Properly calculating deadlines is one of the most important determinations related to construction notices and mechanics liens. Despite this, however, it is also an area that is routinely misunderstood. Deadlines change from project to project depending on location, role, change orders, and more. Even things like determining what actually qualifies as the first or last furnishing date, or the project’s date of completion can be a challenge.
Generally, these are all questions governed by the statute and the performance of the work. Another potential point of confusion is the contract, and all of the related clauses contained therein. Pay-if-paid or pay-when-paid or other risk-shifting clauses, invoice payment terms, and more are all part of construction contracts.
Do these contractual provisions have any bearing on lien deadlines?
Contract Provisions and Deadlines
The short answer here is “no.”
The slightly longer answer is that contract provisions, whether contractual clauses like pay-when-paid, or general invoice terms like Net30 or Net60 have nothing to do with either your right to file a lien, or the deadline/timing to file a lien.
The right to file a lien comes from the state’s statutory law, and it doesn’t matter what the contract says – the law trumps any contract language or clauses. However, it’s still an unfortunate fact that waiting on these types of clauses (and payment in general) for 60-90 days or more is not that uncommon in construction. There are a bunch of reasons that slow payment is such an issue in this industry, but the real issue is whether it can be alleviated in some way.
Many companies attempt to prioritize their invoices or pay-apps by making sure they send preliminary notices, which provides visibility to the interested parties on the project and keeps them informed that you have remained in a secured position (meaning, that if it comes down to it, you are able to file a lien if needed). But it’s important to consider that just because there is a lien right available at some times, that doesn’t mean it lasts forever (or that the lien right has anything to do with the provisions of your contract). The fact is that the right to file a lien expires, even though that expiration has nothing to do with your contract payment terms.
Essential Reading:
Construction Contracts – Beware of Certain Clauses
Click on the buttons below to download charts that cover lien and notice deadlines for all 50 states.
Looking for deadlines for public projects?
Check out our article Bond Claim Deadlines in All 50 States.
When a lien must be filed, has little to nothing to do with the age of a particular invoice. The deadline to file a lien is usually calculated from the last date you did any work on or supplied any materials to the job, or the end of the project as a whole (depending on state).
For example in California, the lien deadline is set at 90 days from completion of the work as a whole (or 30 days from the filing of a notice of completion/cessation), while in Florida the deadline is 90 days from the date the claimant last furnished labor or materials. In some states, the deadline can be even sooner – in Indiana liens on residential projects must be filed 60 days after the claimant’s last furnishing.
This means that in some cases, payment might not even be “late” before the time the lien is due. This can result in hard choices needing to be made. Filing a lien is an adversarial step, so should it be taken prior to the money being due under the contract? That’s a business decision for each individual claimant to make in each individual situation, and the rationale available may be no more effective than simply a gut feeling. It is crucial to be aware, though, that if the deadline passes, the ability to file an enforceable lien to secure payment passes along with it.
Waiting for Payment?
Learn more about payment speed in How Long Does a Contractor Have to Pay a Subcontractor?
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