The construction industry is plagued with payment issues, from slow pay to no pay at all. Because of this, contractors and subcontractors need to take precautionary steps to protect their right to payment. One of the first steps is preparing and sending out a preliminary notice.
However, a preliminary notice isn’t always enough to prevent payment issues, but it does ensure that your mechanics lien rights are enforceable.
If you are due payment for your services, you might be contemplating recording and enforcing a mechanics lien. But what does a mechanics lien do to ensure you get paid?
Mechanics liens create a reaction on your project and place pressure on the parties responsible for providing payment. At CNS, we provide mechanics lien services to help you exercise your rights to payment and verify that your liens are accurate and enforceable.
Continue reading to learn about the various ways in which mechanics liens help get you paid.
Filing A Mechanic’s Lien: What It Does
Mechanics liens are powerful tools for resolving payment disputes; however, they can be complex. Every state has its own mechanics lien laws, and it’s important to be aware of them to avoid potential mistakes that could invalidate your lien. The good news is that if filed correctly, liens are very effective in ensuring that you receive your fully agreed upon contracted amount.
Mechanics Liens Give you Leverage
The primary way in which mechanics liens help to get you paid is that they provide you with leverage. If a mechanics lien is connected to a debt owed to you, it will place significant pressure on the parties responsible to get the lien removed before it becomes detrimental to the project. This pressure, in turn, significantly increases your chances of being paid.
Mechanics Liens Get The Attention of Lenders and Owners
When you file a mechanics lien, you are essentially notifying the lender and property owner that you have not been paid for your work. Sometimes these parties are unaware of any issues within the project because they delegate the task of overseeing payment to a general contractor. But aside from notifying the lender and property owner, a mechanics lien also poses major risks for both parties, such as removing the ability to sell or transfer the property and complicating the property’s loan process. Because a mechanics lien can cause significant inconveniences for property owners and lenders, it is in their best interest to provide you with compensation as soon as possible.
Mechanics Liens Encumber The Property
When a mechanics lien is placed on a property, the property cannot be sold, refinanced, or transferred without the debt being assessed or paid first. This is because mechanics liens are recorded with land records and appear on title searches. If someone accepts the property after a lien has been recorded, they also accept it subject to the claim. That means that the buyer and seller of the property must pay you first in order to have the lien removed and be able to execute the sale of the property.
But remember, depending on your state, the mechanics lien is only enforceable for a fixed period of time. For more details about your state, be sure to contact CNS.
Mechanics Liens Set Firm Deadlines
In the event of continuous slow payment issues, a mechanics liens can also be effective. Slow pay is very common in the construction industry and, especially for smaller businesses, it can delay and cause complications with unrelated projects as it impacts the ability to purchase materials and pay employees. Mechanics liens set firm deadlines for the resolution of your claims. If the responsible parties do not pay you within the given timeframe, you can take the claim to court.
Mechanics Liens Are Difficult To Challenge
When a mechanics lien is placed on a property, it is extremely difficult to remove it without first paying the due amount. That is because the right to file a mechanics lien is very well protected in every state. If the property owner or general contractor decides to challenge the claim and loses, many states will place the responsibility of covering all attorney fees on them.
However, for a mechanics lien to be effective, you need to follow all procedures and ensure no technical mistakes are made when filing. CNS can help you with this process. We provide a research and verification process to verify the accuracy of every lien we file.
Mechanics Liens Freeze Money Flow
Construction projects involve multiple parties through which money needs to be exchanged. This is often the reason for many payment issues as the sheer volume of documents, invoices, and pay applications can lead to the misappropriation of money before it ever reaches you. By filing a mechanics lien, you can stop the flow of money to other parties until your claim is paid.
Mechanics Liens Provide You With Legal Claim On The Property
Sometimes payment issues don’t arise simply because the responsible parties refuse to pay you but because they don’t actually have the funds. This scenario can be a nightmare for contractors, subcontractors, and material suppliers, especially if the property owner files for bankruptcy. In these instances, a mechanics lien actually gives you the authority to collect payment from the property itself. The real estate can be sold at auction in order to pay your claim.
File a Mechanic’s Lien with CNS
Contractors, subcontractors, and material suppliers often spend valuable time and resources making phone calls and sending emails in an attempt to receive compensation.
Mechanics liens save you time and effort by giving you legal rights to collect what is owed to you.
If you are experiencing payment issues, CNS can help you file a mechanics lien. Our mechanics lien services make the process easy for you and verify your project’s information to help avoid mistakes that could invalidate your claim.
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.