In 2016, bad things happened to the lien rights of subcontractors and suppliers in Missouri because of a bad court decision. Then in 2019, American Subcontractors Association (ASA) and its industry partners made good things happen in the legislature with the passage of a favorable law to overcome the bad court decision. The problem started when the Supreme Court of Missouri unexpectedly ruled that a subcontractor had neither a bond claim nor a mechanic’s lien claim against the real estate owned by a county but leased by it to a private entity to be used by that entity as its corporate headquarters.
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Mechanic’s liens are without a doubt a subcontractor’s best collection tool when there are payment problems. The sources of its power are (1) the risk that the property will be sold to satisfy the lien, (2) the threat that the owner, in order to prevent foreclosure, may have to pay the subcontractor even if the owner has already paid the general contractor, and (3) the lien may trump the lender’s prior deed of trust.
An Illinois appellate court has held that buyers of residential property may maintain an action against subcontractors who provided labor in the construction of their home, if there is a defect in their home that makes it not suitable for its intended purpose as a residence. Sienna Court Condominium Ass'n v. Roszak/ADC, LLC, No. 122022, 1st Dist. This court found that homeowners may bring an action against the subcontractors, if the general contractor is insolvent, even if the GC maintained a warranty fund.