OAKLAND, Calif. - If you are doing major construction on your home, your contractor is probably hiring subcontractors and suppliers, and that can sometimes be risky for a homeowner.
Often you pay your contractor for all the work on the project. But what if the contractor doesn't pay all the subcontractors and material suppliers? You may be surprised to find out it's the homeowner that is left on the hook.
The last time we saw Bhupesh Kanwar, he was upset about his rooftop solar system "I took the readings, I said this is totally wrong," Kanwar said.
Kanwar said his system was producing less electricity than promised under a $20,000 contract with Sungevity Solar of Oakland. He came to 7 On Your Side, and Sungevity upgraded the part that converts sunlight to electricity, and it produced more. But, that wasn't the end.
"Now the company has gone bankrupt," Kanwar said.
Sungevity filed for Chapter 11 bankruptcy, which affected Kanwar directly.
"What is this? They are asking me for $4,000 right now," Kanwar said.
It turns out that Sungevity never paid the subcontractor who installed Kanwar's system - Citadel roofing of Vallejo, even though it was included in his contract. Citadel came after Kanwar for that money.
"If $4,000 was not paid to Citadel Roofing. They said they will take legal recourse to put a lien on my house," Kanwar said.
"It's called a mechanic's lien, and it's been in place for well over 100 years," Rick Lopes with the Contractor's State License Board said.
Lopes says homeowners are often taken by surprise when a subcontractor or supplier slaps a lien on their property.
"The contractor has a right to be paid and they have the ability to file a lien on the property if they don't get paid for the work," Lopes said.
With Sungevity in bankruptcy, Kanwar said he had little hope to get his money back. "Now I'm feeling that the best is to look for a company that doesn't hire a subcontractor."
"If they say they're using subcontractors, you want to get a list of those subcontractors," Lopes said.
Lopes said homeowners can protect themselves by paying subcontractors directly.
Sungevity did not respond to our calls for comment. However, when we contacted citadel, the owner said he sent lien notices to about 100 homeowners, but has now reached a settlement with Sungevity for partial payment. That means citadel will not go after any of the homeowners after all.
Bhupesh says it's a scary lesson learned. "A subcontractor can come by and put a lien on your house that comes as a surprise" Kanwar said.
Besides paying a subcontractor directly, there are more ways to protect yourself, and rules the subcontractors must follow to obtain a lien.
Click here for more information on solar leins.