Can a mechanics lien be placed on a property I don't own?

Question

I was in the process of purchasing a for sale by owner home in TX and had looped in a contractor to assist with rehab. I signed a contract to allow him to get started on the home once we closed. Unfortunately, due to a few different circumstances, the target closing date was not met and the seller chose not to proceed with selling the home to me. The issue is that now, the contractor is threatening to sue me for a contract cancellation fee and and to place a lien on the property (that I didn't close on and no work was completed on).  From a legal perspective, does the contractor have a legitimate claim to damages on a job he never started? Also, Is there a way to ensure that the lien does not get placed? Thanks in advance

Greg H. · Answer

Not in this case since there was no work completed but it is possible.  If the contractor actually completed work they might have the ability to place a lien on the property under I believe the term is unjust enrichment

The contractor could possible go after you depending on the terms of the contract.  Moving forward, always make the agreement contingent upon closing on  the property or just wait until after closing

Lynn McGeein · Answer

I think it would depend on the terms of the contract you signed, especially if you agreed in writing to cancellation fees.  My brother once had to pay $3000 to a subcontractor he did not personally hire because the contractor he did hire and payed in full did not pay his subcontractor.  While my brother never signed a contract with the sub and actually had proof he paid the contractor in full, they still somehow got a lien filed against his house that for some reason he didn't know about until he went to sell a few years later.  He had to pay it in full to close on the sale. The original contractor had passed away so he couldn't recover any of it.

Zachary Inman · Answer

Did you sign a contract? If there's a cancellation fee in there, then you could be liable for that.

Putting a lien on a property you don't own makes zero sense if you're the "target," and wouldn't hold up in court if he didn't do any work. I'm not a lawyer... but I wouldn't be concerned about that coming back for you. He's just barking.