How to prevent your property from a "Construction Lien"

Any time, you as an owner or property manager, have construction or maintenance work performed on your property, you have the risk of a lien being placed on the property, even if you have paid your contractor.

If you ever receive a "20 Day Preliminary Lien Notice"  after you have contracted work to be done on your property, you need to know the process to assure no legal action will take place on your property. This notice will come from your contractor, subcontractors, material suppliers, or any other party to the project, and will give them the right to lien your property if they are not paid for their services. Even if you have paid your contractor in full and they have not paid their supplier, if the supplier sent you a 20 day notice, they can file a lien on your property.

Once you have received a preliminary notice, you will want to make sure the necessary steps are taken prior to any payments being made to your contractor. The lien process can be complicated, but following the tips below will help eliminate the chance of a lien happening on your next project.

Here are some helpful tips to use if you receive a "20  Day Preliminary Lien Notice":

• Notify your accounts payable" department or your contract administrator that a preliminary lien notice has been received  and that no payments will be issued until all proper documents have been provided by the contractor.

• Make sure the contractor provides you with an "Unconditional Lien Release" waiver from all parties that sent you a 20 Day Preliminary Notice prior to issuing payments.

• If the contractor cannot provide the unconditional lien release from their vendors, they must provide a "Conditional Lien Release" waiver showing the amounts owed to them. If this is the case, a "Joint Check" will need to be made out to the contractor and their vendor. After payment has been deposited and cleared, request that an 'Unconditional Lien Release" be provided from the contractors vendor.

• If only your contractor filed a preliminary notice, request a "Conditional Lien Release"  with the amount owed, then release payment for that amount, and request an "Unconditional Lien Release"  after the payment has been deposited and cleared.

• If your project is ongoing, you will want your contractor to use the progress payment waivers until the project is 100% complete. Click onto the following link for more information and sample forms:

           http://www.sjhousing.org/program/homerepair/lien.pdf


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-ON-SITE Commercial Services Team