A Lien Success (or Nightmare) Story

This one's a nightmare because it actually happened to me, but it's a success for the various people involved who ended up getting paid. I was trying to sell a house about 18 months ago, and got under contract, prior to the Certificate of Occupancy being issued with a guy who turned out to be a "contractor". Our agreement contained a provision where he would pay for certain items required to complete the house and get the C.O. Prior to the work starting, he asked if I minded if he did some of the work on the house himself, as opposed to paying someone else. I (stupidly so) said yes. There was no signed contract, just a verbal, do x, y, and z to get the C.O. Well the guy ends up not only doign x, y, and z, but also (because he thinks he's buying the house) ends up doing a bunch of non-relevant work, like painting walls, and putting in trim pieces, etc... Bottom line, he's unable to get financing, and at this point has put about $20K in time and materials. After going through 4 different banks, and still no financing, I tell him I'm not renewing my contract with him, I'm going to try to sell the house to someone else, and to send me an invoice, because I do feel he's owed something. I get no reponse until a week later, his attorney sends me a letter, with a copy of the lien for $50K. More than double what he actually did out there. Now, technically I can fight the lien, and it'll take 60 to 90 days, and cost me some money with an attorney, but at this point, I'm about 2 months from foreclosure, and completely out of money. The bottom line is that I end up having to find a buyer, and in that process convince the bank to pay the lien on top of taking a short sale anyway. The guy who put the lien on the property, even an arguably fraudulent one, got every penny he wanted. Now, I'm not saying to put liens on things fraudulently, because someone with a little cash will not only fight the lien, but will sue you for slander of title; BUT, keep in mind that if someone isn't paying you, they may be running tight on cash, and especially if a bank is involved, you want to make sure you have a lien protecting you, because it forces the bank to address you in any sort of sale. You may not get everything you want, but you can get something usually. In that same sale I had a business partner throw a fake lien on the property 4 days prior to closing, and the bank said that instead of fighting it (they new it was fraudulent), they would just settle with the guy. He ended up getting only about half of what he wanted, but he did get paid.

I'm not writing any of this as a reccomendation. Had I had the money to fight both of those liens I would have done so AND sued them both for slander of title. I am writing to show you though that a lien is more than just a piece of paper, it carries significant weight when applied correctly.