A construction lien is similar to any other lien. It is a claim that is levied on the title to your home. If such a lien is placed on your home, it becomes difficult to refinance, it may show on your credit report and you probably will not be able to sell the property until it has been paid.
Now let me make something perfectly clear. I am not an attorney. I am not qualified to give you legal advice. I am giving my opinion only, and this opinion is formed by what I have heard from people involved in these types of situations. Please seek advice from your own attorney.
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Whew! Now that we have that cleared up, let’s continue.
If you hire a contractor to put an addition on your home, and you do not fully pay that contractor, the contractor will probably put a lien on your home. And if you don’t have a good reason to not pay the contractor, you deserve to have a lien on it.
But consider this. Most of the time, a general contractor will hire other sub-contractors to perform specialized parts of the job. These sub-contractors may be plumbers, electricians, roofers or masons, among many other specialties. But what happens if the general contractor does not pay the sub-contractors?
These sub-contractors want to get paid also. And they will first go after the general contractor to get paid. But if the general contractor will not pay them, they may come after the home owner for payment.
Now we have two situations here. First, it you, the home owner, paid the general contractor in full, the sub-contractor has no claim against you. But if you did not pay the general contractor in full, the sub-contractor may have a valid claim against you.
Again, if you are in a situation like this, seek legal advice from your attorney.