In construction, there are few things more frustrating than having to fight for the money that you’re owed on a job. A mechanics lien is an effective method of providing leverage for a contractor, subcontractor or construction company to receive payment for outstanding debts.
What is a mechanics lien?
A mechanics lien is considered an ‘involuntary security interest,’ which provides a legal framework for ‘construction’ participants to receive payment for labor or materials. The lien is involuntary because you don’t need the property owner’s permission to create it. There are several caveats to this designation, including that the labor and materials must have improved a property. This designation can be problematic for suppliers as the materials they supply must be added into the renovation/construction structure for the lien to exist. Here are the main steps in the procedure for placing a mechanics lien:
- Documentation: The work done must be well-documented with contractual agreements. There typically needs to be an effort to collect payment before filing a lien. Each New York county could have its unique filing procedure and requirements.
- Notice of Lien: This form must be filed with proper documentation. Some counties may have different limitations on how long after the work completed according to the work contract that lien can exist. A copy is sent to the owner or business claimed in the lien.
- Attachment: If the lien is valid, it is attached to a piece of real property with a certain expiration date.
Protecting your business from client debts
There are myriad reasons why a client or construction employer would refuse or delay payment for goods and services. Some of these tactics are due to inadequate finances, while others stem from more predatory practices. Whatever the reason, if you’re owed money from a completed construction job, you need an attorney with experience in filing mechanics liens.