What happens if the subcontractors do not get paid? The statute says that if the homeowner paid the contractor and the contractor does not pay the subs, that is a felony…and the homeowner may find a lien on his house. To help avoid a contract outlaw and a lien on your house, ask for these documents:
Notice of Commencement – A statutory form that notes the intent to begin improvements, the location of the property, and description of the work and the amount of bond (if any) filed before the start of construction or remodeling. The Notice of Commencement is recorded and a copy is posted at the construction site.
Written list of all subcontractors and suppliers who have a contract with the contractor to provide services or materials to your property. Request this from your contractor via certified or registered mail.
Release of Lien – Written statement that removes the homeowner’s property from the threat of lien – get this from the suppliers and subcontractors before you make any payment. If the contract calls for partial payments before the work is completed, get a Partial Release of Lien that covers services and supplies used up to that point.
We want the contractor to get paid; that is important for society. It is also important for the subcontractors to get paid—those who provide services or materials to the contractor, but do not have a contract with the homeowner. If you paid your contractor in full and he does not pay his subcontractors, those subs could file a lien against your property to enforce their claim for payment.
Construction Lien Law is complex. Seek competent legal counsel to discuss specific situations.