How to Avoid Liens on Your Home Construction Project
To protect yourself from having liens placed on your property, you may require lien releases from all parties in exchange for payment. Request partial lien releases for partial payments and a final complete lien release for the final payment. NRS 108.226(1) and (2) provide that every person claiming the benefit of the lien laws, must record his or her notice of lien within 90 days after the completion of the work of improvement, delivery of materials or last performance of labor, whichever is later. Consider discussing with your contractor the possibility of withholding a portion of the contractor’s payment until after the period for filing a lien has expired. The amount withheld should be a figure sufficient to cover all claims which might be filed and should be one upon which you and the contractor can agree.
If a lien is filed against your property, consult an attorney. Often, unlicensed contractors will file liens for their work. Their liens are invalid by law, however, you may be required to incur legal expenses to have them removed. Residential Recovery Fund — When a homeowner has been damaged by a contractor and has done everything possible to get the job completed and/or recover the financial loss, there is a fund established by the Nevada legislature that is designed to help – The Residential Recovery Fund.
Homeowners of single-family residences who have entered into a contract with a licensed residential contractor; have suffered actual damages; and have exhausted all other means of recovery may submit a claim on the Residential Recovery Fund.
The recovery amounts are $35,000 maximum per claim and $400,000 maximum per contractor. However, homeowners may only make a claim on un-recovered damages, not the portion of the work, if any, that has been completed. Extensive documentation will be required.