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Lien Law Tips

Owners can protect their property from liens by requesting the general contractor to furnish proof that all laborers, material men and suppliers have been paid.  Requiring the general contractor to furnish partial and final releases of lien to the owner will prevent those persons from placing liens on the owner’s property because of non-payment by the general contractor.  For each request for payment, the contractor should be required to issue a sworn certification to the owner which states:

No known construction supplier, subcontractor, or material men’s liens are outstanding at the date of this requisition, that all due and payable bills with respect to the work have been paid to date or are included in the current application, and, except for such bills not paid but so included, there is no known basis for the filing of any liens on the work, that such liens from all subcontractors, suppliers and material men have been obtained in such form as to constitute an effective waiver of the lien under the laws of the State in which the job was performed.

The forgoing provision should be included in each request for payment submitted by a contractor.  This certification will provide some assurance to the owner that potential lienors have been paid.

By the owner serving the lienor with a Demand For Sworn Statement of Account a lienor is required to provide a sworn statement as to :

  • the nature of labor and services performed
  • the nature of labor and services to be performed
  • a description of materials to be furnished
  • the amount paid on account to date
  • the amount due
  • the amount to become due

The failure of a lienor to respond in thirty (30) days after demand, or should the response be false, the lienor will be deprived of his lien rights.

Similarly, a lienor may request information and documents from the owner payment, direct with others for improvements to property.  Should the owner fail to respond in thirty (30) days, attorney’s fees will not be recoverable should the owner prevail against the lienor in a suit to foreclose a Claim of Lien.

When the contractor requests final payment, including retainer, a Final Contractors Affidavit lists all money due to potential lienors that have not been paid.  At that point, the owner may elect to demand in writing that the contractor pay the outstanding sums due or alternatively, pay the listed subcontractor a pro-rate portion within ten (10) days from the date that the owner serves the written demand for payment to the contractor.

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