You’re a construction contractor who works hard every day on many different projects. Or perhaps you provide materials to a construction site and love to see buildings go up with you windows on the side. In most of these cases, you work hard, get paid, and can go home at the end of the day. Sometimes, however, payment doesn’t happen. While there are many reasons for this, the law provides a process for you to file a lien on the property until you are paid. Your job is to do the work, not provide additional financing for the project. Lien laws give you an additional way to enforce your contract and ensure you’re paid.
Source: Created from data from the Census Bureau’s Business Dynamics Statistics
What is a Mechanics Lien?
A mechanics lien is a legal claim that you, as someone who worked on a piece of property or provided materials to, can file against the title of the property if you remain unpaid for work performed after a certain period of time. This applies to both real property (such as houses, commercial buildings, and garages) and personal property (such as large equipment, air conditioning systems, and other fixtures). Typical lien claimants are general contractors, subcontractors, and suppliers of building materials.
This means that if you haven’t been paid for work you performed on a piece of property, you can file a document with the county that will be attached to the title for the property notifying anyone looking at the property that there is an unsettled debt on the property. When property is sold, any liens against the title must first be cleared before the owner can be paid, so property owners have an incentive to keep their payments up to date and prevent liens.
Will Filing a Mechanics Lien Work?
While filing a mechanic’s lien is not a guarantee you’ll get paid, it certainly gets the attention of property owners and makes it more likely. If you’re having trouble getting paid, a mechanic’s lien can be an effective way to handle collections. A correctly filed lien can freeze project funds, stop the property from being sold, and cause problems for other parties who have an interest in seeing you paid.
The process for filing a mechanics lien varies by state, so it’s important to know the guidelines for the specific place you’re working. Many states require you to notify the property owner and other parties of the unpaid debt before you can begin the filing process. This notification varies depending on the type of property and type of work performed.
Once you’ve met any notification requirements, you’ll need to file the lien. Make sure to check with an attorney or with the local county office to make sure you include all the correct details, meet all the formatting requirements, and attach the supporting documentation. Include the filing fee and take all your paperwork to the county Registrar of Deeds for filing.
You will also need to serve the lien so that the property owner and any other party who was notified gets a copy of the documents you filed in the lien. Different states will have different rules on how to serve the lien, so be sure you’re clear on whether the lien can be served by mail or if it needs to be served in person. Because property with a lien on it cannot be easily sold until the lien is satisfied (paid in full), owners have a great incentive to pay their bills.
A lien is not valid forever, so you need to keep track of when the lien will expire and make sure you take enforcement action before that date. One option for a mechanics lien claimant is to sue to have the real estate sold at auction and recover the debt from the proceeds.
Mechanics Lien Deadline Heat Map
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