Angie's List: Protect your home with a lien waiver when hiring contractors

A lien waiver can keep contractor straight

TAMPA - If you are planning a home improvement project, renovation or remodel, chances are you will hire a general contractor to oversee the job. But you may not know that the general contractor will likely hire subcontractors to complete parts of the project like electrical work or plumbing.

Angie Hicks, with the consumer group Angie's List , said it's important for you to check that the subcontractors are experienced and reputable. "As the homeowner you should be involved in the process of choosing subcontractors.

So ask for a list of subcontractors the contractor will potentially use and then check them out yourself. Check them out on Angie's List, check with friends and family and find out exactly who is going to be working on your house."

Here are a couple definitions:

  • General Contractor (GC): Type of manager who is in charge of overseeing the entirety of a project. For a home remodeling job, the GC will meet with the homeowner to go over the initial project details, estimate the cost of the project, draft a contract, hire workers and handle the daily operation of the job. General contractor usually don't perform any of the labor, but instead hire skilled tradesmen as subcontractors.
  • Subcontractor: A worker who is hired by a general contractor to perform the obligations of another's contract. Also referred to as specialty contractors or "subs," subcontractors are typically hired to perform a specialized type of labor. They are the plumbers, roofers, carpet installers and electricians who are essential to any large remodeling project. As the name implies, subcontractors work under contract with, and get paid by general contractors.

Angie's List offers these tips so you know your  subcontractors:

  • Ask your general contractor for a list of subcontractors to be used on a project, and then check the subs out.
  • Angie's List recommends soliciting at least three bids, properly vetting contractors and subcontractors by checking references and verifying licensure (if applicable), bonding and insurance, and negotiating a detailed contract.
  • Ask the contractor how long he/she has worked with the subcontractors. What is their experience working together?
  • Insist on a lien waiver, which protects the homeowner from liability if the general contractor fails to pay the subcontractors.

"If you're doing a big project it's important to talk to the general contractor about a lien waver," Hicks said. "That's basically going to protect you against the contractor not paying the subcontractor because if the contractor doesn't pay his subs, they could potentially put a lien against your property. If the contractor refuses to have a lien waver it's a red flag and you should walk away."

What is a lien waver?

  • To avoid unexpected fees or liens, homeowners should consider always including a lien waiver or lien waiver clause in the project's contract. With a lien waiver, when the project is successfully completed, both parties sign off and state that the contract obligations have been met, including the general contractor making all necessary payments to materials suppliers, subcontractors or vendors.
  • If the general contractor doesn't agree to sign off on the lien waiver, you can withhold payment until he or she has proved they've paid their suppliers or subcontractors.
  • One of the most essential things to know about liens and lien releases is how they're enforced in your area. Although the general principle is the same for most areas, each state or municipality has different standards for the application of liens and their releases.
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