My question involves real estate located in the State of: California
A friend of mine just finished some updates on his house and is in a dispute with a subcontractor on the job. The sub has threatened to file a lien.
Anybody who has ever worked with a contractor has run into a shady contractor/sub/supplier/etc. at some point. unfortunately it seems that the deck is stacked in their favor and they can file a lien for whatever frivolous reason they want (notice I said file not prevail). Assuming a contractor files a lien, and it is not tossed on a technicality (which seems the topic of most posts/blogs/etc. on the web) the contractor has to perfect the lien by filing a proper lawsuit and foreclosing on the property. At this point the property can be sold to pay off the debt owed to the contractor. Where I see most people get into it is at the very end when the contractor is trying to get out and do as little as possible and the owner is not satisfied with the quality of the work so the last final payment becomes a bargaining chip. Which is exactly what is happening with my friend. In his case there is $5K left in final payment in a $25K contract. There are a number of things that are not up to snuff and a few items in the contract which the sub has not even done. My friend has tried negotiating but the sub is not having any of it because he has already lost money on the job (all his own fault). So yesterday it was left at "I will not pay until you address the deficiencies" and "I will file a lien".
But is this the only remedy? I.E. if a lien is foreclosed for a debt of X amounts can the property owner at that point offer to pay the debt or will the court force the sale of the property no matter what? I have never seen this issue discussed. This may be that most liens placed and collected are for large amounts (tens of thousands of dollars) so the owner does not have the money to pay off the debt but what about the small fry stuff? Can my friend go to court, if it comes to that, lose and simply offer to pay the amount of the lien at that point?
in case anyone is wondering there is no clause in the contract about paying for the other sides legal fees so the only debt that can be collected in the lien is the remainder of the contract.
A friend of mine just finished some updates on his house and is in a dispute with a subcontractor on the job. The sub has threatened to file a lien.
Anybody who has ever worked with a contractor has run into a shady contractor/sub/supplier/etc. at some point. unfortunately it seems that the deck is stacked in their favor and they can file a lien for whatever frivolous reason they want (notice I said file not prevail). Assuming a contractor files a lien, and it is not tossed on a technicality (which seems the topic of most posts/blogs/etc. on the web) the contractor has to perfect the lien by filing a proper lawsuit and foreclosing on the property. At this point the property can be sold to pay off the debt owed to the contractor. Where I see most people get into it is at the very end when the contractor is trying to get out and do as little as possible and the owner is not satisfied with the quality of the work so the last final payment becomes a bargaining chip. Which is exactly what is happening with my friend. In his case there is $5K left in final payment in a $25K contract. There are a number of things that are not up to snuff and a few items in the contract which the sub has not even done. My friend has tried negotiating but the sub is not having any of it because he has already lost money on the job (all his own fault). So yesterday it was left at "I will not pay until you address the deficiencies" and "I will file a lien".
But is this the only remedy? I.E. if a lien is foreclosed for a debt of X amounts can the property owner at that point offer to pay the debt or will the court force the sale of the property no matter what? I have never seen this issue discussed. This may be that most liens placed and collected are for large amounts (tens of thousands of dollars) so the owner does not have the money to pay off the debt but what about the small fry stuff? Can my friend go to court, if it comes to that, lose and simply offer to pay the amount of the lien at that point?
in case anyone is wondering there is no clause in the contract about paying for the other sides legal fees so the only debt that can be collected in the lien is the remainder of the contract.
Liens and Encumbrances: Can Someone Explain to Me What Happens when a Lien is Foreclosed
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