Did you know that choosing the wrong roofing contractor for your home can lead to something much worse than a poor roofing job? The sad truth is that you could actually lose your home if the contractor is negligent in paying for his or her expenses. When this happens, you could receive a notice of lien and your home could be auctioned to pay for the expenses that the contractor failed to pay.
What is a lien of property and how does it work?
Okay, this can all get a bit confusing, but basically, if your contractor takes a line of credit for the roofing material or hires a sub-contractor to deliver the materials, and the contractor doesn’t pay for the materials or the services rendered, the company that the contractor failed to pay can place a lien on your home.
In many cases, the contractor working on your home can actually use your home as collateral on the things that he or she is financing for the project. So, you pay the contractor, the contractor doesn’t pay the bills and a lien is placed on your home until payment is received. If payment is not made, your home can be auctioned to cover the expenses.
What do you do when a lien is placed on your home?
Your best course of action is to contact an attorney to file a dispute to the lien. The attorney will attempt to force the contractor to pay the debt that is owed. Your only other option is to pay the debt to the company that has placed the lien on your property.
Failure to do anything could lead to your home being sold to cover the debt.
What can you do to protect yourself from contractor liens on your home?
There are three ways to protect yourself from this action:
- Designate a checking account to be shared with the roofing contractor working on your home. Instead of paying the full amount up front, the contractor can withdraw funds as they are needed. This gives you the ability to monitor how the money is being spent and how much is left in the account.
- Include a required receipt clause in your contract with the roofing contractor. This will force the contractor to show proof of payment for any service or materials that are bought.
- Include a contractor financial responsibility clause in the contract. This clause will force the contractor to accept responsibility for everything that has been financed for the project, meaning, your home cannot be used as collateral for his or her purchases or financing.
Knowing the risk of contractor liens can help you avoid this terrible situation. Work with your contractor, and maybe an attorney like Robert J Willis, Attorney at Law to draw up a contract to protect yourself from loss during your roofing repairs.