What is my liability, if any?

3 weeks ago

We paid a contractor on time for concrete work according to our contract. We then find out from the concrete supplier he had not been paid for the concrete – checks bounced. He had worked with the contractor many times and this was the first time he supplied the contractor on credit. As the owner of the property/home, am I at any liability from the supplier? The entire job was 35-40K, the supplier was due over 10K for concrete.

Senior Legal Associate Levelset

In terms of contractual liability, an owner isn’t required to pay a supplier simply because their contractor failed to pay them what they’re owed. But, on a Louisiana construction project, a subcontractor or supplier may still be entitled to file a mechanics lien even where the owner has paid their contractor in full.

In other words, it’s entirely possible that an owner may have to pay twice for work performed in order to free their property title from a lien claim. Mechanics liens are regularly used by subs and suppliers in the construction industry during payment disputes, and they’re a direct threat to the owner’s property title, so the potential for lien shouldn’t be taken lightly. Though, that doesn’t mean a contractor is off the hook for failing to pay their subs or suppliers.

Let’s look at some considerations for lien claims, since that’s the most common way an owner will be affected by their contractor’s debts.

Did the contractor provide a “Notice of Lien Rights?” If not, they may be liable to the owner for damages and fees

On residential construction projects, a contractor must provide a “Notice of Lien Rights” which spells things out for an owner, informing them that others on the job may be entitled to lien rights. In fact, section (3) of that form explicitly warns that a sub or supplier may file a lien against the property even where the contractor is paid in full. The notice is regularly featured as a part of the agreement, but sometimes given separately.

Very importantly, if the owner was never given the Notice of Lien Rights document, and if a lien is later filed by a subcontractor or supplier to the contractor, then the contractor would end up being responsible for damages and attorney fees incurred by the property owner.

The contractor is required to indemnify the owner, regardless of any Notice of Lien Rights

When a subcontractor or supplier makes a claim against the property owner for payment, the contractor isn’t off the hook. Under LA R.S. § 4802(F), a contractor is required to indemnify the owner for claims against the owner. So, it may be helpful to contact the contractor and remind them of their obligation to make payment and that any lien claims are very much their problem as well as the owner’s.

I hope this was helpful! Feel free to come back to the Expert Center with any additional questions or follow-up you may have.

| 0 Upvotes
Your answer or comment:
Are you a Registered Expert?
You are not logged in and will be posting
anonymously. Log in Now