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I have done all the steps and filed a lien now what?

The company knows about the lien this is a new construction home under contract and getting close to being finished and going to close. They came by my office to try and intimidate me to accept less than half of my lien. I said NO. They haven't been back. What are my next steps?

1 reply

May 30, 2019

I'm sorry to hear that you had to file a lien here. Everyone should be paid what they've earned. First, let's take a quick look at the power of a lien claim in the face of the sale of the property. Then, I'll touch on recovery options when a lien claim has been made but remains unpaid.

Mechanics liens are a powerful tool, and they work to force payment in a number of ways (we found 17). One of the most powerful positions for leveraging a mechanics lien claim is when the project property will be sold or when a loan will be taken against the property. Mechanics liens create an interest in the property where work was performed - and they appear in the property record. Because of this, if a prospective buyer (or their title company or mortgage provider) will usually be very wary of a lien filing - with a lien in place, their newly acquired property/investment could immediately result in legal issues and potentially even foreclosure. So, when a property will soon be sold, a mechanics lien holder tends to be in a position of strength as long as the lien was correctly filed and the prospective buyer is aware of the lien (and that awareness is created via the property record).

With that in mind, let's look at potential next steps once a lien has been filed...

The time between a mechanics lien filing and the lien enforcement deadline offers an opportunity to resolve a payment dispute without the need for legal action. During this time, lien claimants can negotiate payment for the release of the lien with owners and/or their customers. Unfortunately, sometimes a customer or owner might still be reluctant to make full payment. In these situations, many construction businesses find that doubling down and showing they're serious about payment recovery can help.

One way to do this is by showing that the claimant isn't afraid to pursue legal action to enforce their lien. By sending a document like a Notice of Intent to Foreclose, a lien claimant can show the owner and/or customer that nonpayment won't be tolerated, and that if payment isn't made, the lien will be enforced and the property could be foreclosed upon. You can learn more about that option here: What is a Notice of Intent to Foreclose? Plus, on top of threatening to take further action on a lien, threatening to take legal actions (such as breach of contract, uunjust enrichment, or under some other legal theory) might help, too - particularly when those threats are made via an attorney.

If discussions or even threats aren't enough to compel payment, a lien claimant may need to consider pursuing legal action and enforcing their mechanics lien. While nobody likes a lawsuit, if payment isn't coming, enforcing a lien might be one of the best options remaining. Of course, recall that other legal claims might be possible, too, along with a lien filing - like breach of contract, unjust enrichment, or some other claim.

But, if nonpayment persists, if discussions or threats aren't helping toward achieving payment, and if it looks like legal action will be necessary - it might be wise to consult a local construction attorney. They'll be able to review all relevant information and documentation, then advise on how best to proceed.

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