5 On Your Side

Contractors' money woes could be homeowners' too

Posted January 6, 2011 6:03 p.m. EST
Updated January 6, 2011 7:08 p.m. EST

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.