The people that work in the construction industry are some of the most capable people around. They’re used to building things, fixing things, to getting things done.
But sometimes, people who are used to being able to do everything on their own can get themselves into trouble when they try to take on a task that is outside of their expertise. Unfortunately, we see this all the time with folks in the construction business that try to manage mechanics liens on their own.
What follows are the three biggest mistakes that we have seen when people in the construction business attempt to manage the lien rights process on their own.
The 3 Biggest Mistakes of DIY Mechanics Liens
Before we even get started with the 3 mistakes, there’s another big mistake — really, a misunderstanding — that we see time and again. And that’s the mistaken belief that a mechanics lien is just a document, because it’s so much more than that. Managing lien rights is actually a process (free download available below), and contrary to what many think, the goal is not to file a lien. No, the goal is to help people in the construction business get paid the money they’ve earned on their projects.
Ironically, the best outcome you can get with the mechanics lien process is to get paid, without having to file a lien at all. And the way to do that is to start with Step 1 of the mechanics lien process: sending preliminary notice. Unfortunately, this all-important first step is also where many contractors stumble into the first big mistake.
Mistake #1: Problems with Preliminary Notice
The vast majority of states require some form of preliminary notice in order to secure lien rights on a construction project, and that requirement is also the source for many contractors’ problems. If your project is in one of these states where preliminary notice is required, and you fail to send that notice, chances are your mechanics lien is going to be invalid.
Sending the required notice late could also have the same negative effect, since these states also have preliminary notice deadlines that are strictly enforced. There’s also the issues of sending the notice to the required recipients, using the proper delivery method, and including the correct information on the notice itself. All in all, it’s a lot to manage, so beware!
Mistake #2: Not Sending a Notice of Intent to Lien
Even though a Notice of Intent to Lien is only required in a handful of states, it should be sent prior to filing a mechanics lien by just about anyone in any state.
That’s because a Notice of Intent is like a warning letter, giving your delinquent customer one last chance to make their payment before you take the very serious step of filing a lien. No one wants to have a mechanics lien filed on their project, so unlike the typical “demand letter” used in other industries, a Notice of Intent really gets the payer’s attention and is usually enough to prompt payment before a lien has to be filed.
Mistake #3: Filing Mistakes
Mechanics liens must be properly filed to have valid. It may sound simple, but if a lien is not filed in the proper manner, and in the proper place, it simply will have no effect.
Downloading online DIY mechanics lien forms will provide little insight into where that form actually needs to go which will vary by state. Normally, though, these documents will be filed with the county recorder or the Clerk of Court for the county where the project is located.
Many will assume that once the lien is filed, they can go about their business now that payment has been secured. But not so fast! Many states will require that notice be served to required parties upon the filing of a lien. Sometimes this will require that a copy of the lien be delivered to the owner, GC, or some other parties. So, if you’re downloading those DIY mechanics lien forms online, go ahead and print out a few extra copies, and be sure to get copies to all of the required parties.
And then there’s the problem often made by DIYers of including bad or inaccurate information in the lien form itself. For example, identifying the property to be liened in the lien document is far more difficult that it would seem. Simply jotting down the address won’t be enough in most cases. Many states require the property description to include what’s called the Legal Property Description, which can be very difficult to obtain.
More than just the mistakes mentioned above, mechanics liens get invalidated for all sorts of reasons, not the least of which are seemingly insignificant details like typos, document margins, and even something as simple as placing an address on the wrong side of a page. So if it’s so important that a document is perfect, how can you be sure that you can do this all by yourself?
One Way to DIY With Confidence
Despite all of our warning above to the contrary, there is one way that contractors in any state can file their own mechanics lien — as well as send preliminary notices and any other construction payment document — with confidence. And that’s by using the resources, information, and document templates that zlien freely provides to the construction industry. While it will still take some time to get it right, by using our resources you will at least know that the documents are correct. Plus, we have answers to just about any construction payment question imaginable.