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One of the most effective steps for receiving delinquent payment for rendered services in the construction industry is to file a mechanic’s lien. This is the final step, short of foreclosing a lien, and on many occasions and is often the most effective.

However, like any other collection process, a mechanic’s lien requires other documents to be submitted before it can be effective. If you want a mechanic’s lien to be legally binding, it’s important to follow the process as required by each state statute. Failure to adhere to the correct process can void the mechanic’s lien.

In this article, we’ll briefly discuss how the liens work and how you can use them to your advantage.

How Exactly Does a Mechanic’s Lien Work?

A mechanic’s lien is a legal claim that is taken out against real property such as a home, building, or property that is being improved upon They demand payment for work that has been done on a specific project. These projects can either be commercial or residential.

Note: (In certain instances a mechanic’s lien may be filed against the Payment Bond if the job is a Bonded or Federal project however this discussion will not focus on such claims).

Depending on the state where the work is being done a contractor may not be entitled to a mechanic’s lien depending upon their position on the “Contract Tier”, for example:

In the state of Florida if a contractor is contracted with the sub-contractor of a sub-contractor, they have the right to file a lien however in the state of LA a supplier who sells to another supplier is not entitled to a mechanic’s lien.

How Are They Effective?

One reason that mechanic’s liens are so effective is because once a mechanic’s lien is filed, it means you’ve taken direct action against the property, and are allotted a period (as stipulated by state legislation) to foreclose the lien if payment due has not been satisfied. Foreclosure of a lien can result in selling of the real property, and the funds used in satisfying the money owed to the claimant.

Legal counsel is strongly recommended when deciding to foreclose a mechanic’s lien.

The following are other reasons why mechanic’s liens work so well:
* They are usually filed after a series of other notifications (as mandated by state law) have been made. This allows all parties involved to be “put on notice” of the contractor’s intentions if not paid.
* When issues of property arise, owners are more likely to ensure that all parties are paid to avoid any judgment taken against their property.

It is legally within your rights as a construction company or supplier to file a mechanic’s lien if your customer does not pay.

Consider how Nationwide Notice, Inc. can help you streamline processes like filing a lien. We prioritize assisting our clients to secure their payments as a self and full-service notice and lien company. We have a team of dedicated lien experts ready to help you through the entire lien process.

We help construction companies by assisting with lien laws and related documents, according to their state’s requirements.

You can learn more about what we do here to see how we can help. You can also find out what sets us apart from the rest on this page. Get started with us today and secure your payments.

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