Can a Contractor Seek Payment from Me if Not Paid by a Realtor?

Question from Mel, Can a Contractor Seek Payment from Me if Not Paid by a Realtor?

Answer from AI:

If a realtor procured a contractor to do improvements to your property and you signed an addendum stating that the payment would be made at closing, you might wonder if the contractor can come after you for the funds if the realtor fails to pay them. This situation involves several legal principles and potential outcomes.

Understanding the Contractual Relationships

In this scenario, there are typically three parties involved:
1. **You (the property owner)**
2. **The Realtor**
3. **The Contractor**

The key document here is the addendum you signed. This addendum likely outlines the payment terms and responsibilities. However, the contractor’s ability to seek payment from you depends on several factors:

1. Privity of Contract

– **Privity of Contract** refers to the direct relationship between parties in a contract. If you did not directly contract with the contractor, they might not have privity with you. However, if the addendum or any other document establishes a direct obligation between you and the contractor, privity might exist.

2. Mechanic’s Lien Laws

– **Mechanic’s Lien** laws allow contractors, subcontractors, and suppliers to place a lien on your property if they are not paid for their work or materials. These laws vary by state, but generally, if the contractor is not paid, they can file a lien against your property. This lien can complicate the sale or refinancing of your property.

Steps to Take

If you find yourself in this situation, consider the following steps:

1. Review the Addendum: Carefully read the addendum you signed to understand the payment terms and any obligations you might have.
2. Communicate with the Realtor: Contact the realtor to clarify why the contractor has not been paid and to resolve the issue promptly.
3. Consult with a Legal Professional: Given the complexity of contract and lien laws, it is advisable to seek legal advice. A lawyer can help you understand your rights and obligations and assist in resolving the dispute.
4. Check State Laws: Research your state’s mechanic’s lien laws to understand the contractor’s rights and the process they must follow to file a lien. You can find information on state-specific laws through resources like the [National Lien Law](https://www.nationallienlaw.com/) website.

Potential Legal Outcomes

Depending on the specifics of your situation, several outcomes are possible:

• Realtor Pays the Contractor: Ideally, the realtor fulfills their obligation, and the contractor is paid as agreed.
• Contractor Files a Lien: If the contractor is not paid, they may file a mechanic’s lien against your property. This lien must be resolved before you can sell or refinance your property.
• Legal Action: The contractor might sue for payment. If they win, you could be ordered to pay the contractor, and you might then need to seek reimbursement from the realtor.

When to Seek Legal Advice

Given the potential for significant financial and legal consequences, it is crucial to consult with a legal professional if you are facing this issue. A lawyer can provide personalized advice based on the specifics of your case and help you navigate the complexities of contract and lien laws.

For more information on mechanic’s liens and your rights, you can visit the [American Bar Association’s Guide to Mechanic’s Liens](https://www.americanbar.org/groups/real_property_trust_estate/resources/real_estate_law/mechanics_lien/).

Remember, while this information provides a general overview, only a qualified attorney can offer specific legal advice tailored to your situation.