How a Mechanic's Lien Gets You Paid - The Basics
No business likes facing a delay in payment for services rendered. Progressing or completing a construction job can't be done without purchasing resources or building materials. The longer an invoice goes unpaid, the longer the business is technically in a deficit from the cost of labor and materials for that given job. It's poor etiquette for someone who has hired a contractor to snooze on paying their invoice in a timely manner, but people are human, and this happens all the time. This is where mechanics' liens are applicable to help contractors enforce their right to be paid.
What is a Mechanic's Lien?
The terms "construction lien" and "mechanic's lien" are interchangeable in many states.
Both generally reference a legal motion onto a property that holds the property owners
responsible and enforces a contractor's legal right to be paid for materials used and
services rendered on that property. Mechanic's liens can be instated either prior to a
project beginning, or after a property owner has failed to reconcile with their invoice.
Imposing a mechanic's lien ahead of time is a good way to have clear, written, and legal communication between the property owner and the contractor, so that everyone is in agreement on how and when the contractor's service invoice will be paid. A mechanic's lien can be necessary for hiring any subcontractors on a job, as even subcontractors deserve a guarantee of payment.
Different Boundaries of Mechanic's Liens
Depending on the arrangements made between the contractor and the property owner,
the mechanic's lien can be defined by different terms. The lien can stipulate that the job
will be paid for in installments as certain projects are completed, or in a singular lump
sum payment upon completion of the entire contract.
Mechanic's Liens are Legally Binding
In many cases, in order to place a mechanic's lien on a property, the contractor must
provide notice to the property owner of what services or materials have been rendered
within 20-30 days of them being supplied. If they are not paid, the contractor must then
file a "claim of mechanic's lien." Depending on the state, a timeframe is indicated for how long the two parties have to come up with a solution.
If a mechanic's lien is imposed on a property following the regulations regarding how to do so, the property owner is legally bound to pay for the services and materials used to remodel or improve a home or property, the specifics of which are stipulated in the lien. If they do not, the property owner can face foreclosure. When a property remains bound to a mechanic's lien, it can also make it difficult for that property to be sold, which is an incentive for the property owner to get the situation resolved by paying for the services.
Mechanic's Liens Ensure Contractors are Paid
Given that they are a legal issue with major consequences for property owners,
mechanic's liens offer contractors an assurance that they will be paid for their services.
If you're a contractor looking to impose a mechanic's lien, check with the regulations in
your state where the services are performed so you can do it correctly and give yourself
the guarantee of payment. All hardworking contractors deserve to be paid for their
services and mechanic's liens help make sure that happens.
Having options like a mechanic's lien can help you in the event of non-payment. If you have a construction company and need help getting your construction payments, that is where Nationwide Notice, Inc. comes in. We are a full and self-service preliminary notice and lien service company specializing in assisting construction companies to protect their receivables. 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.