Article source: Bitman O’Brien Law
The use of construction liens makes it possible for construction professionals like contractors, subcontractors, material suppliers, among others, to recover payments for work and materials delivered to a particular property. Since each state has different laws regarding liens, it is vital to understand how the lien can be filed correctly, since a missed deadline, wrong property information, or wrong documentation can compromise the validity of the lien.
If you have a complex construction project or a difficult dispute, the services of a construction lien attorney can help examine your case, determine the relevant deadlines, and guide you through the whole process of filing a lien.
1. Confirm the Right to File a Lien
Not everyone who participates in a particular construction project cannot file a construction lien because this right depends on various factors set forth by state laws.
Check the construction contract and the relevant state lien law to verify that you can file a construction lien. Determine whether any preliminary notices were served. In some cases, failure to deliver such notices may hinder your ability to file the lien.
2. Gather Important Project Information
Information is the basic requirement of any valid lien claim, and you need to gather all of the important documents related to the project before you submit your claim.
Important information could include:
- Legal name of property owner
- Address and legal description of the property
- Information about the contractor or subcontractor
- Signed contract and modifications
- Bills and records of payments
- Date when the labor or supplies were provided
- Amount claimed
- Notices that you are required to have
It will be easier for you to make a claim with all of this information at hand.
3. Calculate the Amount Owed
The claim amount needs to be calculated according to the law. You need to review all of your bills, change orders, payments, retainage, and other relevant documents before making the calculation.
You need to avoid including any amounts that are not eligible according to the law. A mistake in the claim amount can lead to many more problems. You should be able to present your calculation logically.
4. Prepare the Lien Document
There are different construction lien forms used in different states, so ensure you fill out the one specified for your state. The information should include claimant information, property information, owner information, information about the work or supplies, the total claim amount, and dates of the project.
Make sure that everything is correct before you sign it. Sometimes just a small mistake can cause trouble, especially when the property has several owners and separate lots.
5. Meet the Filing Deadline
The filing deadline is the most crucial part of the whole process. The filing deadline can be calculated either from a certain date, including the last day when labor or supplies were provided, the project completion date, or any other date established by state law.
Remember that not all states have the same deadline. Mark the deadline date as soon as there are some problems with payment. Late filing will lead to your loss of lien rights.
6. File With the Correct Authority
After completing the lien form, file the same with the appropriate government agency or entity. This could be a county recorder, clerk, register of deeds, or any other designated authority.
Be familiar with the filing procedures before doing the filing. The fees, signing, notarizing, formatting, number of copies to be filed, and e-filing policies could differ.
7. Understand What Happens Next
Simply putting the claim through filing does not necessarily mean that you will get the money owed. The owner of the property may contest the lien or negotiate its payment.
In addition, some jurisdictions have set time limits for enforcing the lien. Failure to enforce the lien within such time limits could render it void.
Keep Detailed Records
Good documentation will make the lien process much simpler. Maintain your contracts, invoices, time sheets, delivery papers, notice letters, emails, payment history, photos, and copies of filed documents.
Should the conflict become more difficult, a construction lien attorney could examine the available documents and advise you on your possible legal options in accordance with the requirements of the specific state.
Conclusion
The preparation and filing of a construction lien involve careful consideration of eligibility, documentation, deadlines, filing process, and enforcement requirements. Since lien laws vary depending on the state, verifying the requirements prior to filing may assist in avoiding unnecessary mistakes.
