You paid the contractor in full. Then a lumber supplier you’ve never heard of files a claim against your house. Here’s how that happens, and how to prevent it.
Licensing, permit, lien and tax rules vary by state and city and change over time. This guide is general information, not legal or tax advice; check with your local building department, state licensing board or a professional for your situation.
Checklist
- Unpaid subcontractors and suppliers may be able to place a lien on your home, even if you paid the general contractor.
- Get lien waivers from the contractor, and from subcontractors and suppliers, as payments are made.
- Conditional waivers take effect once payment clears; unconditional waivers apply immediately.
- Rules, notices and deadlines vary a lot by state.
A mechanic’s lien, sometimes called a construction lien, is a legal claim against a property by someone who supplied labor or materials and wasn’t paid. It can make selling or refinancing difficult, and in some cases can lead to a forced sale.
How you can end up paying twice
On most projects, the general contractor hires subcontractors and buys materials from suppliers. If you pay the general contractor but the contractor doesn’t pay them, those subcontractors and suppliers may have the right to file a lien against your home. The Federal Trade Commission warns homeowners about this risk and advises making sure subcontractors and suppliers have been paid before the final payment.
Lien waivers
A lien waiver, or lien release, is a signed document in which someone gives up the right to file a lien for work they’ve been paid for.
| Type | When it takes effect |
|---|---|
| Conditional waiver | Once the stated payment is actually received |
| Unconditional waiver | Immediately when signed, so use it only after payment has cleared |
How to protect yourself
- Ask who will work on the project and which suppliers will be used.
- Collect waivers with each payment, from the general contractor and, for larger amounts, from major subcontractors and suppliers.
- Consider joint checks, made out to both the contractor and a subcontractor or supplier, for large material purchases.
- Keep preliminary notices you receive, and confirm those companies are paid.
- Hold back the final payment until you have final waivers from everyone owed money.
Tip
Put the lien waiver requirement in your contract from the start, so asking for waivers is routine rather than awkward. Our contract checklist includes it.
State rules differ
Lien laws vary by state: who can file, which notices are required, deadlines and how liens are released. Your state’s consumer protection office or a real estate attorney can explain the rules where you live.
Records matter in any dispute, so keep every payment receipt and waiver; see when a contractor job goes wrong.
Homeowners ask
What is a preliminary notice?
In some states, subcontractors and suppliers must send the owner a notice early in the project to keep their lien rights. If you receive one, keep it and make sure that company is paid.
How do I find out if there’s a lien on my home?
Liens are usually recorded with the county recorder or clerk where the property is located. Many counties let you search records online.
Can a contractor file a lien over a dispute?
A contractor who claims to be unpaid may try. Lien laws set strict deadlines and procedures, so if a lien is filed against your home, get legal advice quickly.