A Mechanics Lien? Lock down your bids in a contract!

I want to talk adownloadbout Mechanics Liens. This quick tip will ultimately save you thousands, and thousands, and thousands of dollars. This is something I have started putting to work in my own business and I know it has helped me.

Okay, so, during a rehab, your GC hires a Subcontractor who generally will give you a bid to do the work. They are supposed to keep that bill within reason of that bid. Now, we had a situation in which the bill that I got was significantly different from the bid I had initially received. The tricky part apart about handling this situation had to do with how the Subcontractor felt about our questioning the bill. We thought the bill was wrong and inaccurate.

Now, what that Subcontractor can do is get a Mechanics Lien against your company if you refuse to pay the high bill. So, they now have a lien on the property for the amount they feel they are still owed. Attorneys, then, have to get involved. Court dates are filed. Mediation. Arguments. And the Contractor’s Board has to become involved. It’s a big mess and it costs a ton of money.

So, what can we do? We now have a document that we have every single Subcontractor sign. It’s a simple document that signs they are waving their right to Mechanics Lien and they have to keep their bill like that of the Bid. Also, the only way they can bill us for more, is if they have a signed changed order approved by the GC or the owner. I suggest every REI renovator have a similar document drafted up by their attorney. Like I said, it will save tons of money and keep your projects from being stalled.


Author: Dan

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