5 On Your Side

Contractors' money woes could be homeowners' too

Posted January 6, 2011

WRAL 5 On Your Side

It should be a simple process: hire a contractor, the contractor does the work and is paid. Agreement complete.

But that’s not always the case, and it happens more often than homeowners might realize, especially with the way the economy is right now.

The problem occurs when the contractor doesn’t pay its bills.

It happened to Beth Walker, who hired Marc McCormick, owner of M&J Electrical Plus, to add a room to her Fayetteville home this year.

She paid as work was completed but says the whole project was a struggle. It took a threat to call an attorney before he finally finished in October the job that was supposed to be complete in July.

Walker says she was relieved when the work was complete. But now she has a new issue.

After the project was complete, she received a letter in the mail, a claim of lien for $1,477, from a subcontractor who says McCormick never paid him.

“I think it's crazy. I mean, I paid $8,200, and I have to turn around and pay another $1,477 because he didn't pay his worker?” Walker said. “That's not fair.”

Construction attorney Nan Hannah says anyone who does work or provides supplies but does not get paid can file a lien against the homeowner’s property.

She recommends homeowners protect themselves by getting a list of subcontractors and make sure that they are getting paid.

“Ask questions. Stay informed. Know how the project is going,” she said. “Check as you're making each progress payment. ‘Who's getting paid? I saw that tub come. Where’d it come from?’”

Also, have the contractor sign a lien waiver, saying he paid everyone he should have. While a subcontractor can still file a lien, the waiver will at least help protect the homeowner if the matter goes to court.

The subcontractor who filed the lien did not return phone calls seeking comment, but Mark McCormick told 5 on Your Side that he did pay the subcontractor and will prove it in court.

Walker just wishes she had proof.

“I was diligent with my payments,” she said. “I pay everything in full, and then this happens. It's just not right.”

When a lien is placed on property and the homeowner doesn’t owe anything, he or she can pay that amount to the clerk of court. The money is held until there’s a resolution in the case.

Lien issues have to be resolved before a homeowner can sell a property or refinance it.


This story is closed for comments.

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  • FuckYouWRAL Jan 12, 2011

    This is a really stupid law...like a lot of others in NC.

  • map1agmachining Jan 11, 2011

    Blue Skye did this to my wife & I. They sub all license contactors out. So a plumber was doing some work and during the work he was fired by Blue-sky and then we got a letter from a lawyer for his lost wages when they didn't pay him. My lawyer said we were on the hook for it. The lien was the real deal. (538.00 )We paid it got taken care of, subtracted from the overall bill. I wouldn't hire Blue Skye again even if it was free, bad work!

  • itsnotmeiswear Jan 11, 2011

    The best thing to do is cut joint checks to the contractor and his suppliers. If they resist this measure, get another contractor. For less than $10 for a courthouse filing, you can also shift the notification burden back on the supplier. If this step is taken the suppliers lien will be quickly dismissed.

  • hmmmmm Jan 10, 2011

    This is just wrong! That law needs to be re-written to punish the contractor rather than the homeowner!

  • cocker_mom Jan 7, 2011

    sadly, it is going to get to the point where you'll have to get a list of the subs and confirm with each of them (in writing) that they have been paid.

    Could you require the GC to have some sort of performance bond that would protect you if he didn't pay the subs?

    I feel really badly for this homeowner.

  • mrsbowen Jan 7, 2011

    Seems that the lien could be placed against the assets of the contractor, rather than the innocent homeowner. Make it impossible for the corporation to borrow money until the lien is settled. That might be the answer.

  • SaveEnergyMan Jan 7, 2011

    Obviously this is a debate between the contractor and the sub. I assume that the sub is doing this because he can't get the contractor to pay him. This drags more people in and puts pressure on the contractor. I agree that the law should be written such that the contractor hiring and paying the subs should assume full liability, if he has been paid in full by the homeowner. This gets the homeowner off the hook. This needed to have been handled in small claims court between the two of them.

  • nonemeant Jan 7, 2011

    I have never understood the law that gives someone ownership rights to your property if they so happen to put a fence around it for a certain period of time. This is a messed up world.

  • sczarnecki Jan 7, 2011

    When work is completed on your home and contractor is paid.that is 100% his problem if he does not pay any one else.There is something very wrong with the law.Why does that happen to good people. Its ridiculous