If you are thinking to not pay your contractors for their job for whatever reason, you should think twice about it. You may find their work to be of poor quality but when you see the progress of the construction, you can let the contractors know that you do not like their work and they need to focus more on the quality part. Just not paying them their dues can drive you into serious problems. The contractor can place a lien on the construction property and can make the entire thing quite messy for you. It is better to counter them upfront and tell them you do not like their work rather than not paying them their dues.
Let us first understand what a lien on a property is all about. Having first lien on a property means that it completely belongs to you and in case if you want to sell it off and go back home with all the cash you are free to do so. Now if someone puts a lien on your property, it means that if you sell the place you can’t get away with the entire cash amount. You have to first clear the dues of the person/entity that has put the lien on your property and then whatever is left belongs to you. It eventually means that you do not have the absolute right on the property.
This is perhaps just the tip of the iceberg. You may be further entangled with more such complications that will act as a big distraction in your business. Your credit rating goes for a toss. You are also not able to refinance the property with any financial institution. This means that you can’t even keep this place as LAP (Loan Against Property). Moreover, when you are letting you the construction work to a contractor and if he sub-lets it to another contractor, you need to ensure that the contractor pays all the dues to the sub contractor or else that particular person will place a lien on your property. It simply means that whosoever person who has any interest in your property can place a lien on it if their dues are not paid.
In case you come across a contractor who does not carry a good record and you unfortunately give the work to him. In this case, you got to be absolutely sure that you keep records of your payments to him. Such people can create nuisance even after they have received all their dues. In case you are clean, you hire an attorney who will take such guys to task. But before you hire any contractor, it is important that you do a research on their conduct. You can check things like how long they are into this business and how their relations have been with other construction companies. You can check with people in your business circles and hire someone who will not unnecessarily put liens on the property to create problems for you.