Construction Liens: What You Need to Know to Protect Your Business

If you’re in the construction business, you know how important it is to get paid for the work you do. However, there are times when clients fail to pay for your services, which can be detrimental to your business. This is where construction liens come into play.

A construction lien, also known as a mechanic’s lien, is a legal claim that a contractor, subcontractor, or supplier can file against a property owner who fails to pay for construction services. The lien gives the claimant the right to seize the property and sell it to satisfy the debt.

If you’re not familiar with construction liens, here’s what you need to know to protect your business:

1.      File your lien on time

When dealing with construction liens, it is crucial to file them within a specific timeframe. In most states, you have a limited amount of time to file your lien, usually between 30 to 90 days after the last day you provided services or materials to the project. Make sure you know the deadline for filing a lien in your state and file it on time to preserve your rights.

2.      Serve Copy of Lien to Property Owner

After you file the lien, you must serve a copy of it to the property owner, the general contractor, and any other parties involved in the project. This step is critical because it puts everyone on notice that you’re making a legal claim against the property.

3.      Follow the proper procedure for foreclosing on the lien

If the property owner still fails to pay, you may need to foreclose on the lien. However, the process for foreclosing on a construction lien can be complicated, and there are strict rules you must follow. Make sure you consult with a construction law attorney to ensure that you’re following the proper procedure.

4.      Keep detailed records

To protect your business in case of a dispute, it’s essential to keep detailed records of all the work you do and the materials you provide. This includes invoices, receipts, contracts, change orders, and any other documents related to the project. Having accurate records can help you prove your claim in court if necessary.

5.      Consult with a construction law attorney

Construction liens can be a powerful tool for protecting your business, but they can also be complex and confusing. That’s why it’s important to consult with a construction law attorney who has experience in this area. An attorney can help you understand your rights, file your lien correctly, and guide you through the foreclosure process if necessary.

In conclusion, construction liens can be an effective way to protect your business in case of non-payment, but it’s important to know the rules and follow the proper procedures. By filing your lien on time, serving a copy of it to the property owner, keeping detailed records, and consulting with a construction law attorney, by following these steps, you can safeguard your business interests.