I owe a supply company money for materials used on a job. We have fallen into a bad situation and I cannot pay all that I owe. Can the supply company file lien against my homeowner?
1 reply
Apr 12, 2019
Sorry to hear about your situation. The Indiana lien statute grants lien protection to a wide array of project participants, which includes suppliers to direct contractors and subs. Therefore, it is possible for a supplier to file a lien against the property. However, there are always preventative measures a contractor can take to try and avoid a lien being filed. It’s all about open communication. Reach out to the supplier. Inform them of the situation and express full intention of sending payment. Communicating upfront about potential payment issues is, unfortunately, a rarity. But at the end of the day, everyone wants to get paid what they’ve earned, and resorting to a lien claim still costs everyone time and money. There are many ways a contractor can find alternative means of payment; negotiate a payment plan, sign a promissory note, execute a lien waiver with a personal guaranty or some other sort of collateral, or even post-date a check. If they are willing to work something out, this is clearly a good option. Another avenue is to consult with the property owner. Owners hate mechanics liens, and will usually go through great lengths to avoid them. Maybe they are willing to advance payments or supplement costs to avoid a lien filing. Lastly, bonding off the contract (or lien if its filed) is an option as well. When a contract or lien is bonded off, it is substituting the property with a surety bond. But obtaining a bond to block potential liens can also be expensive. It’s important for contractors to perform their due diligence to determine if this is a viable option. Here are a few more resources that may help: (1) Indiana Mechanics Lien & Notice Overview, (2) Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien.