Every state has a public and private works acts of some nature that allows those working on a construction project to enforce a claim for payment against the property itself. This claim is known as a construction or mechanics lien.
The statutes that create these lien rights are hyper-technical. While powerful in protecting the rights of laborers and material suppliers when used correctly, there are many traps for the unwary, and anyone interested in filing a construction lien should become familiar with these statutes’ requirements.
Filing a lien presents a number of legal questions:
- What are the statutory requirements for the contents of the lien?
- Are you filing the lien timely?
- How long after completion of work can you file a lien?
- Did you complete all of the notice requirements?
- What amount should be claimed on the lien?
Once a lien is filed, a new set of legal questions arise:
- Was the lien filed properly?
- Should a party dispute the lien? Bond out the lien?
- If the lien produces payment, how to cancel the inscription?
- If the lien doesn’t produce payment, how to “foreclose” or bring a petition on the lien?
- Who is required to receive a copy of the filed lien?
Trade journals, internet sites and other resources are saturated with information about construction liens and their requirements. You should be encouraged to review these materials, but with a skeptical eye.
Each state has its own lien regulations, and if you’re looking to file a lien, you should be certain that the information your receiving is trusted and related to the state of the project.
Louisiana and Washington, for example, have completely opposite notice requirements in many circumstances.
Liening a construction project is a very effective weapon in your company’s arsenal when faced with a non-paying project, but its important that you file your lien properly.