How can a subcontractor put a lien on my house when I paid in full?

2 weeks ago

I had an new roof and gutters put on my house. It was an insurance claim through state farm. I signed a contract with Zone construction to do the work. Zone subcontracted the work and they got it done. Zone was then paid in full (by State Farm). Apparently Zone didn’t pay his subs and now they are coming after me for payment.

Chief Legal Officer Levelset

It can be confusing, but sometimes mechanics liens are allowed when the property owner (or his/her insurance) has paid for the work in full. Mechanics lien laws can be difficult to understand, especially  for people who don’t spend a lot of time dealing with construction payment and the remedies for nonpayment.

Mechanics liens aren’t a claim against the property owner or any individual party directly; a mechanics lien is an interest in the improved property itself. If the claimant meets certain specific requirements (notice, timing, service, form, etc.), a mechanics lien can be claimed by nearly any party who provides labor or material to a construction project – no matter who they contract with. This means that one of the most powerful aspects of mechanics liens is that a mechanics lien obligates the owner(through their property) – even when the owner does not have a contract with the lien claimant.

Some states, like Hawaii, only allow mechanics liens to the full extent that there is money owed to the claimant, whether or not the property owner has fully paid the GC, and the property owner can be forced to pay twice. These states are “full price” lien states. Other states are “unpaid balance” lien states in which mechanics liens are allowed only to the extent that the property owner still owes money to the GC pursuant to the direct contract.

Hawaii is a full-price lien state, so if a claimant is unpaid and the required rules and requirements are met, a lien may be claimed and enforced against the property owner even if they have fully paid their contract.

If forced to pay twice to satisfy liens claimed on the property, the property owner would have an action against the GC to recover that amount. Further, if a mechanics lien is claimed and an action to enforce the lien is initiated, which is part of the process of filing a lien in Hawaii, the non-paying contractor would be a necessary party to the enforcement action.

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