by Quenda Behler
Consider this scenario: During the course of a project, the
homeowner pays the contractor, but the contractor doesn't pay
his subs or material suppliers. One of the subs or suppliers
then files a construction lien on the property. The homeowner,
of course, goes crazy. He has already paid, he says, and
clouding his title is unlawful. He threatens to sue the sub for
Which begs the question: Can he do that? Can he sue the sub for
trying to enforce a construction lien?
The quick answer is no — but since this is a legal
question, the long response is a little more complicated. In
fact, there is such a thing as a lawsuit based on clouding a
title, and someone who puts a lien to which he was never
entitled on someone's property could be sued for it.
But that does not necessarily mean that an unpaid sub is taking
a risk when he tries to put a construction lien on the property
where he did the work, or that he will get into legal trouble
if the property owner has already paid the contractor.
Be Careful About Signing Lien
If you are a sub who hasn't been paid, go ahead and put a lien
on the property — but be aware of one big "if" that has
nothing to do with whether the property owner paid the general
contractor: You cannot put a construction lien on the property
if you, an unpaid sub or material supplier, have signed a lien
waiver — which you may have done simply because the GC
told you to. I am always amazed at how many guys sign when they
have not yet been paid.
When you sign a lien waiver, you are giving up the most
powerful tool you have to ensure that you get paid — and
you could be exposing yourself to legal problems if you then go
ahead and try to collect from the property owner with a lien.
I'm not saying that collecting the money under those
circumstances would be an absolute impossibility, but you would
definitely need the help of an attorney who specializes in
Also, by signing a lien waiver, you may be giving up the only
way to collect your money if the contractor disappears or goes
For these reasons, I always recommend that the sub sign the
waiver only after he's received the money. But if for some
reason you have to sign before you are paid, make sure that the
waiver is contingent on payment, either partial or final (see
This lien waiver is conditional and takes
effect only after the sub who signs it receives a check and the
And when receiving progress payments, waive lien rights only
for work you did before the date of the invoice, not for work
you have yet to do — and have not been paid for.
Not Breach of Contract
When someone sues to collect an unpaid debt, it is usually a
breach-of-contract lawsuit. However, a sub can't sue the
property owner for breach of contract, because his contract is
with the general contractor, not with the property owner. The
sub can sue the GC, but the only way to collect directly from
the property owner is by filing a construction lien.
When you sign a lien waiver, you are
giving up the most powerful tool you have to
ensure that you get paid.
I have always suspected that some people's willingness to
just go ahead and sign a lien waiver reflects their fear of the
paperwork involved in a construction lien. And in fact there is
a lot of paperwork, and it has to be exactly correct and within
the statutory time limits or the lien will fail.
Still, you shouldn't let your fear of technicalities stop
Let's go back to the original example. Say you're the sub. You
didn't sign a lien waiver, but the property owner already paid
the contractor, who did not pay you. Are you going to get into
trouble if you try to enforce your lien rights? No.
Will the property owner have to hand over payment twice? Once
to the contractor and once to the unpaid sub who filed a
construction lien? Maybe. In some states, the answer is yes,
but even in those places, the construction lien must be
prepared absolutely correctly.
Keep in mind, though, that filing a lien incorrectly and having
your lien vacated — because you filled out a line wrong
or missed a deadline or happen to work in a state where the
property owner never has to pay twice — is not the worst
thing that could ever happen to you.
For instance, it does not mean the property owner can sue you
for clouding his title. (That is, he can't sue you except to
the extent that anybody can sue anytime for anything —
but a halfway-decent lawyer should be able to get the lawsuit
thrown out PDQ.)
If you did the work and you weren't paid, you are entitled to
file a lien, even if you don't file it correctly. If you make a
mistake in the procedure, you simply won't be able to enforce
that particular lien.
And frankly, based on what I have seen over the years, just
filing the lien papers — correctly or not — often
gets immediate results. The property owner learns two things he
perhaps didn't know before: first, that his contractor isn't
paying the subs or suppliers; and second, that he could wind up
paying twice because of it.
That kind of wake-up call usually gets results.Quenda Behler
Story, author of The Contractor's
Plain-English Legal Guide, has practiced and taught law for
more than 25 years.