A few years ago, the deadline for contractors to file mechanic liens against homeowners for non-payment was extended from 6 months after the home sold to 12 months after. Additionally, builders and investors who substantially renovate a home now have to give a 45 day recorded public notice about selling the home, giving contractors fair warning. These actions prodded the title companies to get serious about collecting paperwork on all substantial repairs made to homes within 12 months prior to closing. This has become a significant battle with sellers trying to track down multiple contractors who did various jobs. Most owners keep roof, structural and furnace receipts, but not so much on painting, landscaping and lighting.
Our affiliate, US Title, calls for paid receipts on all work done on the property in the 12 months prior to closing, plus lien waivers on repairs over $500 in that time period. Other title companies can be more stringent. This is a suggestion to you, then, to gather and keep paid receipts and lien waivers on all work done to your property, in addition to any warranties issued with it. Warranties will be asked for by the buyer on waterproofing and structural repairs for many years afterward, plus roofing, termite and mechanical systems. Many contractors will not issue the complete set of forms unless you ask, as it is an extra hassle, especially for the handyman doing $150 job. They may not even have a lien waiver to give you, which is a simple one page form. I have blanks from the title companies, feel free to ask me for one, you can make extra copies. Be aware that there are “conditional” lien waivers, these are not worth much, it is the “Full and Final Unconditional” version they look for. Incidentally, buyers may ask for some of these documents as well per the initial offer or during the inspection phase.
If you know you will not be selling your home in the next 12 months, this is not a concern to the title companies, since the ability to file mechanic liens only runs 12 months. However, it is still a good idea to collect these for your protection, in case any questions arise on payment or warranty, plus buyers may ask for these on significant repairs many years later. The older the job is, the harder it is to obtain old receipts.
The home selling market continues to sizzle, I just closed out another busy spring. Summer and fall seasons are expected to remain strong, and mortgage rates have recently dropped a tad under 4%.
Happy paper collecting!
Gary Hoeferkamp, Broker - Owner of Hoeferkamp Real Estate 