There are few more frustrating times for a contractor than finishing work, only to have a customer not pay for it. 

These situations can leave a builder in a bind as employees, subcontractors, and suppliers still want to be paid for their labor and materials. 

While the hope is always that contractors and their clients are able to work out any disputes and get invoices paid, there are times when construction professionals need to take steps to better protect themselves.

One of those steps is recording a construction lien. 

Construction liens, when properly written and recorded, provide a security interest in the property the contractor worked on. 

This type of lien has two primary benefits: 

1. Provides leverage to encourage a client to pay.
2. Gives the construction professional the ability to foreclose on the property if payment is not made.

Before issues arise: Notice of Right to Claim a Lien 

Laying the proper groundwork to protect your ability to file a construction lien starts early in a project.

This is especially true for residential properties – where the law provides some additional safeguards for property owners – and for subcontractors, who often do not have a direct connection to the property owner.

Subcontractors on residential construction projects generally need to start by providing the property owner a notice of right to claim a lien. Absent some limited legal exceptions, this notice needs to be provided within 20 days of starting work. 

The notice should be sent to the owner by certified mail, and the contractor should keep a receipt so they can later prove it was mailed in the timeframe required. The notice must also be filed with the clerk and recorder’s office in the county where the project is located. 

While receiving a notice of right to claim a lien can be a surprise to a property owner (especially early on in a project and often far before any problem arises) it is a very important step, especially for a subcontractor. 

If a notice is not sent and recorded in the time periods required by law, it can stop a subcontractor from later being able to file a lien at all (although a subcontractor can typically work with a general contractor to have amounts owed included in a general contractor’s lien). 

Sending these notices does not have to be a contentious step, and a subcontractor can often defuse any conflict sending the notice may create with a message letting the property owner know this is simply a step you need to take under the law and that the notice itself is not a sign there is any problem. 

A notice of right to claim a lien is effective for a year, and can be renewed if a project is still ongoing or a contractor is still awaiting full payment. 

So, especially when it comes to subcontractors working on residential projects:

1. Send a notice early on 
2. Keep a record of having done so 

If you are looking for assistance in drafting a notice, or making sure you are clear on how and when to use them, give Worden Thane a call and one of our attorneys would be happy to help.

I’m not getting paid, now what?

Once a project is underway and payments start coming due, a construction professional should stay on top of whether invoices are being paid. If there is a payment problem, don’t wait for it to grow, and consider hiring an attorney to assist you early on.

The law has a very strict deadline for how quickly an unpaid contractor must record a construction lien. That lien must be filed within 90 days of the last day where the construction professional worked on or provided materials for a project.

 And because a lien has certain information that must be included, it’s important to give yourself (and your lawyer) plenty of time to make sure it is properly documented, so the lien will be effective. Gathering the necessary information and revising a construction lien to make sure it is accurate can take more time than you might anticipate, so do not leave it until the final days.

Even if you and the owner are in discussions about resolving a payment issue, or you have been promised that the money is coming soon, it is vital not to let the 90day deadline pass without filing your construction lien. 

Failure to record on time can mean you have lost the right to obtain a lien. As with a subcontractor sending a notice, it could be helpful to let the property owner know this is simply a step you need to take to protect your rights, and that it does not mean you cannot continue to work between yourselves to resolve the issue. 

After all, removing a filed lien because the payment eventually came through is a lot easier than risking than losing out on the ability to file at all.

I need to record a lien, what information must be included?

Whether you are trying to file a lien yourself or bringing in professionals like the attorneys at Worden Thane to assist you, construction liens need to include the same information: 

1. The name and address of the construction professional
2. The name and address of the property owners
3. When your work on the project began, and when the last time you performed work was
4. A description of the work performed
5. The amount owed

 A lien is effective as soon as it is recorded (a copy must also be sent to the property owners by certified mail, return receipt requested), and remain valid for two years.

I have a lien, now how do I get my money?

 While a properly recorded lien is a positive step, it alone doesn’t make the unpaid money appears. A lien on the property can provide a lot of incentive for an owner to pay, as it will be difficult for them to sell or obtain financing for a property without dealing with the lien. 

However, the lien itself does not force payment to be made. If an owner still won’t pay, the next step is filing a foreclosure lawsuit.

 A foreclosure lawsuit can enable a judge to order that the property be sold to satisfy your lien. For as much incentive as there is for a property owner to pay after a construction lien is filed, that pressure ramps up even more with a foreclosure lawsuit where the owner may be at risk of losing the property all together.  If successful, it is also likely you can recover your attorneys fees, costs, and interest in pursuing the foreclosure.

 In addition, if the owner received a loan from the bank to pay for your work, you may be able to claim that your lien has priority over that loan. This typically means the bank will also start pressuring the property owner to pay.

It’s worth having help from a lawyer

 While construction liens are not the most complex of legal areas, the specific requirements and deadlines mean that having an attorney to assist you in doing them correctly can be well worth it. Worden Thane’s lawyers can help with everything from helping to draft form notices and letters that can be used on each project, to ensuring that all the proper information is included in the lien itself, to representing you in court if unpaid work eventually has to be resolved through a foreclosure lawsuit.

Having experienced, consistent representation can make these stressful situations easier. 

If you want help making sure that you are paid for your hard work, contact Worden Thane and we can arrange a meeting with one of our construction law focused attorneys.