Re: Danger of renovating too soon. - Posted by William Bronchick
Posted by William Bronchick on July 08, 2002 at 09:30:43:
At least in the U.S., the mechanic’s lien is the title company’s problem. Both seller and buyer sign affidavits attesting to the fact that no unpaid work has been done that could cause a mechanic’s lien (for those of who don’t know about this, a lien can be filed even months after closing). Title companies generally disclaim coverage for mechanic’s liens if you lied about it in the affidavit.
In a commercial deal, the bank will get involved. They often drive by the project to make sure work is being completed to avoid the mechanic’ lien.
I know there will be a lot of follow Q’s to this post, so let me say this: check YOUR state law on it, since the mechanic’s lien laws varies widely from state to state.
I agree it is dumb to start work before closing, since the deal could fall through, although you would be entitled to reimbursement of work under the legal theory of “quantum meruit”. You could even file a mechanic’s lien yourself if the seller decides to get “cute” at the last minute.
Having said all this, I’ve done work before closing, but in those cases the seller was out of state and we didn’t see any real risk.