If you’re planning a remodel on your home, you may have heard the term “mechanic’s lien”.  If you haven’t, then it’s time you did.

A mechanic’s lien is a hold against your property that provides contractors and suppliers legal recourse to assure payment for services.  So, if a job wraps up but your contractor feels they’re owed for time or material, they may file a claim of mechanic’s lien in your county.

The liens vary from state to state and allow for a cloud on the title of your property and foreclosure action.  Also, if you paid the contractor, but he failed to pay the subcontractors and laborers – who do not have a contract with you – then the workers may file a mechanic’s lien on your home.

This could result in a double payment by you for the same job.  Sounds pretty terrible, right?  Don’t worry.  You can protect yourself from unwarranted liens by selecting your contractor carefully and managing your construction project responsibly.  Look over your paperwork, make sure each cost is outlined clearly and paid on time.

Also, most construction lenders will specify a payment distribution process that involves the securing of lien waivers.  The remodeling contract should address this as well, assuring that the general contractor is responsible for all payments, as well as any costs required to remedy lien disputes that may arise.