Ask the Contractor: Do not panic over 20-day lien notice
We started a remodeling project, and last week we already received a lien notice in the mail. How can a contractor file a lien on our property when we do not owe anything? How serious is this and how do we get it removed? Bart and Patty, Cottonwood, Arizona This information is not intended to be all inclusive of the law of mechanic liens in Arizona, but does contain some basic information.
First of all, do not panic. You received a “Preliminary 20-Day Notice” in the mail and this is not a lien; it is a notice that your general contractor has provided or will be providing goods and services to improve your property and could file a lien if he is not ultimately paid. If the general contractor is not paid, you may receive additional documents. This later document lien is called a “mechanic’s lien.” And if payment is not made to the contractor after receipt of these additional documents, the contractor or supplier could institute legal proceedings to foreclose on the lien.
But, that is way down the road. The “Preliminary 20-Day Notice” is not recorded and only allows the contractor to begin the process. There are very limited circumstances under which a subcontractor or a supplier is entitled to begin the lien process or assert a lien claim in court.
Mechanic’s lien law is at best complicated and confusing, and there are risks involved for homeowners. You can take steps to avoid these problems by preparing for the possibility of a lien and employing safeguards to protect you. A mechanic’s lien is a “hold” for a potential future claim against your property that, if unpaid, allows a foreclosure action, forcing the sale of your home to satisfy any project debts. A mechanic’s lien is a “cloud” on the title to the property that can affect the homeowner’s ability to borrow against, or sell the property as well.
Receipt of a 20-day notice allows you to track who has a potential claim against your property. Subcontractors and suppliers must provide you with this notice in order to maintain their right to file and pursue a lien. If they do not provide you with the notice, they lose the right to file a lien. A subcontractor or supplier can give you the 20-day notice before delivering supplies or starting work and up to 20 days after delivering supplies or starting work.
Keep track of any 20-day notices and make sure you are aware of who can file a lien against your property. Your best protection as a homeowner is to be certain you require and get from the contractor lien releases, both conditional and unconditional waiver and releases on progress payments and final payments. If you have questions you should contact your attorney.
My husband and I are interested in moving to Prescott and we called YCCA to see what the cost per square foot would be to build. Sandy gave us a fabulous answer and it made perfectly good sense to us. So thank you YCCA and we are looking to joining your fabulous community soon. Ed and Louise, St. Louis, MO. Here are the comments I share when someone calls about the square-foot cost to build. This is a very common question and one whose answer is based on the complexity inherit in the construction industry.
Square-foot pricing is a ratio of the total cost of the components for the project divided by the size of the livable portion of a house in most instances.
Since the components that make up a project can be so different from venture to venture it is impossible to predict a price per square foot with any accuracy. Defining the total cost of a projects components without first going through a design process, or at a minimum a detailed written project scope will most certainly lead to a level of speculation that could generate issues with a budget.
If you have decided to do a project, do it well. Form a budget, obtain qualified assistance from reputable contractors and determine if your goals and your budget mesh. Do not fall prey to the speculation of shopping square-foot pricing.
Remember to tune in to YCCA’s Hammer Time at 7 a.m. every Saturday and Sunday on KQNA 1130 AM, 99.FM, 95.5 FM or on the web at kqna.com. Listen to Sandy and Mike talk about the construction industry, meet your local community partners and so much more. It is a great way to start your day.