The homeowner (our customer) we did general contracting for passed away, and the mortgage company took the insurance check for the customer's mortgage instead of paying us. Can they do that?
Oct 5, 2018
I'm sorry to hear about that. Regarding whether the mortgage company can take the insurance check that was supposed to cover repairs made to the home - that seems unlikely, but it's hard to say for sure without knowing more about the job, the contract, or other circumstances. However, regardless of whether a mortgage company is allowed to take a check earmarked for repairs, the party preforming work is still entitled to payment. Naturally, when payment is owed and unpaid, filing a lien claim is one of the best ways to compel payment. Before a lien filing, though, it might be a good idea to try and compel payment via a Notice of Intent to Lien, if possible. This document acts like a warning - it states that, if payment isn't made and made soon, a lien claim will be filed. You can read more about it here: What Is a Notice of Intent to Lien and Should You Send One? Anyway, as for filing against a mortgage company, I think there's a little misconception about mechanics liens here. When a mechanics lien is filed, it is not filed against any person or entity - the lien is filed against the property where work was performed. Thus, a lien filed against a property in the hands of a mortgage company is not technically filed "against" that mortgage company - it's filed against the property itself. The owner of the property is the one who has to deal with the lien claim, but it's worth noting that when an owner passes away, their property (very likely) will not pass directly to their mortgage company - instead, it would more likely pass to the heirs and successors of the property owner. But, regardless of whether the property is owned by an heir or has fallen into the hands of the mortgage company, a mechanics lien may likely be filed on the property, assuming any other requirements and deadlines have been met.