Working in the construction industry, you’ve likely heard of the word “lien.” And while you probably have an idea of its definition, many people are surprised to find out that several terms utilize the word “lien” and hold different meanings.
Construction projects involve many moving parts and various parties, so it’s important to have legal mechanisms in place to protect everyone’s rights. Two powerful legal tools used in the construction industry with different meanings are pre-liens and mechanics liens.
In this article, we’ll explain these tools, their differences, and how they work together. Contact CNS today to get a pre-lien or mechanics lien started.
What Is a Pre-Lien?
A pre-lien — also known as prelim, preliminary lien, preliminary notice, or right to lien notice — is a document sent to the property owner, general contractor, or construction lender (if any) at the start of a construction project by a subcontractor, supplier, or anyone who does not have a direct contractual relationship with the property owner.
If you are unsure of who these parties are or how to verify them, at CNS we provide a robust research and verification process to gather any critical information missing from your pre-liens.
The purpose of a preliminary notice is to inform the recipient that the subcontractor or supplier is working on or supplying materials for the project and to establish their right to file a mechanics lien in the event of a slow, short, or no pay situation.
It’s important to note that every state has its own laws regarding preliminary notices, including the time frame by which the notice must be sent and the information that must be included. For example, California and Arizona both have a 20-day preliminary notice that must be sent within 20 days from the start of the project.
Preliminary notices also tend to be required by law for all subcontractors and suppliers. Because of the varying laws surrounding them based on the state or county you’re providing work in, it can be easy to make mistakes that could jeopardize your lien rights.
At CNS, we specialize in preparing and mailing prelims for various states, including California, Arizona, Nevada, Oregon, Washington, New Mexico, and Florida.
What Is a Mechanics Lien?
A mechanics lien — also known as a construction lien or a supplier’s lien — is a legal claim against a property that a contractor or supplier files after they have not been paid for their work or materials. The lien gives the contractor or supplier the right to seek payment from the property owner by foreclosing on the property and preventing the property owner from selling or refinancing the property until the debt is paid.
Mechanics lien laws vary from state to state, often impacting time frames for filing, notifying the parties subject to the lien, and enforcing it. Mechanics liens are used as the last line of defense for collecting payment for your work or services.
How Pre-Liens and Mechanics Liens Work Together
Pre-liens and mechanics liens work together to provide protection for subcontractors and suppliers and a means to collect payment. Preliminary notices are the first step of the process, sent at the beginning of a construction project to ensure your right to file a mechanics lien if needed.
Once your lien rights have been established, if you are not paid for your work after providing services or materials, you can file a mechanics lien — giving you the legal right to seek payment from the property owner.
Preliminary notices are often required by law for a mechanics lien to be valid. Even if your state’s lien laws don’t require you to send a pre-lien, sending one can make it easier to file a mechanics lien and improve the likelihood of receiving payment.
Prepare Pre-Liens and Mechanics Liens With CNS
Given the information we covered, it’s easy to see just how powerful pre-liens and mechanics liens can be when experiencing short, slow, or no pay situations. Because of that, it’s imperative that you abide by your state’s lien laws when preparing a prelim or mechanics lien to ensure your rights are protected.
At CNS, we specialize in providing preliminary notice and mechanics lien services to contractors, subcontractors, and suppliers in various states. We offer a thorough research and verification process to help keep your lien rights protected and make the process as quick and easy for you as possible.
Contact us today to get a pre-lien or mechanics lien 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.