What is a property lien?

A property lien is a notice on a property from a creditor claiming the owner of the property owes them money.

If you are the buyer of a house and a title search is not done, or not done correctly, you could end up buying a house with a lien on it. Thus, taking on the previous owner’s debt as your own. Depending on the amount, this could bankrupt the buyer. A “Notice to Owner” means the property is at risk for a lien. The property could go into foreclosure and be sold without the owner’s consent.

Hiring a contractor could result in a lien

Let’s say you pay a contractor to remodel your bathroom. They finish the job, but he fails to pay the one of the subcontractors, sub-subcontractors, or material suppliers. The company can place a lien against your home, even though you paid the contractor. In Florida, there is almost no defense against this. The best way to protect yourself from this is through preventative measures.

In the written agreement with the contractor, you may want to stipulate that they must give you a “written release from lien.” If you have received a “Notice to Owner,” you should contact an attorney immediately.

Always hire licensed Florida contractors

Contracts and Lien Laws
Attorney Francis Boyer spoke at the Florida Groundwater Association’s Annual Conference in 2014 about contracts and lien laws for contractors and subcontractors.

Protect your investment and always ask the contractor for their license number and insurance. Unlicensed contractors typically do not have the education or qualification required, and may deliver poor quality work with non-compliance with building codes.  Additionally, this could leave the property owner on the hook to finish the project, even if they already paid.

Beware of scams in the construction and home improvement industries. Additionally, make sure the terms of the contract include an actual and enforceable delivery time of the project.  Furthermore, you may want to include a penalty for non-compliance.

 

Related reading:

3 Reasons to Consult an Attorney for Florida Commercial Rentals

Commercial Real Estate Transactions: Tips to Prevent Disputes

 

 

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