Homeowners who have contractors working on their houses need to take advantage of protections in Missouri law to avoid paying twice for the same labor or materials.
When you hire a general contractor to build a home or to do home repair or remodeling work, the general contractor becomes the middleman between you and any others who provide labor or supplies for the project.
In most cases, homeowners pay their general contractors, who in turn pay their material suppliers and workers (subcontractors).
But there have been cases in which the homeowner paid the contractor in full, but the contractor failed to pay his subcontractors. The subcontractors then filed mechanic's liens on the homeowner's property, forcing the homeowner to pay for the work or labor a second time.
To avoid this, homeowners can use Missouri's lien law. But the process for new home construction is different from the process for repairs and remodeling.
Consent of owner statement (repair and remodeling)
The law says a homeowner who has home improvement or repair work done cannot have a lien placed against his property by anyone other than the general contractor, unless the homeowner has signed a consent of owner statement.
This statement says the property owner will pick up the costs of materials, supplies and labor for a project if the contractor does not pay.
If you sign a consent of owner statement, you give up your protection against liens and double payment. If you are asked to sign this statement, use caution.
The consent of owner provision, however, applies only to home improvements and repairs; it does not apply to home building.
Notice to owner statement (new construction)
Unlike a remodeling project, subcontractors in new home construction do have the right to file mechanic's liens. When building a new home, your contractor must provide you with a notice to owner statement. This statement tells you liens may be filed against your property by subcontractors and suppliers.
To avoid liens on your property, the notice to owner statement says you may ask your contractor for lien waivers from all persons supplying materials or services. If you don't get lien waivers, you may have to pay twice, the notice says.
Lien waivers (new construction)
A lien waiver is a receipt that says suppliers have been paid for work done on your home and will not ask for further payment or file a lien. Therefore, you may want to ask your contractor to provide you with lien waivers from all subcontractors as soon as their portion of the work is done.
Do not settle for a contractor's promise he will pay everybody. If you cannot get the lien waivers, select another contractor or ask your present contractor to choose subcontractors from whom lien waivers can be obtained.
Check references of contractors
One of the best things you can do to protect yourself from liens is to check the background of any contractor you are considering hiring for home building, improvements or repairs. It's best to work with companies that are known to you or recommended to you by someone you trust.
Also, you can search for consumer complaints against a company by using the "Know MO" feature on our Web site.