5 Ways to Avoid Mechanics Liens.
When you have work done in Arizona, workers have a right to place liens on your property to protect their right to be paid. With residential property, only contractors with a contract with the owner have lien rights. But in commercial projects, it doesn’t matter if the owner didn’t hire or agree to pay the contractor, if the contractor was hired to do the work by another – such as by a general contractor. So to avoid mechanics liens, do the following:
1. Be vigilant in scrutinizing all pay applications, pre-lien notices and supporting documentation to see who is doing work and how much they claim they are owed.
2 Inspect the job site to see what stage the construction is. Does it look like the contractor has done the work claimed in the pay application?
3. Every time you make a payment, make sure you get lien waivers from the contractors who are being paid.
4. Require the general contractor to obtain a payment bond. While the existence of a payment bond on a project does not prevent subcontractors from filing liens in many states, it creates a better source of repayment.
5. Put in your contract with the general contractor the right to make payment by joint check. This helps to make sure the general actually pays the subcontractors.