The Process of Removing a Lien
No contractor ever wants to file a lien against a property owner. However, when payment isn't prompt, business owners must take steps to protect themselves.
However, once payment is received, a property owner needs to be able to remove that lien. There are certain steps a property owner or manager can take to remove liens from the property record.
What Is a Mechanic's Lien On a Property?
A mechanic's lien is a legal claim placed on a property by a contractor that hasn't been paid for their
services. For example, if Bob's Construction Company completes an apartment complex for
Woodlake Properties, and Woodlake Properties doesn't pay, Bob will place a mechanic's lien on the
A lien is attached to the property itself and not the owner of the property. This can make the property hard to list on the market if the time does come to sell. Refinancing can also be difficult when a lien is placed on a property.
Why Would a Lien Exist?
There are several reasons a lien would be placed on a particular property.
1. The Contractor Wasn't Paid
If the contractor does not receive payment, a mechanic's lien will likely be placed against a property.
2. A General Contractor Didn't Pay a Sub
If the general contractor on a project doesn't pay their subcontractors, the sub may place a lien on the property. A supplier that wasn't paid can also file a lien on a property.
Although this falls on the general contractor, this can still be damaging to the property through no fault of their own. The bad part is, it doesn't matter if the property owner paid the general contractor or not.
3. Nobody Knew a Sub or Supplier Existed
It's possible on a construction site that a subcontractor will hire their own subcontractor or supplier. There are lots of moving parts to a large construction project. Sometimes a general contractor assumes the crew performing the work are employees of the subcontractor. However, they could be operating independently.
If the general contractor doesn't pay them, they could file a lien on the property. This has to be settled before you can remove a lien.
How to Remove a Lien
There are several ways to remove a lien from a property. There isn't one sure-fire way to complete
this task, so each of these could be effective.
1. File a Dispute
File a dispute immediately if you feel like the lien isn't justified. Preliminary objections can be filed in court to respond to a lien. This method works best when you are sure that the lien isn't justified.
2. Force Them to Foreclose Sooner
You could force the contractor to foreclose on the property sooner. In certain states, owners can send a Notice to Foreclose to a contractor, which gives them substantially less time to foreclose on a lien.
It's possible the contractor won't have time to get a lawyer and get prepared for court. In this case, you will win the judgment. There's also the possibility that the contract doesn't have a strong case, in which situation you will be awarded judgment.
Dealing with a lien situation can be tricky. Everyone has their own side to the story. This is why both parties need to hold up their end of the bargain.
Contractors should ensure the work is done to the owner's specifications. On the same token, an owner should ensure prompt payment of all contractors and suppliers. Nationwide Notice has a team of dedicated lien experts that can help you through the entire lien process. As a full and self-service lien and notice company, we prioritize helping construction companies secure their payments all things construction payment. We help with lien laws and related documents to assist construction companies - that’s what we do! To learn more about what we do, click here - or you can find our full list of services here to see what we can do for you.