Liens

It is important to understand the ins and outs of financing when dealing with contractors. A lien is a contractor’s claim to your property and something you don’t want, so read below on how to avoid it.

What is a lien?

A lien is a claim (a right of a creditor over a debtor) against an asset (item of economic value – your home), which is used to secure a loan and must be paid when the property is sold.

The Mechanic’s Lien Law

When a contractor (or supplier) supplies labor or materials for the construction of improvements on real estate, the Mechanic’s Lien Law gives the contractor a security interest in the real estate.

A person who performs labor or furnishes material with a value of $500 or more to be used in the construction, alteration or repair of your home has a lien upon the property in the event of an unpaid balance in the agreed upon amount or fair market value. As part of the disclosure prior to signing a contract, the contractor must inform the homeowner of the lien rights of labor, suppliers and subcontractors. Any person not paid for labor or materials furnished for a home improvement project may obtain a lien against the homeowner’s property.

Request a contractor’s Affidavit of Final Release be provided to you at the time you make final payment and a final waiver of mechanic’s lien. This is your assurance that you will not be liable for any third-party claims for nonpayment of materials or subcontractors.

Required Disclosures

There are things that you must tell your contractor. When you enter into a contract, there are certain disclosures that your contractor must provide to you in writing. Disclosures must be provided by General contractors, Residential contractors, and Swimming Pool and Spa contractors.

Kathleen Shippen  Home Connect America, Real Estate, Las Vegas, NV