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How can a subcontractor put a lien on my house when I paid in full.

I had a new roof and gutters put on my house. It was an insurance claim with State Farm. I signed a contract with Zone construction to do the work. Zone then subcontracted the work and they got it done. Zone was then paid in full (by State Farm). Apparently Zone then failed to pay his subs and now they are coming after me for money.

2 replies

Oct 1, 2019

It can be confusing, but sometimes mechanics liens are allowed when the property owner (or his/her insurance) has paid for the work in full. Mechanics lien laws can be difficult to understand, especially for people who don’t spend a lot of time dealing with construction payment and the remedies for nonpayment. Mechanics liens aren't a claim against the property owner or any individual party directly; a mechanics lien is an interest in the improved property itself. If the claimant meets certain specific requirements (notice, timing, service, form, etc.), a mechanics lien can be claimed by nearly any party who provides labor or material to a construction project - no matter who they contract with. This means that one of the most powerful aspects of mechanics liens is that a mechanics lien obligates the owner(through their property) – even when the owner does not have a contract with the lien claimant. Some states, like Illinois, generally only allow mechanics liens to the extent that there is still money owed by the property owner to the direct contractor. These states are “unpaid balance” lien states. Other states are “full price” lien states in which mechanics liens are allowed to the full extent a party remains unpaid, and a property owner may be forced to pay twice for the same work. Illinois is an unpaid balance lien state, but in actuality it's more like a hybrid. As discussed in more depth in this informative article, Illinois's unpaid balance rule only applies if the property owner qualifies for that protection by specifically requesting and receiving a “sworn statement” from the general contractor before making payments. If the owner does this, the owner will be protected against paying twice pursuant to a mechanics lien claim. If the sworn statement regarding the identity of subcontractors and suppliers is not requested and received prior to payment, Illinois acts more like a "full price" lien state, and the owner can be obligated to "pay twice" for the same work. In that type of situation, it has been determined that the property owner is best able to control the flow of funds to the project, and ensure payment of all parties. If forced to pay twice to satisfy liens claimed on the property, the property owner would have an action against the GC to recover that amount. Further, if a mechanics lien is claimed and an action to enforce the lien is initiated, the non-paying contractor would be a necessary party to the enforcement action. fnnfnn

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Aug 17, 2022

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