You held up your end of the bargain - the work has been done and done right. So why are you having trouble collecting payment? Unfortunately, collecting payment during a construction project can be challenging. Oftentimes, the only path to payment is through a mechanic's lien.
However, filing a lien is not always straightforward. There are many steps you must take to ensure the proper notices have been made and legal requirements have been met.
Serve a Preliminary Notice
As we addressed in a previous blog post, one of the most important steps you can take to protect your right to payment is to serve a preliminary notice on the required parties. Required parties would normally include the owner, lender and upper tier contractors on a project. It is important to serve the preliminary notice as early in a project as possible, as a preliminary notice only covers payment for work performed 20 days prior to the service of the notice.
Notice of completion and recording deadlines
If a Notice of Completion is not recorded on a project, contractors and suppliers have 90 days to record a mechanic's lien at the County Recorder's Office where the project is located. However, if a Notice of Completion is recorded and served, it shortens the time in which contractors and suppliers may record their mechanic's liens.
When a Notice of Completion has been recorded on a project, the following timelines apply:
- General contractors have 60 days to record a mechanics' lien;
- Subcontractors and suppliers have 30 days to record a mechanics' lien.
It is important to note, these shortened timelines only apply if the property owner records notice within a prescribed timeframe and serves all parties who provided a preliminary notice. If these steps are not carefully followed, the original 90-day timeline may be allowed.
File lawsuit within 90 days
After recording a mechanic's lien you have 90 days from date of recordation to file a lawsuit. If you do not file a lawsuit within this timeframe, your mechanics' lien will become unenforceable.
For assistance with mechanic's liens please visit our website.