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As a construction lawyer for my whole career, call a construction lawyer to review your case. First, was the lien timely filed and done per any statutory notice requirements. Second, if the work was unfinished, terrible quality, etc, then you may have both common law and contractual defense against the lien. Third, if you have the agreement, have the lawyer review the indemnity clause to see if even the cost of hiring this lawyer to deal with the contractor may be covered too. Fourth, get your claim history with chase as it may have details useful for your lawyer.
Lastly, do you have photos or can you take them? Do so. If you got the work done by another contractor then the cost to complete in excess of what you paid this contractor may be recoverable against the other contractor.
Fundamental reality is, it’s a small claim and likely will require many legal dollars to handle correctly. Liens are very annoying to deal with. The contractors next step is to see if you do anything and then find some cut rate lawyer to make demands of you and, if they choose so, file a lawsuit to foreclose the lien, which means that if you lose and refuse to pay, they can sell you house to collect the money. Foreclosing the lien though will cost the contractor money too unless they just send their case to a debt collector lawyer who tries to collect it as a debt and not as a lien. If it’s a debt collector lawyer, expect to get harassed and then a lawsuit filed to annoy you.
You can wait and see or you can get ahead of it now with your own lawyer. Totally depends on the money you have in your war chest.
You can try to get a haircut on the lined amount. But here, you’d need a settlement agreement that requires release of the lien even though it’s not paid in full (I.e the payment the contractor accepts is payment in full). It won’t figure itself out. You may be able to use proceeds of the house sale to pay off the lien, but either way to get the lien gone it has to be released by the contractor - who won’t do anything unless paid or a court discharges the lien.
Why did you pay him before inspecting the job? With contractors that’s your main source of leverage to make sure they do the job properly.
Lien laws do vary by state so smart to get a lawyer to help sift through your options. Also double check the contract that you signed to see the terms and conditions that were outlined.
If it’s not finished, I would think the contractor would have a hard time making the case of a lien.
And look up slander of title laws
Speak to the contractor directly. Don’t involved lawyers. I am sure you can work it out. I’ve worked for contractors before and they will go back to clean up the job.
OP you can try this maybe you get lucky. But since there’s a lien on your property and you already took back the payment - y’all are in a dispute lol. Without some agreement indicating that the contractor is coming back to the site to fix something for free, bringing him back on your property to do more work might just enable you to get another lien for the work he came back to do when or if he charges you. Good luck OP.