Legal Question in Real Estate Law in North Carolina
My wife and I are trying to get our house put on the market, and have hired a painting contractor (former colleague in a leads group) to paint the exterior trim before we list the house. There is some rot that he will have to repair/replace before he can paint. He has sent me a contract including payment terms to get the work done (we're in a tight spot financially for the time being). He has included the following clause, and assures me it won't affect the sale of the house, and I'm just wondering what exactly it DOES mean regarding the sale of the house. The clause reads
"Client authorizes Contractor to place a mechanics lien on the property for the balance of the contract. Contractor will release the lien upon receipt of the total contract price. There will be no interest beyond that which is posted."
According to the terms of the contract (he and I have already agreed on this) we will pay him $600 upfront, with 10 equal monthly payments (including 8% interest) to begin June 1 of this year, and to be paid in full upon sale of the house (from the profit made from sale of the house).
I can send a copy of the contract if that will help.
Thank you
1 Answer from Attorneys
Essentially it means if he files a lien on the property, it will need to be paid off before or at the time you sell the house. It protects him from non-payment. There is a lot more that goes into it and in reality he would need to bring an action to enforce the lien within 6 months of the date that he last did work or the lien would lapse. Either way - whether or not he files a lien - you would have an obligation to disclose to buyers that you had work done on the property that was not paid and it would have to be paid at closing. Also he would have rights to file a lien whether or not that was in the contract.
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