DON’T PAY TWICE
When we are not helping clients with their business issues and insurance claims, the rest of our work involves construction issues and disputes.
Lately we have been contacted by numerous homeowners who have paid their contractors for home improvements only to learn that the contractor did not pay for materials. These clients now have liens on their property and the material suppliers are looking to the property owners to get paid.
Unfortunately, if these clients did not pay their contractor the “right” way, they’ll have to pay twice.
Home owners just do not know that there is a right way and a wrong way to pay contractors.
The “right” way protects the homeowner. The “wrong” way exposes the home owner to potentially paying twice.
How do you make payments the right way?
Know who is working on your job. Keep an eye out in the mail for something called a Notice to Owner (NTO). Subcontractors and material suppliers will be sending you a NTO to alert you they are working on your job. You also have the right to ask your contractor for a list of subcontractors and suppliers. Make this request in writing and via certified or registered mail.
Obtain Lien Releases every time you make a payment. Every time you make a payment to the contractor, make sure the contractor gives you a lien release. Also have the contractor obtain lien releases from every company or person who sent you a NTO.
Make joint payments if necessary.
If the contractor tells you he cannot pay his subcontractors or suppliers without receiving your money, then arrange to make your payment jointly to both the contractor and the sub or supplier to obtain the releases.
Most importantly, before making a final payment, obtain a contractor’s affidavit. Before making your final payment, tell your contractor you want a “Contractor’s Final Payment Affidavit”. Although you are entitled to it, a contractor will generally not give you one unless you ask for it. In the affidavit, the contractor has to tell you what subs or suppliers remain unpaid and by how much. That way, you can direct your payments properly and make sure you receive final lien releases from everyone involved.
Florida’s lien laws are very technical and the slightest mistake can cost homeowners big money. If you are going through a home improvement project, you should call us to make sure you are making payments the right way.