There are a number of situations where, if you’re having trouble collecting a payment you’re owed, you may need to put a lien on a property. Placing a lien is one option that allows you to secure your debt and hopefully, eventually get paid. Two common types of liens are mechanics liens and judgment liens and the process to place each type of lien varies from state to state.
Mechanics liens are filed by companies and individuals that provide labor or materials to a construction project on a piece of property. Check your state to see if you’re eligible to file a mechanics lien by reviewing our Guidebooks, but generally, people who are contractors or subcontractors such as roofers, plumbers, electricians, architects, and more can file a mechanics lien.
In some cases, you may need to provide a notice that you’re starting a project but in all situations, you should collect information about the project and property owner on a job sheet. You’ll use this information to send invoices and file liens if necessary. After you’ve sent the invoice and if you only receive a fraction of the amount you’re owed or no payment at all, you’ll start the process of filing a mechanics lien. Be sure to pay attention to the timeline for this as they can be fairly short and missing the filing date may mean your forfeit your rights to file the lien.
The lien itself is a document filed in the county clerk or recorder’s office for the county you’re working in on a specific project. Research state laws to determine what specific information the lien needs to contain and call the county office to make sure you meet and local rules on formatting, copies, and fees. You also need to send a copy of the lien to the owner of the property, which you can do by dropping it in the mail as certified or registered mail, return receipt requested. You may also want to attach copies of your invoices and any other relevant supporting documents.
Once you’ve completed the necessary steps for your state, you have secured a lien on a property. This doesn’t mean your work is done! You need to pay attention to the timeline for the lien and either file a lien extension, cancel the lien, or take an appropriate action to collect on the debt.
If, for example, you receive a judgment in a certain amount, you have the ability to file a different lien on the property based on the judgment lien. These liens aren’t necessarily for work performed but are instead for a debt owed where a court has issued a judgment in favor of the creditor. Again, this type of lien will have laws that vary from state to state, so be sure to research the rules or consult an attorney before filing.
In addition to obtaining a judgment, mechanics lien holders may also begin an action to foreclose on a piece of property. In this case, you may want to see what other liens are outstanding on the property and what the precedence of the liens are to determine if such action is likely to result in a payment to you.
If you need help determining the best course of action, reach out to the experience lien attorneys at National Lien & Bond. We can help you set up a process for your mechanics lien, put a lien on a property, or figure out your next steps before the lien timeline runs.