Lien Waivers from Contractors and Subcontractors

[Christopher Andrews]

2nd post today about this rental.  What an education!

Huge reno on a gutted house I bought this past Dec.  Hired a licensed home builder general contractor to pull the permits and reno the property.  He hired a crummy electrician.  This guy has caused numerous delays, and has been a headache from the start.  Shouldn't be my problem; that's why I hired a GC...  

Anyway, now there's a dispute between my GC and his sub over about $300 in scope.  The electrician sent me a text over the weekend telling me he's going to go file a lien on my property today.  I don't know whether he did, was bluffing, or will soon.  Seems unlikely as I understand even after he files the lien, he still has to litigate it to get a judgment or something.  

Trying to figure out how best to protect myself. It's in my contract with my GC that I will require a lien waiver before final payment, contigent upon final payment.  Can I require him to secure and provide one to me from his sub now that his sub is threatening the lien?  Anyone out there had to deal with this before?

[Chris K.]

@Christopher Andrews

Lien laws vary by state. So it would be helpful for the BP Community if you explain where this property is located.

But as a general rule, you have the right idea. In the larger construction world, the GC and the Owner would request a lien waiver for every payment. That probably won't happen in the smaller construction world due to smaller contractors struggling to deal with paperwork. 

Also in the larger construction world, there is this whole process called a "closeout." It's basically where the GC and the Subs need to provide all the required documentation (e.g. lien waivers, warranties, manuals, as-builts, etc.) before releasing the final retention payment. I have no idea what contract you have with the GC. But it may say something about it. 

On a final note, I would just note that the amount in dispute is $300. If you cannot find an amicable solution (and if your project went mostly smoothly), I would just pay the $300 and call it a day. Probably not worth the trouble of getting involved in it any further. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.