Good afternoon, We are an Arizona licensed contractor that will be building a spec home for someone who has the lot/land (in Arizona) under his name. He plans to sell this house as soon as it is completed. The written agreement states that he will pay us the final contractor's fee of $10,000 at close of escrow. We also have another person that will pay us the same way only this one will be owing more than $10,000. What legal form should we use and record with the county so we can get paid at close of escrow? Do we use a mechanics lien or would a deed of trust be used instead? If a mechanics lien is used does 20 day preliminary notice need to be filed first? We have always built spec homes for us to sell never have we done it for someone else. Thank you.
You should have used a deed of trust at the outset related to the owner and likely a security agreement or other form of secured structure for this other person. You don't describe this other person is but unless that person owns the property, there is no lien or deed of trust that applies to them.
If you did not file a preliminary notice and your work is all done, you cannot file a lien.
I recommend that you hire an attorney tomorrow as they could consider options to try to secure this. You can certainly ask the owner if they will sign a mortgage or deed of trust but they really have no reason to do so.
I hope this works out. I don't mean to be negative and maybe they will honor their agreements. That is what they should do but after more than 20 years in practice and based on being a partner in a constuction company, hoping people will honor their agreements without sold agreements in place is very risky business. Going forward, have an attorney draft agreements to protect your work as how this was structured could cause you serious losses. We can hope that they will honor their agreements and maybe they will. If they don't, then you will pay much more and spend 100s of hours trying to get this money in litigation.