Home>Levelset Community>Legal Help>A contractor has caused and accepted responsibility for significant water damage to a number of condo units in a high rise building. The individual condo owners are skidish about signing paperwork that would hold them financially responsible. Some condo owners have flat out refused signing our service agreement with financial language in our service agreement. We have a service contract with the contractor responsible for the damage and whose general liability insurance will be paying for the damage. Should we stop work in the condo units in which the condo owners refused to sign our contract?
A contractor has caused and accepted responsibility for significant water damage to a number of condo units in a high rise building. The individual condo owners are skidish about signing paperwork that would hold them financially responsible. Some condo owners have flat out refused signing our service agreement with financial language in our service agreement. We have a service contract with the contractor responsible for the damage and whose general liability insurance will be paying for the damage. Should we stop work in the condo units in which the condo owners refused to sign our contract?
This is a continuation of a previous questions regarding 16 condo units. We appreciate the answer and speed at which it was answered initially. We just had a follow up question.
1 reply
Jan 31, 2019
Glad to see you back at the Construction Legal Center - even if it is under unfortunate circumstances. If I recall correctly, the last question related to preserving the right to lien when work will be done on multiple, individual condominium units as well as the common areas of that condominium. Referring to your new question - ultimately, it's up to each business to determine what best suits their needs. However, there are some things worth noting.
First, when there has been no payment dispute and there's been no indication that one might come up, it might be a little hasty to decide to stop work simply because the right to lien for some potential dispute down the line might not exist. This is especially true where payments will be made from a third party where there are a guaranteed amount of funds available to pay for the work.
Next, note that the previous answer provided that signing separate contracts with condominium owners was the safest way to proceed - the right to lien could still persist here, plus lien claims very rarely make it to a courtroom. So, potentially, (1) lien rights could be available, and (2) even if a filed lien claim might be considered invalid if it came under scrutiny - mechanics lien disputes are often resolved before some legal action is taken on the lien (either challenging the lien or enforcing it), and flawed lien claims, when made in good faith, typically don't result in the same liability that a fraudulent lien might cause. zlien discusses that idea in this article: Frivolous Mechanics Liens: Intentionally Fraudulent vs. Honest Mistakes
Further - as mentioned in the following article, where lien rights might not be present or might not be the preferable method of recovery, there are always other options available for recovery.
All of this is to say that while each construction business must assess their risk and create their own standards for approaching that risk, it might be worthwhile to take a holistic approach and to consider the totality of the factors at play. At the end of the day - each business must do what it feels is in its best interest.