Generally, Yes, Property Owners Can Pay For The Same Services Twice
There are some states where the answer is no. In states like New Jersey and Virginia, for example, mechanics lien claims are only effective against the property owner to the extend the owner is holding contract funds at the time the lien is filed. The vast majority of states, however, do not follow this framework and hold property owners responsible for the entire value of a valid mechanics lien claim.
Generally speaking, therefore, a property owner may be forced to pay for the same services twice. It sounds harsh and does result in some unfortunate consumer stories and violations, but the mechanics lien laws are designed to protect the big picture construction markets, and property owners are charged with the duty of making sure that when they pay their contractors they take precautions to ensure all subcontractors and suppliers’ claims are satisfied.
But, Make Sure The Mechanics Lien Is Valid
Of course, this is only true if the mechanics lien claim is valid. The property owner does not have privity of contract with subcontractors and suppliers, and accordingly, it does not have any legal obligations to these parties unless the mechanics lien is filed. The mechanics lien is the instrument that creates the owner’s obligations to these parties.
Prior to paying these demands, therefore, property owners ought verify that the mechanics lien claim is valid.
This typically involves a check of two things: (1) Was the mechanics lien filed on time; and (2) Did the claimant preserve its right to file the mechanics lien by sending a required preliminary notice?
Owners Can Seek Reimbursement From The Contractor
Does the owner just get screwed here? What is the owner’s remedy?
The property owner is not left dead in the water if forced to pay a mechanics lien claim and pay for services twice, but they are not in good shape. The property owner’s remedy is to file a claim against their contractor to be reimbursed the amounts paid twice. The trouble here is not a legal one (the claims are there, and they are very good claims).
The problem is a practical one, as this situation usually only occurs when a contractor has misappropriated funds, is having financial problems, or is committing fraud. The value of a judgment against these parties is questionable. Some states have consumer protection funds available to property owners if they get burned by a contractor, but these states are in the minority and the fund always suffers from administrative and financial problems.