subcontractor payment reciept?

skatermomJuly 12, 2011

Hi

We are just finishing a project that has gone so-so with our contractor. While I find him to be pretty honest, there have a been a few things about the project that haven't set very well with me, quality of work, communication, length of time on project, etc.

We are just getting ready to do the final punchlist and I am wondering, if I should require him to give me lien release documents from the 3 subs that he hired to do the job. The project was about 25k in labor and I think the subs probably account for 60% of that payment.

Writing this now, the answer seems very clear that of course I do need to do that, but I hadn't asked for those in previous poejcts from this contractor, but then again they were smaller projects.

How can I approach this kindly and professionally with my contractor without putting him on the defense and is it too much to expect the lein waiver prior given to me at the time of the final payment?

thanks so much!

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brianadarnell

Skatermom,

Did you have an agreed upon rate for overhead, etc? Were you cost plus? If not, I think you can ask for this but I would be surprised if he would be willing to give it to you. He shouldn't be- if he is being honest, but he might not be willing to fill you in on how much he is making on the project if you aren't 100% satisfied. Let us know how this plays out. It brings up a good point about my project...hmmm.

    Bookmark   July 12, 2011 at 1:16PM
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marcolo

What?? A lien waiver isn't a receipt, and of course you can, excuse me, need to ask for it.

Simply give him a matter-of-fact FYI ahead of time: Let's figure out what date we'll do the final payment, I have to transfer money at the bank, and please don't forget the lien waivers from the subs, you want me to bring donuts?

    Bookmark   July 12, 2011 at 6:48PM
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brianadarnell

Marcolo is right. Of course he needs to provide these. I should have clarified my post which was answering your post subject about the amounts he paid the individual subs...oops! sorry for the confusion!

    Bookmark   July 12, 2011 at 7:07PM
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skatermom

thanks so much for your replies, and sorry about the post title. I def. need to do this , just need to get some guts!

My husband is in sales, so he will coach me on my wording, and I love your wording, Marcolo!

I paid for all the "hard" stuff: cabinets, fixtures, flooring, etc. I owe him for the labor plus incidentals like paint, drywall, trim, etc.

This is our 3rd project with him, and so I know him well, but he has def. slacked off as well as hired most of the components out. I would not use him again. My guess is he is over his head in projects, so i am seeing the results.

In the grand scheme of things, 25k isnt a total and complete life ruiner, but I def. don't want to pay any of it twice.

I think I just need to, excuse the phrase, "man up" and be straight forward which is sometimes tricky if you are the lady b/c you dont want to come off sounding like you are a you know what. :)

Thanks for the advice and hopefully this message reminds a few others out there to get those waivers! :)

    Bookmark   July 13, 2011 at 8:58PM
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WhiteRiverSooner

Definitely get the lien wavers. I get them from my contracter each time I give him a check.

Before my final payment, I will check with each major contractor to make sure they have been paid and get a final lien waver.

Don't be shy, and check your bills and question anything you don't understand. I have found mistakes.

This is business. He should be a businessman and understand.

    Bookmark   July 13, 2011 at 10:03PM
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cloud_swift

We intend to ask for lien releases on all large jobs in the future. We hired a reputable company to redo our roof. BBB members, clean license, no complaints, etc. They did a great job on our roof. They spotted that some of the roofing material wasn't quite right (something we wouldn't have noticed), handled getting the replacement material and redoing that area. It was as perfect an experience as could be.

My DH asked for the lien release from the supplier before paying the final bill. He was given something and didn't realize it wasn't the correct form (we hadn't asked for one before). About a month after the job was done and paid for, we got the first notice from the supplier that they were preparing to file a lien as they hadn't been paid.

The roofing company's story was that they had had some other customers that had gotten into financial difficulty and hadn't paid for their jobs so they had used our money to pay for material on earlier jobs. We checked with the contractor's board and that's not proper. We ended up filing a complaint with the contractor's board. The roofer did pay up, but he waited until the last moment before the supplier was going to take further action (sorry - I don't remember what the next step was).

We have a big one story house with wide eaves and a covered entry patio - the bill wasn't 25K but it was more than 10K. We could have swung it without hardship but we didn't want to pay it twice either and the situation was really stressful to my husband.

Which reminds me that perhaps we should mention to the contractor that we are about to hire that we will be asking for a lien releases. He has done small jobs for us before where the amounts were too little to worry about.

    Bookmark   July 13, 2011 at 10:09PM
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doggonegardener

Lien waiver, lien waiver, lien waver. Say it with me...lien waver. It's simple and he should do them. You should not feel badly for asking for them. It's business.

    Bookmark   July 13, 2011 at 11:30PM
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breezygirl

Alright. I'm stupid. Explain a lien waiver to me. Like a 2nd grader. ;)

    Bookmark   July 14, 2011 at 3:29AM
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brianadarnell

Breezy- this won't affect you nearly as much as some of us who have someone handling our projects for us. Since you are the GC, you will KNOW that your subs have been paid and therefore won't be worried about them filing a lien on your property. You should probably still ask for this (never hurts).

I plan on asking for these before we give our builder his final draw because if I didn't and someone hadn't been paid, they would file a lien on my property and I wouldn't have any money to pay them since I would have already been the GC in full.

    Bookmark   July 14, 2011 at 7:31AM
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jgs7691

Breezy -- they're talking about mechanics' liens or materialmen's liens, which is essentially a legal burden placed on a property by a contractor or sub who claims to have provided materials/labor (that are essentially now a part of the real estate's value)and haven't been paid. The lien attaches to the real property (home) in question and has to be discharged, satisfied, or dismissed at some point.

Laws vary greatly from state to state, including the proper procedure for enforceable lien waivers, but it's always a good idea to get lien waivers from GC and subs (and asking GC to certify all subs/suppliers paid).

HTH - "jgs7691, Esq."

    Bookmark   July 14, 2011 at 12:49PM
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shimmerstorm

It's a great idea to request lien waivers - whether he's obliged to give them to you is less clear to me.
Check the laws in your area on liens and holdbacks. Did you keep a holdback? In our jurisdiction, the holdback is essentially for the protection of the subtrades, and ideally protects the homeowner from paying twice. Normally you don't pay out the holdback until the possible lien periods are expired (so many days after completion). I think if you were being asked to pay the full bill, including holdback, before the period you are required to hold it, you can insist on lien waivers (but you may still be at risk).
HTH.

    Bookmark   July 14, 2011 at 1:54PM
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celtinNE

skatermom, I sounds like you should...in marcolo's words.

Don't mean to hijack here...

Breezy, we are both GCing. I have every sub sign a paid in full on their receipt, with their signature and the date, check # etc. That said, I am purchasing all materials, DIYing what I can, and am only hiring subbing out the labor. I did talk with an attorney in my state though, and every state is different. Better safe...

    Bookmark   July 14, 2011 at 4:06PM
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gggirl

Call out to skatermom, is this boeh? I used your advise and am getting a bid from him. Please let me know, I have other options. thanks

    Bookmark   October 5, 2012 at 3:51PM
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weedmeister

Waiver of Mechanics Lien. It indicates that the vendor/contractor has been paid and will not sue you to collect more money.

    Bookmark   October 5, 2012 at 4:45PM
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abbeys

Hi Skatermom,

I just wanted to put in my $.02 that you should definitely get the lein releases from the GC's subs. As Cloud Swift said, you can be liened by subs, even if you paid the GC for their work. They usually have a period of time after the work is completed in which to file a lien. There is also a form you can use to be released by the GC at the time of your final payment to him/her. I would definitely hold back some money until you get the signed forms. It doesn't cost the GC anything to get the forms, it's just an extra hassle. (unless, of course, they haven't paid their subs...)

In a lot of commercial projects the owners won't make a final payment until the lien period has expired (which I think is 60 days after completion). This is normal, accepted business practice.

Unfortunately, in this economy some contractors have cash-flow problems and use money from Job A to start work on Job B, leaving Job A subs unpaid. The lien releases will protect you from this. Ideally, it would be written into your contract, but even if it isn't, you should ask for it.

Good Luck!

    Bookmark   October 5, 2012 at 7:06PM
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phiwwy

Yes, get a lien waver from GC for all sub payments. He should not object (unless he hasn't or doesn't intend to pay them). YOU provide the form to him, not the other way around.

Make clear to yourself that you are not requiring a signature on a lien waver to uncover what subs have been paid (it's water under the bridge at this point anyway). only to obtain signoff that they have been paid in full. email me if you need a form.

I am GC'ing and am not requiring - but the sub I've kept on from the original contractor - you bet I'm going to get a lien waver.

    Bookmark   October 5, 2012 at 11:34PM
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annkathryn

It looks like the law changed and some of the forms have been modified slightly in California as of July 2012. Here's a link to the updated forms I found online.

Here is a link that might be useful: Lien Wavers for California

    Bookmark   October 6, 2012 at 3:24AM
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mountaineergirl

We are just getting started on a $75K remodel, due to water damage. The checks from the insurance has our name as well as the mortgager's name. In the paperwork required by the mortgager was a lien waver that stated "no funds will be dispersed until signed form is returned" what? Well my GC balked at this, because if he signed before work started (or was completed) the bank could keep the money and him not get paid. He said he'd heard of that happening to someone. He wanted to wait until the end, which I thought was fair. I called the mortgage co and they agreed to wait until the end of the project, but withhold the final payment until after said form was received. I was just wondering if anyone had heard of contractors signing the waivers before they had been paid anything??

I thought it strange that the mortgage co didn't put up a fight about it. Why have such a strongly worded sentence (it was in bold caps) and then say "oh no problem, he can wait until the end to sign it" ??

    Bookmark   October 7, 2012 at 7:57AM
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phiwwy

There is a version of a lien waver I've seen, that is worded for progress payments.

Would come into play if, say, he got 1/3 of the payments then walked, and claimed he'd not been paid for all the work he had completed, and sought to file a lien.

    Bookmark   October 7, 2012 at 8:05AM
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millworkman

progress paymets and progress lien releases are made ad used all the time.

    Bookmark   October 7, 2012 at 8:35AM
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PRO
Rachiele, LLC

I would check your local laws. In our area, a vendor must send a "notice to owner" form in order to place a lien. I am going from memory, as I have not been involved in construction for many years. A call to your local building department should have answers for you.

    Bookmark   October 7, 2012 at 6:51PM
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