Mechanics Leins

Started by PaN • 12 replies • 1580 views

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PaN (Pennsylvania)
Posts: 9

Posted:

Some of our neighbors just found out the hard way (I did not know either)of a quirky PA law. Heres the situation......our builder is in financial dire straits. He closed on 8 houses at the end of 2012, putting pressure and even financial incentives in front of people to settle by year-end. This is a 55+ community, most of these people paid cash for the house. A couple weeks later, they started receiving notices from attorneys representing subcontrators saying they had not been paid by the builder for their work, and that the HOMEOWNER was now liable for the balance, or a lein would be placed on their home.

We thought that this was nonsense; how could the new homeowner be responsible, but alas, in PA that is the case! Wow! Can you imagine? This builder is now not retirning calls and emails....a tragedy

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is a bit unclear to me. What is the exact reason for the liens? They bought the lot from the developer and then built houses on those lots. Now the builder claims they still owe for building or the developer? Confused.

Former HOA President

PaN (Pennsylvania)
Posts: 9

Posted:

it is a planned community. The builder sold houses on lots that he owned. It was a transaction between a buyer and the builder. The problem is that the builder did not pay his subs, and they want to be paid. Under PA law, the homeowner (who already paid in full for his home) can now be sued by the subs if the builder refuses to pay

GlenL (Ohio)
Posts: 5,491

Posted:

That is not just in PA but in almost if not every state. Caveat Emptor

Studies show that 5 out of 4 people have problems with fractions

JonD1
Posts: 2,350

Posted:

Putting pressure on them and offering financial incentives = in plain English made them an offer to good to be true. Sounds like the builder held a fire sale. Cash deals in which the buyers didn't bother to verify whether they were buying property with a clear title. Did they run these deals past a lawyer????

The builder owed contractors for the work they performed and the houses could now be put under liens to collect the monies owed.

Sort of like buying a car with an outstanding loan and never bothering to check that the seller in fact owed the car 100% and had the right to sell it.

Many times people's own greed sets them up for being victims of this sort of scam.

I would wonder how much lower was the purchase price than everyone else paid. Boy have I got a deal for you...............................

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Paying cash for a house is usually a bad idea. Sounds like some people did not do the research. They can be liened especially if the builder went belly up. Not unusual.

Former HOA President

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Under PA law, the homeowner (who already paid in full for his home) can now be sued by the subs if the builder refuses to pay

Yep, it going to get very messy. The homeowners should get together and hire a single law firm to handle this. They will end up paying, but maybe they can reach a settlement. This is a common issue with new construction with the economy going down the tubes.

I remember in the 1980's when this happened, it wasn't pleasant. Those who don't remember history are bound to repeat it.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Did any of these transaction go through a title company? It seems if there were liens that they should have been discovered by the title insurer during closing. Of course, if you bypass all the safeguards like licensed real estate agents, title companies, escrow officers, and lawyers then you expose yourself to all the risks that these people are supposed to help you avoid.

How much money are these subcontractors claiming is owed to them?

PaN (Pennsylvania)
Posts: 9

Posted:

thanks for all replies.....it didnt happen to me, so I'm not exactly sure of the details, but according to one neighbor i spoke to the title company claims they are not responsible because there was clear title at the time of the search....

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I understand you feeling empathy for them but don't make it your HOA's problem. Meaning this is NOT a HOA issue but an issue between the builder, subs, and the owner. If they bring this issue into the HOA, then expect someone to try to con a way into you ALL paying for this. A HOA is ONLY funded by it's members FOR it's members. So if they want to somehow pass this onto the HOA, watch out.

When I purchased one of my homes it was during the "Housing boom" right before it burst. The loan officer was discussing all these "loan options" with me. They offered some pretty bad options that later proved to have burst the housing bubble. (Those ARM type loans were the worst). I knew better and refused them. However, I saw many people waiting with kids coming in to get home loans. Knowing the whole time that many of them would be falling for these loans. They did. I learned then that you can't save anyone else but do the best for you. Believe me, they will drag you down with them when they see how not everyone fell for the dangling carrot.

My advice is to keep an open ear to these people but a closed wallet. Make sure they don't try to drag the HOA into this situation. Realize that it was mostly their fault for being in the situation they are in. That doesn't make them "bad people" but people who made mistakes. Hopefully, they will learn from it and you have to. Never buy the dangling carrot from a fruit salesman...It's for his horse who is full of poop...

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

My understanding of a mechanic's lien is it is filed by a sub-contractor (the mechanic) on a property they worked on when the main contractor (the one that hired them as a sub on the property) has not paid them ir there is a dispute.

I understand it is a typical procedure but that the property owner can "easily" get the mechanics lien removed as they did not "contract" with the sub.

I could be wrong.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By JohnC46 on 02/05/2013 5:29 PM

I understand it is a typical procedure but that the property owner can "easily" get the mechanics lien removed as they did not "contract" with the sub.

That's my understanding as well, providing that they have proof that they paid the builder for the work.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By PaN on 02/05/2013 5:51 AM
according to one neighbor i spoke to the title company claims they are not responsible because there was clear title at the time of the search....

This was new construction. My understanding is that it is customary to obtain lien releases or waivers from the subcontractors at or before closing.

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