Home improvement season is in full swing and while contractors hire subcontractors, a lot of homeowners are not aware that they can protect themselves from lien waiver.
Summer is the time of the year, where most homeowners turn toward their to-do-list and hire contractors to fix their homes, not knowing that it is not unusual that these general contractors hire subcontractors, who are specialized in certain trades.
Not knowing who is working on your house can bring up negative surprises, such as lien waivers. To avoid this, owners should participate in the process and go on Angies’s List to check out if these subcontractors are experienced and reputable, said Angie’s List founder Angie Hicks.
“If you’re doing a big project it’s important to talk to the general contractor about a lien waiver,” Hicks said. “That’s basically going to protect you against the contractor not paying the subcontractor because if the contractor doesn’t pay his subs, they could potentially put a lien against your property. “
Hicks suggests that you should always walk away from those contractors, who refuse to have a lien waiver, since it is mostly a red flag, which can save you a lot of trouble.
A nationwide Angie’s List poll found:
• When asked what aspects of the hiring process or contract were important – 10 percent of the respondent said lien waiver.
What is a lien waver?
If a home improvement contractor fails to pay his employees or fails to pay for the building materials used in the project, a lien can be placed on your property and you, the property owner, can be held liable for the unpaid expenses if a lien waiver was not established.
• To avoid unexpected fees or liens, homeowners should consider always including a lien waiver or lien waiver clause in the project's contract. With a lien waiver, when the project is successfully completed, both parties sign off and state that the contract obligations have been met, including the general contractor making all necessary payments to materials suppliers, subcontractors or vendors.
• If the general contractor doesn't agree to sign off on the lien waiver, you can withhold payment until he or she has proved they've paid their suppliers or subcontractors.
• One of the most essential things to know about liens and lien releases is how they're enforced in your area. Although the general principle is the same for most areas, each state or municipality has different standards for the application of liens and their releases.
Angie’s List Tips: Know your subcontractors
• Ask your general contractor for a list of subcontractors to be used on a project, and then check the subs out.
• Angie’s List recommends soliciting at least three bids, properly vetting contractors and subcontractors by checking references and verifying licensure (if applicable), bonding and insurance, and negotiating a detailed contract.
• Ask the contractor how long he/she has worked with the subcontractors. What is their experience working together?
• Insist on a lien waiver, which protects the homeowner from liability if the general contractor fails to pay the subcontractors.
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