Meaning of word &quot;remodeled&quot; in California seller disclosure? On California C.A.R. TDS forms sellers have to disclose any unpermitted work properly so that buyers would not later sue seller for misrepresenting property. On disclosures I have seen words &quot;[re]built&quot;, &quot;remodeled&quot;, &quot;converted&quot; being used to disclose unpermitted work. What are main differences between these words in common law? Can seller state &quot;bedroom was remodeled without permits&quot; to imply that what is actually garage on building blueprints is now being called bedroom? Or would seller have to use verb &quot;rebuilt without permits&quot; or &quot;converted without permits&quot; in a such disclosure to imply that non-living space is being used as living space?
The words words &quot;[re]built&quot;, &quot;remodeled&quot;, and &quot;converted&quot; are not terms of art at common law. They would be interpreted on a case by case basis under the circumstances, typically in a lawsuit for a fraudulent misrepresentation, negligent misrepresentation, or breach of a contractual covenant, with an eye towards where the use of a particular word in a particular context was, or was not, misleading. Also &quot;converted&quot; is a term with a technical legal meaning but not in the sense that you are using the word (the technical term of art legal meaning is to take or obtain property of another in a tortious, i.e. wrongful, manner for which there is a civil damages remedy). Often a court would refer to an ordinary, non-legal, dictionary to aid it in evaluating the meaning of these terms.
You have to take the General Notes part in its full context. The relevant clause says The term “Common Area” as used herein means all portions of the Project except the Units, and without limiting the generality of the forgoing, all structural projections within a Unit which are required for the support of a Condominium, gas, water pipes, all sewers, all ducts, chutes, conduits, wires and other utility installations of the structures wherever located (except the outlets thereof when located within the Units)… The most proximal expression is "wires and other utility installations", so construing "outlets" as covering gas, water, sewers, ducts etc. would be contrary to the interpretive principle known as the Last Antecedent rule. Nothing in the context requires a broad-scope interpretation of the "outlet" exception. This being in the US, courts would use ordinary English usage to understand what an "outlet" is, that is, even if "you could argue" that something is an outlet, the term "outlet" is used in the context of buildings to refer to an electrical outlet. The way this works is that you would need to get an expert witness to testify as to the common meaning of "outlet" in this context. There are two approaches to doing that. One is to get testimony of a contractor, as to what they mean when they say "outlet". However, contractors speak a special language (and not consistently so), and it's dubious that either party of a contract could have understood "outlet" in a special way shared by contractors. So the other approach (exemplified by Heller) is to call on a language and usage expert. A DIY approach is to google things like "sewer outlet", "electrical outlet" and so on, to see if you get many hits. You do not have a sewer outlet in your unit. You might have a water outlet if you work on cars and brought one inside the unit, but clearly context dictates that that is not relevant. The way courts resolve these matters is to determine what the ordinary meaning of a term is, and set aside specilized and technical meanings. See for example Nix v. Hedden where SCOTUS ruled that a tomato is not a legal fruit, because scientific definitions notwithstanding, a tomato is clearly a vegetable in common usage. Note that I am specifically addressing the question you posed, about "outlets". IO believe that attention to "outlets" is misguided. Focus should be on the regulation about "the HOA not being responsible for water leaks between units or interior damage", which is what they are invoking. By your description, the hole in the pipe which constitutes the source of the leak was behind the wall. The problem is that "between units" can have two very different meanings, one being "from one unit to another", and the other is "which takes place in the area that exists between units". Since you do not own the area behind the walls (presumably: property descriptions can be less than totally clear), there was no leak from one unit to the other. There was a leak which took place in the space between units. The definitions for the project clearly indicate that such behind-the-wall stuff is "common area". If a breech in the drain pipe occurs outside the wall and leaked into the unit below, that would be a leak outside the common are, and would be a leak between units in the "from one to the other" sense, although the water would have to pass through the common area. But if it originated on the other side of the wall, it originated in the common area which is always present between units. Suppose, being devil's advocate, that you own not just the stuff inside the walls but also the stuff behind the walls, up to the next unit's walls. But if you apply that analysis of property boundaries, then the adjacent unit's property is the stuff inside his walls and between, up to your walls, so unless you are very special, you don't own the area between the walls. So to reiterate, "outlet" is a irrelevant. What matters is the interpretation of "leak between". Under neither interpretation of that expression is a leak behind the wall the responsibility of the person "upstairs".
For the US: I believe 17 U.S. Code § 120 applies here: 17 U.S. Code § 120 - Scope of exclusive rights in architectural works (a)Pictorial Representations Permitted.— The copyright in an architectural work that has been constructed does not include the right to prevent the making, distributing, or public display of pictures, paintings, photographs, or other pictorial representations of the work, if the building in which the work is embodied is located in or ordinarily visible from a public place. So long as the building is located in or visible from a public place, anyone should be allowed to distribute models of the building Edit (more information, but I believe original answer still suffices): So we know from 17 U.S.C. § 102(a)(8), that architectural works are copyrightable, and the extent of this copyright protection extends to copyright over the blueprint itself and/or the right to produce the building. This seems to only mean that an architect would own copyright in a model of a building if he specifically creates a sculpture of the building and then copyrights it. It doesn't appear that designing a building or having blueprints of it grants the creator rights over a sculpture of the building, the rights to such a sculpture would have to be obtained seperately. TL;DR You should be allowed to sell models of a building so long as they are not models based off the actual blueprints of the building, and that these models haven't been manually copyrighted by the architect beforehand. (i.e making the building hasn't granted a copyright over models of the building beforehand)
Desuetude is the Latin word. https://en.wikipedia.org/wiki/Desuetude Typically there is more to it than just that there was no enforcement for a while. It usually occurs when prosecutors agree not to prosecute and judges don't punish or punish harshly for it. Normally an HOA is just rules for your apartment building and not actual laws so it would not apply there.
You can be held liable for rent after you are off a lease. Rewriting a lease only affects future obligations, and doesn't extinguish past obligations. However, you appear to have released X from all obligations via paragraph 2. If you plan to sue for past rent, the court will have to interpret the statement that &quot;The landlord, Y, and Z agree to relinquish X from any obligation regarding the lease as mentioned above&quot;, which is non-standard English. It is extremely likely that the court will interpret this to mean &quot;release&quot;. You might argue, using earlier emails, that all parties had a clear understanding that this means &quot;from all future obligations, but not past obligations&quot;, but that is not what the written agreement says, and the parol evidence rule, which is codified as explicit law in California, says execution of a contract in writing... supersedes all the negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument That clause lets X off the hook, in exchange for his claim on the security deposit and for relinquishing his tenant rights to the unit. You cannot sue X for any rent.
Michigan law say nothing about landlord entry, so whatever it says in the lease is what is allowed. Various sources like this comment on the lack of such statutory regulations. There does not appear to be any relevant case law for Michigan which impose restrictions on a landlord's right to access a rental. Since there is no statutory or case law restriction on landlord's right to access his property, landlord's agent would have the same right to access. That would mean that if the listing agent were authorized by the landlord to enter, then the agent could enter, and it would not be necessary for the landlord to accompany this agent whenever entry was needed. That does not mean that a "listing agent" that happens to work with a landlord has an independent right to enter the landlord's property. The same would go for repairmen. It is actually not clear to me whether there could be blanket permission for any and all with access to the lock box to enter, since pretty much any realtor can enter a house for sale, subject to whatever the stated limitations are, and they don't call the owner for each entry. I suspect that one would not have legal grounds for imposing a particular additional restriction on a landlord's right to access and permit access to the property, since there's no overriding statute, and restrictions on landlord access mainly derive from statutes.
Short Answer The question of whether a real property mortgage is recourse or non-recourse is governed by the law of the jurisdiction where the real property is located. The place where the parties to the agreement reside, or where the documents are signed, is irrelevant. I am not aware of any exceptions to this rule anywhere in the world. In some circumstances, the parties may reach an agreement regarding whether a real property mortgage is recourse or non-recourse if the law of the jurisdiction permits agreements of this type. But, often the parties are not allowed to vary this aspect of their real property mortgage agreement by contract. Choice is law for loans secured by collateral which is property other than real property is pretty much irrelevant in the U.S. This because the law is the same in every U.S. state, territory, or district. Long Answer Background regarding recourse and non-recourse loans To clarify, the terms &quot;recourse&quot; and &quot;non-recourse&quot; are normally used to refer to the remedies available in the event of foreclosure of a loan secured by property that serves as collateral for the loan. When the collateral is real property, the core documents in the transaction are a promissory note that represents a borrower's promise to reply the funds borrowed from any assets available to the borrower that is not exempt from creditor's claims, and a document representing the fact that the collateral may be seized if the promissory note is not paid as agreed, and that the creditor's interest in that collateral has priority over all third parties seeking to collect their debts out of that property which cannot be erased by transferring the property to someone else. This document is sometimes called a mortgage, and a substantially equivalent document used mostly in the Western U.S. is called a deed of trust. I will call this document a mortgage for simplicity, whatever its true name in your locality. In the case of a recourse mortgage, if the borrower defaults, the lender can foreclose on the mortgage, which results in a foreclosure sale at which the lender can bid all or part of the debt secured by the collateral together with any additional cash desired, and their parties may make cash bids. Ignoring for the moment the complications involved when there are multiple mortgages and liens with different priorities encumbering the real property, the person who makes the highest bid at the foreclosure sale is given ownership of the real property in exchange for paying the price bid at the foreclosure sale either in cash (in the case of a third-party bid) or in the from of a reduction in the debt owed, in the case of a lender bidding the debt owed against the property. If the mortgage is a recourse mortgage, then if the lender bids less than the full amount of the debt owed on the promissory note and is the highest bidder at the foreclosure sale, then the debt owed on the promissory note is reduced by the amount of the bid made by the lender and the remainder of the balance owing on the promissory note is a personal debt owed by the borrower to the lender called a deficiency judgment. For example, suppose that you buy a house for $1,000,000 with a $200,000 down payment and an $800,0000 recourse mortgage loan. Some time later, the balance owed on the mortgage loan from regular monthly principal and interest payments is $775,000. But, due to a collapse in the real estate market in the real estate market where your house is located, your house, which had a fair market value of $1,000,000 when you bought it, now has a fair market value of $725,000. You lose you job due to the same economic downturn that has caused the market value of your house to decline and are unable to make mortgage payments. The lender forecloses on your house and bids $725,000 at the foreclosure sale, even though you still owe $775,000 on the promissory note. After the foreclosure sale is completely, the lender owns your house, and you still owe the lender a deficiency judgment of $50,000. The lender may now collect the $50,000 deficiency judgment in much the ame way that the lender would collect a judgment entered by a court on an unpaid credit card bill for $50,000. The lender can garnish your wages (once you get some), can seize your bank accounts, and can seize other property which you own which is not protected by a statutory exemption from creditors. In a recourse mortgage the economic risk of declining property values that wipe out the down payment equity is born by the borrower. In contrast, if you had a non-recourse mortgage, the lender's sole remedy would be to seize the collateral and the lenders would not be able to obtain a deficiency judgment no matter how little your house was worth. Operationally, this means that the lender is required to bid the full amount of the debt owed by the borrower to the lender at the foreclosure sale, even if the property is worth much less than the amount of the debt owed. In the case of a non-recourse mortgage the economic risk of declining property values that wipe out the down payment equity is born by the lender. Choice of Law For Real Property The place where the documents are signed and the domiciles or place of organization of the parties to the agreement are irrelevant to the question of whether a real property mortgage is recourse or non-recourse. In the U.S. (and everywhere else that I am aware of), the law governing security interests in real property, such as mortgages and deeds of trust and liens is the law of the place where the real property is located. So, if you take out a mortgage on property in a non-recourse state, the mortgage will be a non-recourse mortgage. Usually, in a non-recourse state, it is not possible for a lender and a borrower to mutually agree to make the mortgage a recourse mortgage when the default rule is that mortgages are non-recourse mortgages. In contrast, if you take out a mortgage on property in a recourse state, the mortgage will be a recourse mortgage, unless the borrower and lender expressly waive the right of the lender to obtain a deficiency judgment in a foreclosure within the mortgage document. Choice of Law For Other Property The law governing security interests in property other than real property in the U.S. is usually the Uniform Commercial Code which contains choice of law rules. While, in theory, different rules that states could adopt regarding whether security interests in property other than real property are recourse or non-recourse, in practice, every U.S. state has adopted the Uniform Commercial Code as a matter of state or territorial or district law, and at the level of generality of whether a security interest (which is the legal name for a mortgage with collateral other than real property under the Uniform Commercial Code) is recourse or non-recourse, the law is uniform throughout the United States, although there might be slight technical differences between the laws of different states or other jurisdictions within the U.S. based upon the version of the Uniform Commercial Code that is on the books or the decision of state legislators to deviate from the uniform statute's language. The Uniform Commercial Code of each state contains choice of law rules determine which state's version of the Uniform Commercial Code applies to a case. And, the choice of law rules of the Uniform Commercial Code in the state where a lawsuit pertaining to the personal property security interest is what a court in that state applies to resolve the choice of law question. These rules are generally consistent with each other. Footnote on Macroeconomic Implications Of Recourse v. Nonrecourse Mortgages The incentives of lenders and borrowers when entering into mortgage loan arrangements is different in recourse and nonrecourse mortgages, particularly, when the decision to give a borrower a loan is made by a third-party mortgage broker subject to bureaucratic conditions, or by a low level bank employee who acts in the same way, rather than by someone with an economic stake the financial well being of the lender. When mortgage loans are non-recourse, down payments are small, and housing prices are rising, and may be entering a real estate bubble, a borrower is in a &quot;heads I win, tails you lose&quot; situation. If real property values collapse, the borrow loses only his small down payment. If real property values go up, the borrower can sell the property and pocket all of the profits (in some circumstances the profits are even tax free). The borrower has little incentive to worry about the possibility that the fair market value of the real estate could collapse at some point. But, if the decision to allow the borrower to borrow is made by an employee or broker with nothing to lose if a loan is authorized when it shouldn't have been because the risk that the property values will collapse due to a real estate bubble are too great, the mortgage broker has an incentive to be lax in underwriting the loan to make sure that the borrower can really make the payments and that a foreclosure of the loan will realize enough value to pay of the loan if a real estate price bubble collapses. And, since the bank can get its money back and more by foreclosing if the borrower doesn't make payments while prices are going up, there isn't much of an incentive to make sure that the evidence of the borrower's ability to make the payments on the mortgage is accurate. The incentive of the broker or employee is usually to get as many mortgages processed as possible, even if that means overlooking problems with paperwork in a loan application, or using an appraiser who will say that the property being financed is worth what is necessary to get the loan approved, even if you know that the appraiser is cutting corners or just making up inaccurate values to get what the broker wants done. These events can conspire to make a real estate mortgage very bad and to expose the entire community of lenders who make loans in a non-recourse state to catastrophic losses in the event that a real estate bubble collapses. In contrast, this is much less likely to happen in a recourse mortgage state, where the risk of a downside loss deficiency judgment discourages borrowers from trying to finance the purchase of a house that could easily lose more value than the down payment if it was apparent that a real estate bubble was developing. So borrowers would self-police. The reason for this extended footnote and story is that this was one of the root causes of the financial crisis. A handful of states with big real estate markets and non-recourse mortgages (California, Florida and Texas mostly) started to experience real estate bubbles and mortgage lenders, because they had bad incentives in their mortgage origination systems didn't do enough to prevent themselves from financing the purchases of overprices houses. Eventually, the real estate bubble collapsed, lots of borrowers with overpriced houses and little money down defaulted on very large mortgage loans, and the lenders took huge losses on their real estate mortgage portfolios which were supposed to be ultra-low risk but weren't because the people evaluating the real estate mortgage investments overlooked or willfully ignored the risks. This, in turn, resulted in losses so great at the financial institution level that almost every major investment bank in the country and almost every subprime lender in the country went out of business or went bankrupt, and the collapse of this part of the financial industry, in turn, wrecked havoc on every firm in the economy that relied of these financial institutions as a source of investment or a source of financing for their unrelated businesses. The result was the worst recession since the Great Depression.
Preface and Caveats The question doesn't specify where this happened. I am providing an outline of the way that most U.S. states would handle this situation, if the fats are as they are much more likely to be and not as claimed in the question probably due to a misunderstanding of the underlying transaction. I identify areas where state laws most often vary and don't describe those areas of the law in detail since that is impossible without knowing where this happens. This is a matter of state law and varies from state to state, although most U.S. states are quite similar until you get to the fine details. Atypical language in the contract between the contractor and the client could also lead to a different conclusion. I don't know how this would be resolved in a non-U.S. jurisdiction. Background: The Structure Of A Typical Construction Loan Financed Construction Project In business and contractual disputes you can only understand the answer if you understand the underlying business transaction, which the question itself doesn't spell out very fully. The fact pattern identified in the question is so unusual that I strongly suspect that there is a misunderstanding of the facts, or an inadvertent misstatement in the language used in the question due to sloppy writing that flows from not appreciating the importance of some key facts. The transaction was almost surely structures more or less as follows (for background, I'm presenting a more general very of this kind of transaction rather than the simple one with no subcontractors or material suppliers involved, because this context helps someone understand why the laws are written the way that they are written.) Usually, the client owns real property, takes out a construction loan from a bank secured by the real estate, and hires a general contractor. The client will usually make some down payment to the general contractor who will take care of paying the subcontractors and material suppliers, and will pay the balance of the amount due to the general contractor through proceeds of the construction loan disbursed by the bank which are drawn as the work is done and payment is earned. Typically, each drawn cycle, which is often monthly for a smaller project and weekly, biweekly or semimonthly in a larger project, materials suppliers and subcontractors submit invoices and lien waivers to the general contractor based upon the work done. If the work is complete, a complete lien waiver is submitted, if he work in only partially finished, a partial lien waiver is submitted. The general contractor substantively reviews the invoices based upon a physical review of the construction site and a review of the subcontract. If there are problems it is rejected and must be resubmitted by the material supplier or subcontractor. If it is approved, the general contractor attaches that invoice as a supporting document to a draw request for the draw cycle summarizing all validly submitted invoices from material suppliers, subcontractors and itself, and also attaching a partial lien waiver from the general contractor. Then, the general contractor submits that draw request to a bank officer handling the construction loan as an agent of the property owner-client, and also a client representative for approval. The bank officer and client representative make a much less probing review of the draw request, looking only for obvious irregularities or suspicious amounts, and if everything is in order, they approve the request. Then, the bank write a check in the draw amount approved to the general contractor. The general contractor then disburses the invoiced amounts to the materials materials suppliers and subcontractors and pays itself the amounts that it has earned. Sometimes, however, the general contractor gets a valid invoice from a material supplier or subcontractor, and receives funds from the client in the form of a downpayment or a loan draw, but doesn't pay the subcontractor or material supplier with those funds. Also, sometimes, the general contractor does work that it is entitled to be paid for or incurs an obligation to a material supplier or subcontractor, but the client doesn't pay or the bank doesn't disburse the funds requested even though the request is valid. When a general contractor, material supplier or subcontractor doesn't get paid for work that is actually done at a particular piece of real estate, the law gives the firm that wasn't paid for its work on that particular piece of real estate what is called a mechanic's lien encumbering that piece of real estate. The details of how a firm with a mechanic's lien gives notice to the world of its rights, the priorities of lien's vis-a-vis each other, and the way that mechanic's liens are enforced varies significantly from state to state. But typically the notice must be given very promptly and not long after notice of non-payment is given, a lawsuit to foreclose on the real estate encumbered by the lien is commenced. An unpaid material supplier or subcontractor, in addition to its lien rights, can also sue the general contractor for breach of contract, and sometimes also for misappropriation of disbursements from the client or the bank. An unpaid general contractor, in addition to its lien rights, can also sue the owner of the property for breach of contract. The Facts In The Question and Analysis The first paragraph of the question tells us what went wrong. The client paid an employee of the general contractor (probably a project manager) instead of the firm the employee worked for (basically embezzling the money by deceiving the client into thinking that the employee was authorized to receive a payment to the employee's firm on its behalf when that wasn't the case), and the firm of the employee who was paid now wants to get paid. This happens and lawsuits usually follows when it does. But exactly what happens next depends upon the facts in the next to paragraphs. The next two paragraphs of the question, however, are probably confused and incorrect. The next two paragraphs say: Two weeks later, the client received a letter from the contractor's lender asking the client for money owed to the contractor, saying that if it was not paid, the client could be double charged. Does the client owe the contractor's lender? What probably actually happened is that the finance office of the contractor submitted a draw request to the bank officer in charge of the client's construction loan with the bank, and also gave a notice of the draw request to the client. The client tells the bank officer not to approve the draw request because the client has already paid the draw request directly to the employee of the contractor (probably the project manager) without the knowledge of the firm the employee worked for. What Happens Next If The Facts Are As I Believe Them To Be? When this happens, the finance officer at the contractor firm talks to the client figures out what happens and then talks to the employee to whom the payment was made. If the employee promptly turns over the funds the the contractor firm, the finance officers at the contractor firm scolds the employee for screwing up the system and the client for making a payment to the wrong person and there is no harm, no foul, and the matter is over. But if the employee who took the client's money doesn't turn over the money which the client can prove to the contractor firm that he paid to the employee, several things are likely to happen. Non-Lawsuit Actions: The client will direct the bank not to pay the draw request. The employee who took the money from the client is fired (no big deal, he was probably long gone). The contractor firm and/or the client will often, but not always, report to the police that the employee embezzled the funds from the client, and if the police find it credible, will issue an arrest warrant. The main reason not to do so is that the facts are uncertain enough that the police and prosecutor don't want to touch it (e.g. the client paid the employee in cash and didn't get a receipt, or the employee when asked says that the payment was made but was a &quot;tip&quot; or was payment for something unrelated), or the client and/or the contractor firm don't want to harm their reputations by making public the fact that there was a theft on this job. Three lawsuits could be brought, although, in practice, these might be consolidated as claims against different parties and cross-claims between defendants, in a lawsuit brought by the contractor, or in some other configuration. The contractor firm sues the employee who took the money for converting money from a client intended for it (probably both as a tort and as a breach of fiduciary duty by an agent of the construction firm). The contractor firm sues the client for breach of contract. The question is about the liability of the client in this second lawsuit. The client might also bring a counterclaim against the contractor for negligent supervision of its employee if the employee did indeed abscond with the money and the facts support that counterclaim. If the client prevailed on that counterclaim, the judgment on the counterclaim for negligent supervision (e.g. if the contractor knew that the employee had a history of doing things like this and didn't warn the client) would be setoff against the breach of contract judgment, rather than being a defense to the breach of contract claim. The client sues the employee for fraud, conversion or theft. What Are The Rights Of The Parties In These Lawsuits? In the second lawsuit, the client has breached the contract. The contract said to pay the firm, the client paid someone else, and so the obligation under the contract was not satisfied. The disputes in the lawsuit between the contracting firm and the client will be over whether the employee had apparent authority to accept the funds as an agent of he contracting firm, over whether the payment that the client says was made to the employee was made at all, and over the purpose of the payment if a payment was made to the employee but the employee claims that it was a &quot;tip&quot; or a payment for something else (e.g. the employee also had a catering side hustle and the employee says it was for catering services). The issue of whether the client made the payment at all may be hard to prove if the payment was made in cash and the employee didn't provide a receipt and will come down to the credibility of the client and employee's testimony at trial. if the payment was made with a check or credit card, bank records will make it an open and shut case on that issue that will probably not be disputed at trial. If the facts reveal that the employee had apparent authority to accept the funds from the client for the contractor firm and that the payment was for work on the project and not something else, then the the payment made by the client to the employee satisfies the client's duty under the contract even if the employee wasn't actually authorized to receive the funds for the contractor firm. So, the client wins and the contractor firm's sole remedy is to sue its employee for misappropriating the client's funds. On the the other hand, if the employee did not have apparent authority to accept the funds from the client, or the payment was for something other than work on the project, or the client fails to prove that the payment was ever made, then the client owes the money to the contracting firm and must pay the contracting firm for the amount due (plus interest, litigation costs and possibly attorneys' fees depending on the terms of the contract). The client may pay that obligation out of separate funds of the client's own, or may authorize a the bank officer to make a draw on the construction loan to pay the amount owed. The construction loan bank of the client wouldn't sue the client or demand payment from the client for the amount that should have been paid to the contractor firm but was instead paid to the employee. It didn't pay money to someone it shouldn't have paid it to unless the client authorized the bank to do so. And, the bank won't pay the contractor without the client/borrower's say so. If the client authorized a draw payment from the construction loan to the employee rather than the contractor firm, the client still owes the bank for what it paid to the employee at the direction of the client (in addition to all other draws on the project), although the client may have a suit against the bank officer for negligence in administering the loan by failing to flag that the payee was wrong (which might lose but isn't a sure loss). The amount owed to the contractor firm proceeds under the analysis set forth above. What If The Facts Are Right? If, improbably, the facts as stating in the question are actually what happened, the client will owe or not owe the contractor money under the same analysis as above. But the client will not have liability to any company that the contractor got a loan from (which would not encumber the client's real estate), since the client has no contractual relationship with the contractor's lender. Post-Script On Double Payment Prevention Laws The question hinges on the unfairness of the client having to possibly pay twice for the same construction work. In some situations, where the general contractor firm is at fault for causing the double payment to happen, the law protects the client from double payment, even though those laws don't apply here. I explain why these laws don't apply below. Basically, the client has to eat the double payment when the double payment occurs because the client screwed up though no fault of the general contractor and the general contractor doesn't benefit from the double payment. Some states have laws designed to prevent property owners, often only residential property owners having work performed on their own residences, from having to double pay for work done in some circumstances. But these laws usually only apply when the client pays the general contractor firm as the client is supposed to, satisfying his contractual obligation, and the general contractor doesn't pay the subcontractor, causing the subcontractor to sue the general contractor for breach of contract and the owner to enforce the subcontractor's mechanic's lien. In those situations, the double payment prevention law eliminates the subcontractor's mechanic's lien rights when the client pays the general contractor in full, and the subcontractor is left only with a lawsuit against the general contractor who didn't pass on the client's or the client's bank's payment to the general contractor for the subcontractor's share of work to the subcontractor. In this case, the double payment laws usually wouldn't apply because the legal issue here is whether the client paid the contractor, or was deceived by the employee into paying someone other than the contractor in an act of conversion/embezzlement/fraud.