Last August, my husband and I applied to refinance our home mortgage. At the end of last week – about ten months later – we finally closed on it.
Why did it take so long? In a nutshell: legal trouble. And so a straightforward, dry financial transaction turned into a mini-drama.
Back in 2005, we had insulation blown into our house. The contractor showed up a few days later than scheduled, obviously running behind on all of his work. He tried to play catch-up at our expense. Our supposedly two-day job shrank into a single day, leaving us with a tremendous mess and parts of the job still unfinished. We complained; we paid him for work done but withheld about a third of the invoiced amount; we got dunned repeatedly, wrote letters explaining what was still unfinished, and ultimately filed a complaint with the Ohio Attorney General’s office.
The contractor’s response was basically “FU.” Toward the end of our correspondence, he told us that he had a lien on our property and would collect one way or another. That seemed ludicrous, because we had never gotten any official notification of a lien being filed.
We put him out of our minds for the next few years. Then one day, a few weeks into the refinancing process, the bank called to inform us that a contractor had placed a mechanic’s lien on our property.
I knew nothing about mechanic’s liens, though a quick scan of the Ohio Revised Code gave me a basic clue. I learned that a contractor can stop you from selling or refinancing your home if he says you owe him money. For him to collect, he’d have to initiate foreclosure proceedings. For the lien to be valid, it has to be filed within 30 days of the date when work was last performed on the property – and it must be served on the property holder.
In other words, unlike other types of debt, fees owed to contractors are backed with one’s property as collateral, which puts the consumer at a massive disadvantage when there’s any dispute. While I can understand that the law aims to protect honest workmen from getting screwed over, it’s strongly skewed against consumers when a contractor does shoddy or incomplete work. For a dispute of less than $600, our entire house could be held hostage. And so it was.
In our case, though, the lien had never been served on us. I thought we should be able to make our case even on the substantive facts, but if not, then at least on that legal technicality.
We talked to a lawyer friend. He said the rational thing to do would be to offer the contractor a compromise payment. So we called him – let’s call him Nagol Insulating. Nagol’s response was: “Ha ha ha ha ha ha ha! You’re just mad because I didn’t clean up. [There was more to it than that.] You owe me 25% annual interest, but I’ll accept half the interest plus the principal. Oh, and I just got out of court with another customer, where I won again.” We did a search on Nagol and learned that he had dozens of liens filed in Athens and nearby counties. (You can check out contractors’ records for many Ohio counties and some in other states too at Public County Land Documents – a great source that I’ll check before we ever hire another contractor again.)
So we went back to our lawyer friend, who said, “Well, getting rid of this fellow will probably cost you more than than the disputed amount in legal fees, but he’s demanding menace money! I would completely understand if you wanted to fight him.” Our friend couldn’t represent us, since he’d once done work for Nagol and would be open to conflict-of-interest charges, should the case land in court. He referred us to a colleague, whom I’ll call Mr. Magic, Esq., because he’s actually a magician who performs for kids on his off-work hours.
We paid a retainer of a few hundred bucks to Mr. Magic, and I will say that this small act – paying money to our lawyer – truly did work magic on my peace of mind. Suddenly, we had someone in our corner. Someone who could read the Ohio Revised Code and not just speculate on what it meant! Someone who knew how to speak and write legalese while translating it for our benefit!
Any of you ever felt at the mercy of a bully? I remember it well from my childhood, when no one ever swooped in to protect me. Now, I had a protector. It felt great.
Which leads me to think that everyone should have affordable access to a good lawyer when they need one. For civil disputes, I don’t know how you’d prevent people from filing frivolous lawsuits. And yet, I can’t help but think that their numbers would be dwarfed by folks with legitimate complaints – the legions whose insurance coverage has been canceled when they get sick, for example. As for criminal defendants, yes, they’re entitled to a lawyer, but unless you can pay for your own, chances are good you’ll be assigned someone who’s overworked, burnt-out, perfunctory, or just plain incompetent. (I know someone who pled guilty to a spurious charge of disorderly conduct just because the alternative would’ve been thousands of dollars in legal fees.)
Let’s be clear: the opportunity to retain an attorney rests on a massive dose of privilege. Ten years ago, we could not have afforded Mr. Magic’s fees, which ultimately ran into the high triple figures. We’re really lucky we had the money. Otherwise, we would have either had to cave into the bully’s demands (which were in the same price range, however) or just defer financing the house, likely missing the boat altogether on affordable interest rates.
Mr. Magic did an excellent job, as it turned out. Since there’s no legal mechanism for questioning the validity of an illegally filed lien, the procedure required us to file a “Notice to Commence Suit,” which essentially dared Mr. Nagol to foreclose on us within the next two months; otherwise, the lien became void. It could perhaps also be termed a “Notice to Shit or Get off the Pot.” Nagol tried filing a suit in small claims court, again, but that wasn’t the proper venue and anyway Nagol is the only one who’s convinced he’s a legal hotshot. He’d be well advised to stick to insulating, except even that isn’t true.
In the end, Nagol’s lien expired since foreclosing on us would have cost him a four-figure sum just in legal fees. (Hmm, maybe not everyone needs access to an affordable lawyer?)
I sort of miss having Mr. Magic, Esq., on retainer. But mostly I’m just glad we could finish the refinance job.
Which brings us to what Paul Harvey used to call “the rest of the story.” Back in August, we were quoted an annual percentage rate of 4.85%. Friday, we closed at 4.325%. Thanks to Nagol’s shenanigan’s and the resulting delays, we just went from a 30-year mortgage (at 5+ APR) to a 15-year. Our monthly payment stayed the same.
If Nagol only knew! But then again, it’s enough to have vanquished the bully once. I don’t see any need to provoke him.
(If you’re a local reader and want the real name of Mr. Magic, Esq., I’m happy to provide it if you email me. As for Nagol, if you want to avoid him you can just spell his name backwards.)