Monday, July 27, 2009
Think Your Subcontractors Have Been Paid? - By Jeannette Rivera-Lyles
The economic downturn can be an opportune time to get home-improvement deals.
You might be able to finally afford the sun room you've always wanted. Or maybe your dream kitchen is now within reach. But before you cover the furniture with dropcloths, you should take steps to protect your wallet.
In Florida, you can find yourself in court with subcontractors who worked on your house angry that they're still owed money for the work they performed. Florida law can hold homeowners liable for money owed to subcontractors or to material suppliers even if an invoice from the contractor has been paid in full.
Unpaid parties have the right to enforce their claims for payment by filing a lien against the property on which they did their work. And if a homeowner hasn't taken the proper precautions, that lien could be only the beginning of a legal nightmare.
"It is possible to pay a contractor in full, be sued and have to pay again," said Winter Park business attorney Frank Pohl of the law firm Pohl & Short.
Consumers often don't realize that hiring a contractor or project manager doesn't relieve them of their legal responsibility to monitor payments to subs.
"Problems creep up when people think that they can hire a contractor and close their eyes," said David Lenox, a real-estate attorney with Orlando's Greenspoon & Marder. "It is still your obligation as an owner to ensure everybody involved is being paid."
The process can be tedious and lengthy, but it doesn't have to be complicated, Pohl said.
"When the consumer is negotiating with the contractor, one of the first things he or she should do is to get a schedule of payments that is tied to the percentage of work being done," Pohl said. "For instance, you pay 20 percent of the cost of the job when that 20 percent is completed."
When a payment is made under such a schedule, the homeowner should get a partial release of lien from their contractor - a legal document certifying that all workers, subcontractors and materials have been covered. The document needs to be signed by those parties.
The attorneys also recommended not issuing the last payment until the contractor has signed an affidavit certifying that final payments have been made to everyone involved in the project.
"Keep a file with all of these documents," Lenox said. "The key here is to protect yourself up front."
To protect yourself from liens:
- Request from the contractor, via certified or registered mail, a list of all subcontractors and suppliers who have a contract with the contractor to provide services or materials to your property. Know who they are and be in periodic contact with them.
- Obtain a partial release of lien when you make any payments through the duration of the project. This is a waiver signed by the contractor and subcontractors removing your property from the threat of lien arising from work performed up to that point.
- Before you make the last payment, obtain an affidavit from the contractor that specifies all unpaid parties who performed labor, services or provided materials to your property. Make sure your contractor obtains releases from these parties before you make the final payment.
SOURCES: Florida Department of Business and Professional Regulation and attorney Frank Pohl
- File a notice of commencement before beginning any construction or remodeling. Whoever issues building permits is required to provide this form, which is recorded with the clerk of Circuit Court. Many liens are filed with incorrect information. The court is more likely to throw them out on a technicality if this notice has been filed.
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