In your business, you can't take for granted timely payment. When you have employees, suppliers and you own bills to pay, waiting for a contractor or property owner to compensate you for the work you have finished can be frustrating and damaging to your business. You may know that you have the right to file a mechanic's lien if a customer doesn't pay within a certain amount of time. However, the process may seem complicated and time-consuming.
That's because it is. Nevertheless, a mechanic's lien may be your best advantage to getting payment that you deserve for the work you have done. While you may be able to access online services to attempt to file a lien, the complex nature of the process means you are taking risks with your company that you may not be able to afford.
Providing preliminary notice
If you are a contractor or subcontractor who has not received payment for work you did on a construction project, you have every right to pursue payment through any legal means. A mechanic's lien is an assurance of that payment. However, the lien must be filed properly, meet all deadlines and coincide with the laws of the region in which the project exists. Since each state has its own laws, seeking professional assistance is always a wise decision.
To begin with, you must file a preliminary notice in accord with the Texas deadlines, unless the project is in another state. This notice details the outstanding expenses and the services you performed, and you will send it to the owner of the project, the lender and, if you are a subcontractor, to the general contractor. Again, each state has specific requirements regarding a preliminary notice, and sound legal guidance can prove useful to you at this stage.
The lien and its benefits
You must file the lien in the appropriate government office having jurisdiction over the region where the project construction takes place. The lien means that you have a claim on the property. If the entities who owe you money fail to pay you, you may be able to force the sale of the property to regain your money. Some important details to consider include the following:
- You must have a valid contractor's license to legally file a lien.
- You may not file a lien if you have not supplied directly to the project.
- You will have a limited amount of time to enforce the lien once you have filed it.
- You may be able to recover the money you spend pursuing the lien.
Depending on your contractual relationship with the project's owner, you may have more success with a stop notice, which freezes the project's remaining funds until you receive your payment. Your attorney can advise you if this is the better option for you.