In the construction industry, sometimes payment disputes arise that cannot be resolved even if you sent a preliminary notice at the start of the project. In cases like this, you are left with no choice but to file a mechanics lien to protect your right to payment.
Mechanics liens place pressure on the parties responsible for providing payment. Sometimes that’s enough of a warning to prompt the responsible parties to resolve the issue and pay you what you’re owed. Other times, however, you might need to take further steps.
Below we’ll cover what you can do after filing a mechanics lien.
Foreclose on Your Lien
After filing your mechanics lien, copies are sent through certified mail to the property owner, general contractor, and financial lender. Typically, upon receipt of the lien, the owner or GC will get in touch with you to negotiate terms so the lien can be released. However, if this doesn’t happen, you may need to take the next step and send a Notice of Intent to Foreclose.
The Notice of Intent to Foreclose serves as the final warning. If that goes nowhere, the next step will be to file a foreclosure lawsuit, also known as “enforcing” the lien. Both the Notice of Intent to Foreclose and the foreclosure lawsuit must be handled by an attorney since, at this point, you’ll be bringing a lawsuit against the parties responsible for your payment. If you win the case, you’ll have the security of the property to ensure your payment.
Are you in need of a lawyer to resolve your payment dispute? Contact CNS today, and we can refer you to our network of trusted attorneys.
Your Lien Could Expire
Mechanics liens do not remain valid indefinitely. After a certain amount of time, if no action has been taken, the enforceability of your lien will expire. The exact timing of when your mechanics lien will expire varies from state to state.
For example, California requires general contractors to enforce a lien within 90 days of the recording of the lien. In contrast, Arizona requires general contractors to commence the foreclosure on a lien within 6 months after recording the claim of lien.
If your lien expires, you may be forced to release the lien even if you haven’t been paid. Please pay close attention to all relevant time frames as they could be the difference between receiving payment and not.
Release the Lien
Once you receive payment, you should file a lien release as an official notice that the lien on the property has been removed. Otherwise, the lien could still encumber the property and put you at risk of a lawsuit from the property owner.
If you are only paid a partial amount of what you’re owed and negotiated a payment plan for the remaining balance, you can file a partial lien release. The partial release will state that only a portion of the amount owed was paid, and the remaining portion is still claimed by the mechanics lien.
Filing a Mechanics Lien With CNS
Mechanics liens are one of the most valuable tools and often the final line of defense construction businesses have in the collection process. However, mechanics lien laws vary from state to state and can lead to pitfalls that could result in the loss of your lien rights.
At CNS, we have over 38 years of experience helping contractors, subcontractors, and material suppliers get paid. Our mechanics lien services are designed to make the process quick and easy for you while verifying that all information in your mechanics lien is accurate before filing. Additionally, a preprepared lien release form is included when you file a mechanics lien with CNS.
Contact us today to get a mechanics lien, or preliminary notice started.
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.