Mechanics lien rights require careful planning and consideration before any construction. Woodall Batchelor PLLC has extensive experience working with clients to preserve mechanics lien rights. Here are a few tips on how to best ensure mechanics lien rights hold up.
Draft mechanics lien with precision
In the event of litigation, judges scrutinize mechanics lien carefully. If any are found inaccurate, they are generally found invalid. Seeking legal help is recommended to make sure that your mechanics liens have correct descriptions of property, licensure information, contractor, affidavits, and owner.
File liens quickly—especially if payment is uncertain
If you are worried that a general contractor will be unable for some reason to pay you for work done on site, you should file for a lien immediately. Courts have stated in the past that owners do not have to pay twice for work done, even if one contractor failed to pay their obligations to other subcontractors.
Consider multiple contracts
Each lien corresponds to a specific work milestone. As a best practice, setting contracts with lien stipulations for each purchase order will help. Even if all the purchase orders are under one master contract, having multiple contracts will offer added protection.
Identify the right property
If land or property is attached to a portion of property where work is being done it should also be covered under contract. You can’t file a lien on a portion of a property, so if a contract only refers to a portion, then any lien will likely be invalidated because it doesn’t cover the entire property.
Consider the 150 day rule
Mechanics lien are only enforceable within 150 days of your last work day. This is important during jobs that you receive partial payments. Make sure that a partial outstanding balance doesn’t exceed the 150-day limit, or your lien will be void.
File mechanics lien in compliance with the 90 day rule
Liens must be filed within 90 days of the final day of the final month that work was done, or within 90 days of the project completion date. Whichever date is reached first is valid. If liens are filed outside these time requirements they will be invalid.
File suit within the 6 month rule
People seeking to place a mechanics lien must file suit within six months of filing. If a lien is filed outside that timeframe it will be invalid.
Note permits on residential projects
All one- or two-family homes should be noted at the onset whether a permit with a mechanic’s lien has been issued. Notification to agents needs to happen within 30 days of the permit issue date or the construction start date.
Correctly specify interest
Anyone seeking to claim interest payments needs to make sure their claim follows contract terms. Seeking interest payments is perfectly appropriate, but these precautions will make sure claims remain valid.
For answers to any questions about mechanics liens, reach out to Woodall Batchelor PLLC. We have years of experience advising clients on mechanics lien requirements and can help you best protect your business interests.