How

IllinoisBankruptcy

I'm a homeowner and the general contractor on our new construction home filed for bankruptcy. Subcontractors are now asking us (the homeowners) for payment and some have either filed a mechanic's lien or plan to file a Notice of Intent to Lien against our property. We are either going to sell the unfinished project or will need mortgage financing at completion of the house. In either case, we need clean title and all liens removed. What are our options here? If work was legitimately done, should we pay these subcontractors in order to remove and/or avoid the liens? Or will this somehow muddy the waters with the bankruptcy proceedings?

1 reply

Jun 16, 2022

This is a very difficult situation. You will likely not be able to get financing with liens on the property in the circumstances you describe. Your options depend on whether 1) you received the proper payment documentation, 2) you paid the contractor for more work than was completed, and 3) your contractor made proper payments to subcontractors. If your payments did not exceed the completed work and the subs were paid according to the draws, you could be in good shape. In any case, you need to consult an attorney. Your problem cannot be solved in a question-answer app.

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