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Real Property & Development Review

Owner Payment To Contractor Still No Defense To Subcontractor Lien Claim

Posted in Construction

Lien laws in most jurisdictions provide the Building Owner with a defense to a subcontractor lien if the Owner has paid the contractor for that subcontractor’s work.  But not in Oregon.  Here, Owners may end up paying twice if the general contractor fails to pay its sub from funds the Owner has already paid to the general contractor.

Not fair?  Certainly not from an Owner’s perspective.

A bill amending Oregon lien law circulated in the legislature over the last couple of months addressing this issue.  The new law would require a court to:

dissallow the lien if the owner proves that the owner paid the contractor for materials, equipment, labor, or services that are the basis for the lien

(See page 4). 

But subcontractors breathed a big sigh of relief when the bill died in the Oregon Senate.   The status quo remains: Owners continue to have no legal defense to subcontractor liens even if the Owner has already paid the general contractor.

Reminder of the day for Owners:  get proper lien and claim waivers from general contractors and subcontractors for all payments.