In order to ensure that you’re paid for your services, time, or materials after the completion of a construction project, it’s important to understand how to file a mechanics lien.
A mechanics lien – also known as a construction lien or laborer’s lien – is a tool for contractors, subcontractors, and others in the construction industry used to resolve payment disputes. For more information on how liens work in construction, visit our article, “I Did the Job, Now I Just Want to Get Paid.”
Keep reading for a step-by-step guide on how to file a mechanics lien.
Filing a Mechanics Lien: State-to-State Similarities
Despite the differences in how to file from state to state (more on this in a future CNS article), the mechanics lien process consists of several steps that are true no matter what state the project is located in.
Verifying the Right to File a Lien
The first step to filing a mechanics lien is researching whether you have the right to file. Depending on where the construction is located, the build and associated liens are subject to the laws of that particular state. Your right to file will be determined by your involvement with the project, whether you’re required to give notice, and the timeline for filing the lien.
When determining your right to file, it’s important to note whether your particular state requires you to give notice to the property owners. This notice can come in the shape of a “preliminary notice” or a “notice of intent to lien.” Sometimes people think that they need to send the prelim (or file the mechanics lien) 20 days after the project ends, but many states require the prelim be mailed within 20 days of the project’s start.
Drafting the Lien
Once you’ve verified that you have the right to file a lien, the next step is to prepare the actual document. This step is known as the lien claim and drafting it can be quite tricky. First, you must acquire the correct form for the state you’re filing in. Next, you must fill it out to the exact state law requirements. This can get pretty detailed and even require the specific formatting of fonts, font sizes, and page margins. Some counties also have different requirements for address details. Seeking the assistance of a professional like CNS can ensure that everything is filled out correctly.
Filing The Lien
After the lien claim has been properly filled out, it must be filed in the county or jurisdiction where the construction project is located. But just how long does a contractor have to file a lien? The lien must be recorded within the time frame defined by that particular state’s laws. If you need help determining your time frame, reach out to CNS.
Every county recorder has unique requirements and procedures that you must adhere to in order to successfully file your lien. Failure to do so may result in additional filing fees or the rejection of your lien. The county recorder will also specify whether you can mail the lien, file it in person, or file it electronically.
Notifying the Parties
Before the filing process is complete, you’ll need to notify the party or parties subject to the lien. Be sure to check state laws as some states require notification immediately after filing while others require it simultaneously with filing. You’ll also have to verify who you need to notify. Some states only require that the property owner is notified while others require that you serve the contractor and lender as well.
Enforcing, Extending, or Releasing
Many contractors and suppliers make the mistake of thinking that the process is over once their lien has been filed. However, there are three important things that must be kept in mind:
- First of all, there’s a strict time period to enforce the mechanics lien. After the enforcement period has ended, collecting on the mechanics lien can be difficult.
- Once you’ve been paid, you’ll need to release the mechanics lien.
- While not all states require the claimant to cancel the lien, some will impose financial penalties if the lien is not released.
Secure Payment by Filing a Mechanics Lien on Property
A mechanics lien is one of the most, if not the most, valuable tool that construction businesses have in the collection process. However, there are many challenges when filing a construction lien which can result in you losing your lien rights.
Don’t roll the dice. Reach out to us to ensure your prelim is filed accurately – and quickly – so you’re able to file a lien later on.
Prefer to call? You can reach us at 800-366-5660.
Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.