Mechanics Liens

Even if you pay your contractor in full, you stand the chance of having a lien put on your house — this nearly happened to us when we had a block fence installed. A mechanics lien can be put on your house if your contractor hires, but does not pay, a subcontractor. A lien of this type can hinder the sale of your home or cause you to have to sell your home to satisfy the lien holder. Always ask for a release of lien from every person and supplier who works on your project — get it in writing and keep it with your project paperwork.

Another way to protect yourself is to issue a two party check to your contractor and subcontractor or supplier. The contractor can’t cash it without a signature guarantee (kind of a notarized signature he obtains at his bank) of the subcontractor — which means that the subcontractor knows that the money has been paid for the job and has leverage to receive his payment.

To learn more ways to protect yourself during home improvement projects visit the Federal Trade Commission website http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro20.shtm