Home>Levelset Community>Legal Help>Did I complete our lien form properly?

Did I complete our lien form properly?

The total amount owed to our company for a particular project (in Tennessee) is $164,515. However, the monthly notices did not start getting issued when the job began. We issued three monthly notices of nonpayment, which together total only $13,542. When I completed the lien request form, it asked for the total outstanding amount from our customer. I entered the full amount owed of $164,515. Was that correct or should I have entered only $13,542?

1 reply

Dec 10, 2018

I'm sorry to hear you've gone unpaid. First, I should mention that I won't be able to provide any advice or to determine whether a filed lien was properly or improperly filled out. However, I will be able to provide relevant information that can help you come to that determination yourself. Anyway - let's look at the Tennessee requirements. § 66-11-145 of the Tennessee lien statute creates the requirement for sending monthly notices. Based on that section, in order to preserve the right to lien, monthly notices must be sent in relation to lienable amounts - and the failure to send the required notice will render amounts under which notice was not sent not-lienable. Amounts that exceed what was noticed are not susceptible to mechanics lien, where notice was required. However, even in a situation where the amount of a mechanics lien filed exceeds what the claimant is entitled to lien, there are some things to consider. First, it's worth noting that there's a difference between an honest mistake and a fraudulent lien filing - which is discussed in this article: Intentionally Fraudulent vs. Honest Mistakes. Where the total amount on the face of a lien is actually owed, but some of those amounts might not be lienable, very typically, that will not automatically render a lien fraudulent. Further, Tennessee allows for the amendment of a filed mechanics lien, so a lien claimant may be able to amend their lien to reduce their claim. However, that amendment must be made within the time for filing and serving the lien under § 66-11-119. Finally, where a lien filing may exceed the amount lienable for a given project, if a claimant later needs to enforce that lien, the enforcement action could potentially be brought in the amount for which that lien should have been filed. § 66-11-139 of the Tennessee mechanics lien statute discusses exaggerated liens and sounds scary. However, that section refers to lien amounts that are "willfully and grossly exaggerated". If the right to lien doesn't exist for some amounts due to procedural issues - but that debt is actually owed, and where the lien was accidentally overstated, it would seem hard to show that the lien was willfully and grossly exaggerated. This is especially true where the lien enforcement action only aims to enforce the portion of the lien that was noticed. Lastly, it's worth noting that even where a filed lien may be flawed, a claimant might be able to recover the full amount of the lien by leveraging the threat of enforcing the lien. Many claimants find that sending a document like a Notice of Intent to Foreclose can help compel payment. A Notice of Intent to Foreclose serves as a warning - it let's the recipients know that if payment isn't made and made soon, legal action will be brought on the filed lien. Considering the drastic nature of a mechanics lien suit, often, property owners (and potentially customers) might be more amenable to talk deal if a lien enforcement seems to be on the horizon. Plus, if it's ineffective, claimants can proceed with some other option - such as enforcing their lien, or pursuing some other option for recovery. More on the Notice of Intent to Foreclose here: What Is a Notice of Intent to Foreclose?

0 people found this helpful

Helpful