The construction industry is no stranger to payment disputes. Contractors, subcontractors, and material suppliers often find themselves in situations where payment for completed work is delayed or withheld entirely. When working on projects managed by a Homeowners Association (HOA), these challenges can become even more complex.
HOAs operate under unique legal and financial structures, often involving multiple stakeholders such as board members, property management companies, and individual homeowners. When an HOA fails to pay for services rendered, contractors must navigate a multi-layered process to secure payment. One of the most effective tools available is a mechanics lien—a legal claim against the property that ensures payment by restricting the HOA’s ability to refinance, sell, or conduct other financial transactions.
However, filing a mechanics lien against an HOA involves strict compliance with legal requirements, including sending a preliminary notice before a lien can be recorded. If not handled correctly, a mechanics lien may be invalidated, leaving contractors without legal recourse for payment.
This guide provides a comprehensive roadmap for contractors, subcontractors, and suppliers working with HOAs. It covers:
- The importance of sending a preliminary notice to an HOA before filing a lien
- The legal steps involved in preparing and filing a mechanics lien
- How to enforce a lien if payment is still not received
- A real-world success story demonstrating how a well-executed preliminary notice resulted in full payment
By following these steps, you can protect your lien rights and improve your chances of getting paid.
Understanding Mechanics Liens and HOAs
What is a Mechanics Lien?
A mechanics lien is a legal claim filed by a contractor, subcontractor, or material supplier against a property when payment for services is not received. It serves as a security interest, preventing the owner from selling or refinancing the property until the debt is resolved.
In the case of an HOA, a mechanics lien is typically filed against the association’s common property, rather than individual homeowners’ units. This can include:
- Community clubhouses
- Common area landscaping
- Roads and pathways
- Recreational facilities such as pools and gyms
Because HOAs function as collective property owners, their finances are managed by board members and property management companies. This creates multiple layers of decision-making, making it crucial to follow proper legal procedures when asserting your right to payment.
Why Mechanics Liens are Effective Against HOAs
When an HOA has a mechanics lien recorded against it, it creates financial and legal complications for the association. These complications can include:
- Inability to refinance or obtain loans until the lien is settled
- Legal pressure from homeowners who want the lien removed from their community’s common property
- Delayed real estate transactions affecting individual unit owners who may be selling or refinancing
Because of these consequences, an HOA is often highly motivated to resolve payment disputes once a lien is filed. However, before you can file a lien, you must send a preliminary notice.
Step 1: Sending a Preliminary Notice to the HOA
A preliminary notice is a required legal document that must be sent before filing a mechanics lien. It formally notifies the HOA that you have performed work on the property and expect payment.
Why a Preliminary Notice is Essential
- Preserves Your Right to File a Lien – In most states, a mechanics lien cannot be filed unless a preliminary notice was sent within the required timeframe.
- Alerts the HOA Board and Management Company – Many payment disputes occur simply because board members or property managers are unaware of outstanding invoices.
- Encourages Prompt Payment – A well-drafted preliminary notice serves as a professional reminder that legal action may follow if payment is not made.
Who Should Receive the Preliminary Notice?
When dealing with an HOA, it is crucial to send the notice to all relevant parties to ensure it reaches decision-makers. This includes:
- The HOA Board of Directors (each board member should receive a copy)
- The Property Management Company responsible for financial matters
- The Property Owner or Developer (if applicable)
Timing and Delivery Requirements
Each state has specific legal deadlines for sending a preliminary notice. For example, in California, a 20-day preliminary notice must be sent within 20 days of first providing labor or materials.
Preliminary notices must be sent according to the state’s legal requirement which include:
- Certified Mail with Return Receipt – Provides proof that the notice was delivered
- First-Class Mail with a certificate of mailing – Provides proof that the notice was mailed
Failing to send a properly documented preliminary notice may result in forfeiting lien rights, leaving you without legal options to recover payment.
Step 2: Filing a Mechanics Lien Against the HOA
If the HOA does not respond to the preliminary notice or refuses to pay, the next step is to file a mechanics lien.
What to Include in the Lien Filing
Each state has its own requirements, but a mechanics lien generally must include:
- Your business name and contact information
- A detailed description of the work performed
- The total amount owed
- The name and address of the HOA and property management company
- Supporting documentation, such as invoices and contracts
Where and How to File the Lien
A mechanics lien must be recorded with the county recorder’s office in the county where the HOA property is located.
Steps for filing include:
- Notarizing the lien claim (some states require notarization before filing).
- Filing the lien within the required timeframe.
- Serving a copy of the filed lien to the HOA via certified mail.
Once filed, the lien creates a legal claim against the property, making it difficult for the HOA to conduct financial transactions until the debt is resolved.
Step 3: Enforcing the Lien if Payment is Still Not Received
If the mechanics lien does not result in payment, you may need to enforce the lien through a foreclosure lawsuit.
Steps to Enforce a Mechanics Lien
- Send a Final Notice of Intent to Foreclose
- This serves as a final warning before legal action is taken.
- File a Foreclosure Lawsuit
- If the HOA still refuses to pay, a lawsuit must be filed within the state’s legal deadline
- Seek Legal Assistance
- Because foreclosure lawsuits involve court proceedings, many contractors choose to consult an attorney. Note: CNS is not a law firm and cannot assist with enforcing a mechanics lien but we can refer you to one of our partner law firms.
If successful, the court may order the sale of HOA assets or impose other financial penalties to satisfy the lien.
A Real-World Success Story: How a Preliminary Notice Helped Secure Payment
To illustrate the power of a well-executed preliminary notice, here is a real-life testimonial from a contractor who successfully recovered payment from an HOA:
“I can’t thank Construction Notice Services, Inc. (CNS) enough for their outstanding service. My company had completed concrete grinding work for a condo complex HOA, but the management company was not paying us.
CNS promptly sent a preliminary notice on our behalf, not only to the property management company but also to every member of the HOA board. This thorough approach made a significant impact. Within just two days of the board members receiving the notice, I received a call and was paid in full.
CNS is incredibly easy to work with and truly understands the importance of protecting lien rights. Their professionalism and efficiency have earned my trust, and I would definitely recommend them to anyone in need of lien protection services.”
Protect Your Lien Rights with CNS
Navigating the mechanics lien process for HOAs can be complex, but CNS simplifies the process by ensuring all notices and liens are properly prepared, filed, and served.
Call CNS today at 800-366-5660 to get started.
Disclaimer: CNS is not a legal service provider. For legal advice, please consult an attorney.
