Patio, Garden and Home Info

By now you have heard of a family who lost their home in  a tornado or hurricane and how they paid a company a lump sum of money to a builder to rebuild their home. This builder then allegedly walked away with their money with only a small portion of the work completed.

How infuriating that anyone could have the guts to take advantage of people in dire need. Unfortunately, this happens all the time. It is heartbreaking that some homeowners are vulnerable to these con-artists and fail to protect themselves from someone taking them for a ride.

There are many con-artists in our world just waiting to take advantage, so it is up to each individual to be on the lookout and to take measures to prevent from you being scammed. When building or remodeling, never, never, never pay anyone up front for work to be done. If they ask for payment up front, you need to be very cautious and consider their motives for needing money up front.

Before you begin any home project you need to find out about all the information on how and when to pay your contractors and sub-contractors.  You should never have to pay for any job not completed as agreed upon. Discuss the payment terms with your contractor up front, before any building contract is signed, to break down the entire job into specific phases. Only then, after that phase is completed and approved by the inspector, should that specific payment be made.

Your contractor should supply you with a detailed list that is broken down into each individual job, phase, and material requirements from the building permit fees to the finishing work of the home. You then take this list and create a “payment log.”  Make all payments yourself directly to the specific sub-contractor or building supplier, not to the contractor once the work is complete. In doing so, you know that the bills are being paid to the right person and you will be less likely to end up with invalid liens on your property.

A running log of payments made and work left to be done should be kept readily at hand so that you always know exactly where you stand at all times. In addition, by making payments yourself it will free up your contractor from having to spend the time to disperse these payments.

Discuss this payment plan with your construction loan officer when you apply for a  construction loan. After your loan is set in motion, a specific checking account should then be set up to pay for completed jobs. Every check should have a “no lien contract” stamped on the back prior to making any payments. Once that check is cashed by the payee they are agreeing to that portion of the job being paid in full and will have no grounds to apply a lien to your property.

Each state will have different contractual requirements, so please discuss this issue with your legal adviser, especially if your project is large and/or complex.

In the end, you will have your completed home project without having to worry about anyone running away with your money or falsely putting a lien on your home.