the costs of the lien or that no sale of your property can proceed until such time as the construction lien is paid off.

This naturally begs the question as to what, if anything, homeowners can do to prevent this from occurring.

The answer, as it turns out, is actually rather simple: secure a release of lien.

As implied by the name, this is a legally binding document provided by subcontractors and/or material providers promising not to file a construction lien in the event of non-payment by a contractor.

We'll take a more in-depth look at these releases in our next post, including when and how they should typically be obtained.

In the meantime, if you have questions or concerns related to a construction lien or nonpayment of a contractor, consider speaking with an experienced legal professional as soon as possible to learn about all of your options.

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