HOUSE-N-HOME-BUILDING.COM NEWSLETTER #214
New House Building: Money Saving, Convenience and Healthy House Tips
Beginning with the April 2002 edition, newsletters are now archived
online at: http://www.house-n-home-building.com/newsletters/newsletters.html
1. What you need to know about mechanic's liens to avoid paying
2. Bone Yards are not Just for Canines.
3. Useful Links
Guest article, by Chris McMinn, Professional Cost Analyst
4. Thought for the Day
5. Subscription Information
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1. Mechanics Liens
What, you might be wondering, does your car mechanic have to do with the building of your new house. The answer is nothing! However, a type of lien commonly used in his occupation is applicable to and is used in the house building industry. That is the mechanicís lien. A mechanicís lien is a claim for payment put against your property by either laborers or material suppliers who have not been paid. But you say, I paid my builder so the builder owes these people money not me. True that is the way it should be. Unfortunately though, that is not the way it is! If your builder goes bankrupt or just refuses to pay one of his subcontractors or material suppliers, a mechanicís lien can be filed against your property by those companies or individuals who have not been paid. And to settle such a claim you may have to pay those individuals, which amounts to paying twice for supplies or a service, if you have already paid your builder for this work.
Who can file a mechanicís lien?
As it pertains to house building the answer is virtually anyone who works or supplies material for your house. It matters not whether this person is your builder, your builder's subcontractors, or your builderís subcontractorís subcontractors. The same is true for companies that supply material, and their subs. Whether or not any of these parties have a written contract with you is is largely irrelevant.
How is a mechanicís lien filed?
A notice of lien is filed with the county clerk in the county where you house or property is located. There is a statue of limitations or a time limit during which such a lien can be filed. This differs state to state, but is usually a few months in duration.
Are there other problems that can arise from the filing of a mechanicís lien?
In addition to the irritation of having to pay twice for goods or services, there is also the potential problem that mechanicís liens cause at your bank, assuming you are financing your building project with a construction loan. Every time you request and installment or draw to be paid, the bank will normally check your property for liens. If a mechanicís lien, or any other for that matter, show up the bank may refuse to issue the installment until the lien is satisfied.
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How can I avoid the problem of a mechanicís lien in my building process.?
Assuming you take the advice in the House N Home Building Guide and hire a builder, rather than undertake the building process yourself as the GC, the best way to eliminate this problem is to put appropriate language in your building contract. Your building contract should have a clause that states the builder agrees not to file any liens against you or your property as they relate to the building of your new home. Furthermore, your builder should protect and indemnify you from any liens that may be filed by his suppliers, contractors, subcontractors, and materialmen, and further agree to settle or pay all such liens promptly.
Even such a clause in your contract is not ironclad. If your builder goes bankrupt and cannot pay his debts, his debts to these suppliers may be forgiven. Nothing would prohibit his suppliers or contractors from filing a mechanicís lien against your property. To avoid this situation, one would have to have a list all suppliers, contractors, etc. that your builder is planning to use in the building of your house, and require that each of them sign an affidavit stating that will not file mechanicís lien. While possible, the amount of effort to get this task done can become significant.
Probably the most important way to prevent mechanicís liens from being filed is to hire a reputable builder or reputable contractors. The advice in the House N Home Guide on hiring builders can go a long way toward helping you get that done.
2. Bone Yards are not Just for Canines
This article is excerpted from one of Mr. Chris McMinnís books. McMinn & Associates are professional cost analysts and consultants. They review and analyze a large range of residential and commercial construction projects, applying the same methods and techniques of cost engineering to residential construction projects as they do for their commercial customers.
If you are looking for a professional cost consultant, we encourage you to contact Chris. If you are looking for written Guide to many of the same issues Chris points out, we encourage you to take a look at the House-N-Home Building Guide.
These places have got to be one of the greatest resources for building material. Did you ever stop to ask yourself what happens to all the mis orders, the unpaid-for-items, the forgotten, never-picked-up, wrong-sized, wrong-handed, mis-matched doors, windows, fixtures, appliances and so forth? Did you realize that somewhere between five and ten percent of all building supplies shipped today will not work, fit, match or measure up for their intended use? What happens to this huge pile of brand new stuff? As hard as manufacturers scramble to make sure that what was shipped matched what was ordered, it never works out that way. So on any given day across America, literally millions of dollars of new building material has to be returned, restocked or dumped somewhere for resale, disposal, melt down or whatever.
Much of this ends up in what are euphemistically called "boneyards." Places where left-overs, surplus and all those mis-orders simply sit while someone tries to figure out if the manufacturer will take them back (not something they like to do) or the store can ship them somewhere else. Of this huge pile, probably half IS eventually returned. The rest sitsósomewhere. And as fast as this mountain of material builds up, manufacturer's discontinued stock, obsolete models, dented, scratched and damaged merchandise adds to it.
We've spent years exploring and tracking down what happens to thousands of windows, doors, hardware and so on. Much of it ends up in these bone yards. To the hardware store this is, for the most part, a source of embarrassment. They can't return it, they probably didn't get paid for much of the stuff, and the sheer odd ball range of sizes hardly lends itself to restocking.
Your job is to locate these bone yards in your area! You have to ask for them. Suppliers keep this stuff hidden out back. You'll find windows, skylights, doors, sliders, sheet metal goods...the list is usually endless. There it sits, rusting and corroding, rotting away, representing a significant loss to the store owner. You come along and simply ask, "Do you have any bone yard surplus?" Strictly retail stores end up with very little of this. But lumber yards, window suppliers, plumbing wholesale outfittersótheir stacks just keep growing.
Here's what you do: first, bring cash. Most businesses will go the extra mile if you show them you are a serious buyer with cash in your pocket. No matter what you need to purchase, greenbacks work. You must look through the yellow pages for well-established businesses which specialize in the sort of merchandise you need. Lets say you want to build a new bedroom addition. You need interior doors and closets, along with some exterior windows. You've put your plan together with your rough window and door sizes determined. Check out all the window and door suppliers in your area. Either call or visit. I prefer a visit (after a quick look out back), whenever I see a stack of mix and match windows. Put aside a day to do this. You will need to check out as many bone yards in your area as possible, while carrying with you your window/door sizes. The object is to find out everything that's available, and then sift through your requirements, searching for the best possible match between what you need and what is obtainable.
You have the advantage, as the homeowner, of making the final decision as to which type of window and door you will accept. The contractor, on the other hand, rarely has this luxury, unless he is building "on spec." He must shop from a list supplied by the architect. Realistically, when (and if) you ever sell your house, very few buyers will notice what types of windows you have. We've heard of homes being sold and never heard anyone ask (or look) if the windows were by different manufacturers. In fact, most people will simply assume it was specified that way.
To be continued next monthÖ.Copyright © 2002 C. S. McMinn
3. Useful Links
The following are useful links relating to the housing industry may be of interest.
EBAY Building Supply Stores http://www.stores.ebay.com/stores/category3187/page3.html
EBAY Building Materials Stores
4. Thought For The Day - Charity
With malice toward none, and charity for all, with firmness in the right, as God gives us to see the right, let us finish the work we are in. ---Abraham Lincoln
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