Home Buying in Santa Clara>Question Details

David, Both Buyer and Seller in Santa Clara County, CA

What should I do if a supplier wants to put a lien on my house because the former owner's contractor did not pay them?

Asked by David, Santa Clara County, CA Fri Sep 14, 2012

I bought a house recently in Santa Clara, CA and about two months after I moved in, I received a letter, addressed to the former owner, from a concrete company threatening to put a lien on the house. The letter states that because a contractor that the former owner hired did not pay them for concrete delivered to this house, they are going to place the lien unless the full owed amount is paid.

Judging by the dates, the concrete in question was used recently, probably right before the previous owner sold the house to me.

First of all, can they really do this? If so, what can I or should I do about this? Is my title in the house safe?

I'm worried and any help would be much appreciated.

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Answers

8
Hi David

Call the Title Officer with who you signed the papers at closing at the Title Company.

Now of course if this was a private deal with all cash and you chose not to get Title Insurance
then it is a different story.

The contractor will threaten and intimidate you. You need to refer him to the Title Co.

Good luck.
Perry

http://www.trulia.com/blog/perry_mistry/
0 votes Thank Flag Link Wed Sep 26, 2012
A contractor, subcontractor, laborer, or materials supplier has 90 days to record a claim. If a notice of completion was filed with the recorder's office, the time is reduced.

The Contractors State License Board has recommendations if a mechanics lien is filed on your property.
http://www.cslb.ca.gov/consumers/legalissuesforconsumers/mec…

Juliana Lee
650-857-1000
Keller Williams Realty
Web Reference: http://www.julianalee.com
0 votes Thank Flag Link Sun Sep 23, 2012
At closing, did the seller sign a document stating there were no mechanics liens or outstanding invoices for work performed on the property? This is a standard document at most closings. Check your documentation and then consult with a real estate attorney.
0 votes Thank Flag Link Fri Sep 14, 2012
Yes, the lien, if recorded would create a problem with you proposed HELOC. The lien would be ahead of any lien place by a subsequent lender. It is unlikely that you could obtain a HELOC that would be in a junior position to your mortgage and the mechanics lien at a rate that you would find acceptable.

You may be protected by your title policy but you may not if the title company could not have known about the potential lien. Call them and find out. You may need the help of an attorney.

Mechanics lien law is also in the realm of attorneys and beyond the knowledge of Realtors.
0 votes Thank Flag Link Fri Sep 14, 2012
I don't think I can edit my original post, but thank you all for answering my question so quickly. This one gave a me a scare this morning.

The only other thing I'm worried about is that I am thinking about pulling a home equity line of credit from this house by early next year to buy another rental property. Would having a lien placed on the house affect this? If my title insurance pays off the lien, would it still negatively affect my ability to pull HELOC? (Like a point on a driver's license that lingers for a few years.)
0 votes Thank Flag Link Fri Sep 14, 2012
Either your title insurance will cover it or you will need to get an attorney to send them a treating letter to remove the lien. Unless you are planning to sell soon you need not worry, it could stay there for years with no affect on anything unless you were to sell. Contact the title insurance people first and then a lawyer if need be. Many contractors file these liens in hopes you don't understand them and decide to pay them and since they cost less than $20 to file -- they just do.
0 votes Thank Flag Link Fri Sep 14, 2012
Hi David and thanks for your post.

As Terri noted--and she's so fast at answering these questions--you have title insurance which should help defend your title against claims. Give the title company a call to let the know about this problem.

Good luck!
Grace Morioka
0 votes Thank Flag Link Fri Sep 14, 2012
Call your Escrow and Title Company. You have a title insurance policy which states what is covered.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Fri Sep 14, 2012
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