Customers ask me time and again how they can avoid getting a construction lien on their home or project. I don’t claim to have all the right answers nor can I offer legal advice. I do have something to share, and figure that this contribution will be a good springboard into other topics along the lines of construction liens in Michigan.
First of all, the recording of a construction lien means someone either didn’t get paid or they presume payment is not going to be coming very soon. Otherwise there would be no lien. Liens can be good, and I’ll get to that in another article.
The number one caution is: Know who you are dealing with. This holds true for anyone who enters into a contractual agreement with another person or company. If you don’t do your homework, you may as well be tossing the dice. Also, you need a well-written contract that is understood by all parties.
Here are just a few falsehoods that sheep among wolves tend to gloss over:
1) “He’s been in business for years, so therefore he is reputable and reliable.” This does not mean a thing. I know of several businesses that have funded their operations by stealing from their suppliers, their clients, the IRS, and occasionally their laborers. In another age they would have been tarred and feathered and sent out of town. Today we are much more tolerant and accommodating.
2) “I checked the Better Business Bureau and there are no complaints.” These bureaus don’t (and absolutely will not) log any negative data from creditors. The BBB boasts a really powerful mission statement and purpose, yet simply does not provide the big picture on their “accredited” businesses. Bad checks, lawsuits, frauds, poor workmanship, building code violations and so on are just not listed. Complaints are accepted online, but if people don’t realize their contractor billed them for something that was never installed, the complaint just isn’t going to be logged.
3) “This company really has it together because the website is so professional.” Now I must admit that this really wasn’t stated, but let me back up to say that I’ve done some light research on some really bad players in the industry, and I just want to leave you with no less than this truth – a great web presence means nothing. Don’t fall for this.
Knowing who you are dealing with involves a little work. The wise project owner asks the contractor where the materials will come from and whether he has an account at that particular store. You aren’t asking him for credit references, per se, as he would only give you good ones anyway. You should be interested in your project, your warranties, and your materials.
If his answer is “Home Depot” or “Lowes”, then either you don’t have a very big project, or your contractor (for whatever reason) does not have an account with a material supply company that specializes in several choices of quality products with depth, warranty, delivery, and product knowledge. If he says he has an account with them, it’s a credit card just like you get, only with commercial pricing and incentives. Home Depot and Lowes do not manage credit nor ever have, to my knowledge.
But if your contractor states your local “Home Town Lumber”, call them up and ask for the credit manager. Explain who you are and the type of materials you require for your job. Then ask how your proposed contractor handles his bills and whether the person you are talking to would hire your proposed contractor to do work on his own home.
If the response is positive, you probably have good potential for success. If the answer is anything else, ask if you can speak with the sales counter for a couple contractor referrals. Who knows, you may wind up with a better quote!
Be sure to thank everyone for their time.