I am a General Contractor and a customer of mine will not pay the final expenses which include $13,000 to sub contractors and $25,000 to me as my final payment for building their home. They have not refinanced their existing construction loan into a conventional home loan yet. Can i place a lien on their contruction loan to keep them from getting a conventional home loan until they pay what is due.
2006-10-12 16:17:15 · 7 answers · asked by Kevin M 1 in Business & Finance ➔ Renting & Real Estate
Of course you may...by the time they want to sell or refi, they have to pay you more to take your name out...go for it...
2006-10-12 16:47:23 · answer #1 · answered by Mimi 4 · 0⤊ 0⤋
If you have not signed a lien waiver you can file a Mechanics Lien against the property. You just need to find the correct form for your state and go to the County Recorders Office (of the county that the property is located in) and pay a recording fee. I live in MN and it's $46 to record a Document and I know in WI it's $11 for the first page and $1 for each page after. The contractor will have to pay the lien off before selling the property. No lender will finance a home with a lien on it. If it doesn't sell for over 1 year you will need to file an extension on it though. At least that is the way it is in MN. If nothing happens to the lien for 1 year, it falls off the property. Whatever you do, DO NOT sign a lien waiver without being paid!!!!
2006-10-12 16:47:53 · answer #2 · answered by OggieHun 1 · 1⤊ 0⤋
You do not place the lien on the construction loan, you place the lien on the PROPERTY. File a LIEN against the property for the amount due to you and the subcontractors. You can get the correct form from Bradford Forms .. here is an example (this one is for Colorado..look for one for your state or a general form):
http://www.bradfordpublishing.com/pages-document_product_info/product-297/statement-of-lien-with-notice-of-intent-to-file-a-downloadable-pdf.html
Also if you know who the construction loan is with send them a certified letter informing them of the fact that there is an existing amount due on the property for labor and materials that has not been paid. Although they cannot pay you without the owner authorizing the payment they WILL HAVE TO pay attention to the lien on the property if they are the ones who will refinance the construction loan into a regular loan and if they are not the ones doing it the may be obliged to inform the new lender of the fact that there are outstanding charges that have not been paid.. BE PREPARED TO DOCUMENT EVERYTHING in case these charges are disputed..
Good luck!
2006-10-12 17:05:11 · answer #3 · answered by MeInUSA 5 · 0⤊ 0⤋
You would actually be placing a lien on the house, but that would make it almost impossible for a lender to close on a permanent loan. I assume you have not signed a lien waiver form. In most states you will file as a mechanics lien, a statutory lien that does not require getting a judgment of default first. Act fast so that no one else gets there before you do.
2006-10-12 16:23:49 · answer #4 · answered by David W 4 · 1⤊ 0⤋
Doesn't the funds/draws on the construction loan come directly from the bank to you ? I would try contacting the company who financed the construction loan and tell them of your intentions. Chances are that bank will not want you putting a lien on the property and maybe they can do something to assist..
2006-10-12 16:23:17 · answer #5 · answered by bellagirlinchicago 2 · 0⤊ 0⤋
More probably than not, they do not have the money to finish paying you, and probably need to cash-out refinance. Placing a lien on their house will restrict them from getting the loan. I would talk to them in person (i.e. visit them) and ask them why they aren't paying; and use the lien as a last resort threat; but if you use that threat, you're going to have to tell them that a lien on the property will not allow them to sell the house or refinance, and ruin their credit, and will cause three times as much money to fix...
2006-10-12 17:27:09 · answer #6 · answered by Duuuude no waaaay! 2 · 1⤊ 0⤋
This is why most banks will not finance owner/builder transactions. With a General Contractor overseeing the construction the job will most likely be fininshed on schedule. Of course they have options, they can always call the outstanding balance due and payable within 30 days and foreclose if it is not paid.
2016-03-28 07:05:49 · answer #7 · answered by Anonymous · 0⤊ 0⤋
You have a contract. Failure to deliver entitles you to court action, and give you the option of straight up repossession of property.
2006-10-12 16:21:13 · answer #8 · answered by Isaac C 2 · 1⤊ 0⤋