How to Avoid Getting Scammed by a Contractor

Local News

In continuing coverage: What you can do to avoid getting scammed by a contractor?

KX News brought you the story of a homeowner who’s out over $100,000 after his home went unfinished due to unpaid contracted work.

We sat down with the CEO of North Dakota Guaranty and Title to get you the answers you deserve.

For background, several subcontractors placed liens against the homeowner when they didn’t get paid. A lien is placed against someone’s property until a debt owed by that person is paid out.

The title companies are responsible for making sure any construction liens are taken care of by the day a property sale is completed, but anything after that date isn’t necessarily covered by the title company.

The CEO, Nick Hacker says a title company can be your first line of defense. They can insure you against construction liens that could happen if a subcontractor doesn’t get paid.

The frustration for many is that if the general contractor on a project doesn’t pay the subcontractor, the homeowner is the one who suffers. That’s why Hacker says you should call your title company, before you build, and ask for extended coverage.

The ND Guaranty and Title CEO explains, “And so if a homeowner is building their own home or contracting it out on their own lot per se, and the title company’s not involved: what they should do is make sure they get a budget with the names of those sub-contractors. And then as you pay the general contractor, ask them to provide lien waivers from those subs after they’ve been paid.”

A lien waiver is a document from a contractor or subcontractor, that says they’ve been paid and will waive any future lien rights against the property for that amount.

Hacker says homeowners should request a lien waiver from your contractor after every payment throughout the construction process.

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