What is a construction lien?
A construction lien is a claim upon property for money owed to a contractor, material supplier or anyone who supplied labor or materials for improvements to the property.
If your contractor isn’t paid, or if your contractor does not pay subcontractors, employees, rental equipment or material suppliers, or others who are owed money for work on your property, they may lien your property for payment.
It is in your best interest to verify that all bills are paid, even if you pay your contractor in full.
This documents explain more about liens:
Notice of Right to a Lien
A Notice of Right to a Lien lets you know of the possibility that a lien could be placed on your property by subcontractors, employees, material suppliers and equipment rental companies.
Sending a Notice of Right to a Lien is not the same as filing a lien claim. The notice protects the right of the person sending the notice to later file the lien.
Homebuyer Protection Act
This law (ORS 87.007) protects home buyers from construction liens when the buyer has already paid for the construction work. Construction work performed before the sale of a home may result in a lien after the sale.
The laws applies to:
- A new single-family residence, condominium unit, or residential building
- An existing single-family residence, condominium unit, or residential building that had at least $50,000 worth of improvements, additions or remodeling within three months before the sale.
Ways to protect buyers
A contractor selling a home that is subject to this law must protect the buyer from liens. To comply, the contractor-seller may:
- Buy title insurance that does not exclude filed or unfiled claims of lien;
- Retain at least 25 percent of the sales price in escrow
- Maintain a bond or letter of credit for at least 25 percent of the sales price
- Obtain lien waivers or releases
- Wait to complete the sale after the deadline for filing liens (usually 75 days)