WHEN MIGHT A SUBCONTRACTOR CONSIDER FILING A MECHANIC’S LIEN?
If you are a subcontractor who has not been paid for work you provided, a mechanic’s lien can help you recover that money by placing a lien on the property where you provided the work. Once you do this, the property owner will not be able to sell or refinance the property until the debt is paid. A mechanic’s lien also allows you to go to court to have the property auctioned off, if necessary for the debt to be paid.
Although a mechanic's lien can help you recover the payment you deserve, you must follow appropriate steps within designated time frames. If a step or deadline is missed, you could lose all your mechanic’s lien rights.
Who can file a mechanic’s lien?
Contractors, subcontractors and suppliers can file mechanic's liens in certain situations. For you to file a mechanic’s lien, you would have had to provide labor, services or materials without receiving payment for that contribution to the construction project. However, a mechanic’s lien typically cannot be filed against a publicly owned property.
Preliminary notice
The first step you must take is serving a preliminary notice. A preliminary notice informs the owner, general contractor and lender that you have not received payment for specific work you completed.
However, it is important to make sure this notice is served no later than 20 days after you first began work on the property. A preliminary notice only covers the work done in the 20 days right before the notice was served, so if it is served later than 20 days after you began work on the project, a mechanic’s lien may not cover some of your work.
Additional steps
Next, you must record the mechanic’s lien. The deadline for this can vary between 30 and 90 days after the project is completed.
You then must file a lawsuit to foreclose on the lien within 90 days of the lien being recorded. If you do not file a court action to enforce the lien within the set amount of time, the lien will no longer be valid.
Mistakes can be costly when filing a mechanic’s lien. However, by paying close attention to the proper steps and deadlines associated with a mechanic’s lien, you can increase the likelihood of collecting the payment due to you.