An Owner’s Perspective on Liens

We frequently post about construction liens from a contractor’s perspective – who are clearly interested in figuring out ways to qualify for the filing of a lien.

What we rarely comment upon is an owner’s perspective, who are concerned with the opposite:  figuring out ways to condemn a lien as improperly filed.

It’s important for those who usually file mechanic’s liens to step back and consider the opposing viewpoint.   There is some value in understanding that upon receipt of a lien, an owner’s will likely have the instinct of wanting to fight it as improper or unfair.

When lien laws are drafted, they are drafted with protection for property owners in mind.  And when contractor boards and other regulatory agencies commit time to lien laws, they are usually focusing on educating the public (i.e. property owners) on what they can do to prevent liens.

A December 2008 article from the Daily Journal of Commerce in Portland, Oregon, stands as an example of this.  In the article titled “Five Questions to Ask About Liens,” the author goes through five questions owners should ask when faced with mechanic’s liens to determine their rights on proceeding forward.

This is not a rare example.   To the contrary, regulatory agencies across the nation who regulate contractors focus a great deal of effort on helping owners understand and overcome improperly filed construction liens.  See the page for Department of Labor & Industries in Washington, or the Contractors State Licensing Board in California.

If your company does wind up filing an improper mechanic’s lien and its disputed by the property owner, a loss in court could require your company to pay penalties, attorneys fees and more.

The point?   It’s important to understand the lien laws in your jurisdiction, and avoid making common errors and mistakes.

Andrea Goldman, a construction attorney in Massachusetts, publishes a great blog about this very issue titled:  Home Contractor v. Homeowner.  She frequently posts on issues that surface in home construction between the property owner and contract that results in litigation or arbitration.

With all of the work across the nation from regulatory agencies attempting to stifle improperly filed mechanics liens, Andrea notes in her blog that mechanic’s liens are so powerful of a collection tool for contractors that even an improperly filed lien can yield non-payment.

In her post the “Strength of Mechanic’s Liens,” Andrea states as follows:

Even if the lien is not done properly, one still has to file an action in court to dissolve it, which requires paying legal fees that are frequently not recoverable.

And regardless of your position on the subject (as a property owner, contractor or regulatory board), and regardless of how right or wrong your position may be, Andrea’s point is clear.   Mechanic’s liens are powerful instruments, and even when they are filed with technical defects, they cause parties to consider the debtor’s claim and contemplate a resolution.

Why Lien?

Dear Contractor/Subcontractor/Supplier:

There are some customers or prime contractors who will not pay you after a significant amount of work, labor, services and materials have been invested into performing a job. The founder of Express Lien’s father and grandfather were both general contractors in New Orleans, LA, so we know your frustration.

The best way to collect on these non-paying accounts is to begin collecting quickly and thereby motiving the debtor to resolve your claim.

Mechanic’s liens – the documents created and filed by Express Lien – are inexpensive and hard-hitting. These filings put restrictions on the job-site property, they entangle the owner with your dispute, they can freeze public funding, and more.

You may be pressured to hold-off on filing your lien and beginning the process of collecting on your account receivable. Homeowners may attempt to postpone payment by promising future funding, and many general contractors – perhaps pointing to a “pay when paid” clause – may promise payment once it gets paid on the job.

These “hold ups” on payment – even when legitimate or well-reasoned – will not suspend the short and strict time period you have to file your lien. If you wait too long, you may lose your right to file a lien – and that means you lose the ability to inexpensivly take this important step in collecting on an account receivable and in preserving your rights against all parties funding the project.

Filing a lien will stake your claim. If you were hired by the Owner, it will restrict the owner’s ability to abandon, sell or otherwise transfer the property. If you were hired by the Contractor, a filed lien gives you the right to not only seek payment from the Contractor, but also from the Owner, thereby increasing your chances of getting paid.

Not only is the founder of Express Lien the son and grandson of general contractors, but he is also a successful construction attorney licensed to practice law in both Louisiana and Washington. Scott Wolfe, Jr. was named as a Top 50 New Orleans Attorney in 2006 and 2007.

Express Lien makes filing a mechanic’s lien fast and easy, and we have the experience and knowledge to help you get paid on a non-paying construction job.