The value of a mechanic’s lien for people in the construction industry is unparalleled. It is the most important tool for contractors as it guarantees that they get compensated for their contribution of services and resources into a construction project. A lien holds the construction site as collateral. The owner of the property is legally denied their rights to sell or refinance the property until the debt has been paid to the contractors. This makes mechanic’s lien the most effective tool to collect unpaid debt.
But just because it has a very high success rate, that doesn’t mean that contractors shouldn’t prepare themselves for it. With all the deadlines and conditions linked with lien rights, managing the process becomes challenging and this is where uninformed and ill-prepared contractors make blunders. These blunders can make them lose their lien rights.
In order for a mechanic’s lien to be successful, it must be valid. And in order for it to be valid, you should follow all the legal guidelines associated with the process.
The following are the most common mistakes you can make when filing a mechanic’s lien-
A single error in your lien, no matter how irrelevant it might be, has the potential to disavow you of your lien rights. If the details you have registered are false, you can also be required to pay the legal fees of your opposition. While filing the lien, you should be extra wary of mentioning exact project details in order to validate your claim.
There are deadlines associated with a lien process that must be met. With so many deadlines, it is another area a contractor struggles to manage. If you have only provided labor for the project, you’re required to file the lien 2 months after the last day the labor worked. And if you’ve also provided resources, you have up to 4 months after the day you provided resources. After a lien is filed, you only have 6 months to enforce it; otherwise, it would be ineffective.
Even the brightest of the contractors can struggle with this area and end up losing their lien rights. Most states mandate sending preliminary notice to the property owner prior to filing a lien. You can send a preliminary notice simply by sending the property owner the Notice of Intent with a copy of Statement of Lien.
Keeping up with your state laws and regulations on mechanic’s lien can help you manage your lien process with much more convenience and ease, and also support your claim for judgment enforcement.