I had someone contact me the other day about filing a mechanics lien, and was all hung up on the difficulty or costs in later proceeding with a mechanics lien foreclosure action. The caller went through the entire mechanics lien process in their head, concluded it would be too much of an ordeal, and then went on their way.
They should have taken the process step-by-step.
The mechanics lien process it bit like a filtering process.
First, you send your preliminary notice to preserve your lien rights, and the act of sending off a preliminary notice actually reduces your chances of getting stiffed on payment.
Second, if you’re unpaid, you can send a Notice of Intent to File A Lien. This sometimes results in getting you paid, even if you’re not required to send the notice.
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Third, if that doesn’t work, you can file a formal mechanics lien and make your claim. As we found with our mechanics lien survey, more than 64% of mechanic lien filings are paid within 3 months and without the need for a foreclosure action. Therefore, if you’re eventually forced to file your mechanics lien, the chances are good that this will produce payment.
Then, finally, if the job goes unpaid after preliminary notice, and a notice of intent doesn’t work, and against the odds your mechanics lien doesn’t prompt payment, then and only then are you required to proceed with a lien foreclosure action.
Just because you proceed to foreclose on a lien doesn’t mean you’ll actually foreclose, either. Starting these proceeds are a lot more common than finishing them.
So, if you’re tied up about whether you want to send a notice or file a mechanics lien, worried you’ll need to spend a lot of money and time in a foreclosure action, don’t be so paranoid! The chances are quite good you’ll get paid quickly, and long before you wind up in a complicated legal proceeding.