We’ve been at this a long time here at zlien. Over about a decade in business, we’ve helped thousands upon thousands of folks just like you in the construction industry get paid the money they’ve earned on their projects.
Over that time we’ve also learned quite a bit, to the point that we are now in a position where we are able to freely share our extensive collection of construction payment resources with anyone and everyone who has a stake in the industry. (Go ahead and click the link to check it out for yourself!) We also share a ton of helpful information on our Construction Payment Blog, and we stay up-to-the-minute on changes to the lien laws in all 50 states and share news and updates about those laws on our Lien Law Alerts Blog.
Today, we wanted to share with you a bit of a cautionary tale – the 7 worst construction lien mistakes you don’t want to make! Read on to find out which mistakes make our list of iniquity.
The 7 Worst Construction Lien Mistakes
1. Failure to Send Notice to the Project Owner (even if it’s not required)
The Good News:
Mechanics lien laws exist in all 50 states!
The Bad News:
Each state’s lien law is different, which means that the mechanics lien process works differently in every state.
Even though preliminary notices are not required in all 50 states (though they are required in the vast majority of states), we believe very strongly that sending preliminary notices on every project, even when it’s not required, is an indisputable industry best practice.
Project participants who send preliminary notices get paid faster and increase their visibility to the other project stakeholders. Oh, and let’s not forget that sending preliminary notice is often a required step that must be completed in order to secure lien rights.
Take it from us: you don’t want to be on a project where a payment issue pops up down the line, only to discover that your liens rights were already lost since you failed to send a preliminary notice! Don’t be that guy!
2. Failure to Send Notices to Other Important Parties on the Job
No matter what state the project is in, the primary recipient of a preliminary notice is always going to be the project/property owner – after all, they’re the ones who have the money. But some states – California and Texas, for example – require that preliminary notice must be sent to other project participants in addition to the owner.
Though a Notice of Intent to Lien is only required to be sent on private projects in nine states, it’s an extremely effective document that should be a part of a contractor’s payment toolbox in every state.
4. Missing a Deadline
Be careful here, because this category is a doozy. Generally speaking, the lien process in most states involves four steps:
- A) Send Preliminary Notice (if not paid, then proceed to B)
- B) Send Notice of Intent to Lien (if still not paid, then proceed to C)
- C) File a Mechanics Lien (if still not paid, then proceed to D)
- D) Enforce the Lien
And in most cases, there are strict deadlines for performing each of these actions. These deadlines are no joke and must be taken seriously since just one missed deadline can be fatal to your lien rights!
Click on the buttons below to download charts that cover lien and notice deadlines for all 50 states.
(Looking for deadlines for public projects? Check out our article Bond Claim Deadlines in All 50 States.)
5. Failure to Serve a Copy of the Lien to Required Parties
Serving a copy of the lien is not universally mandated nationwide, but it’s a requirement in many states. Be sure to visit the resources section of zlien‘s website to find out if serving a copy of the lien is required in your state.
6. Overstating the Amounts Due and Owed
We’ve written about this topic before, but we really can’t say it enough: do NOT, under any circumstances, inflate the amounts on your lien claims.
Just. Don’t. Do. It.
7. Failing to Foreclose on the Lien
You come this far – why would you go through all of this effort only to bail before taking the final step in the process?? Look, we get it: what foreclosing on a mechanics lien really means is that you’re going to have to file a lawsuit in order to enforce your claim, and lawsuits are expensive. (Sidenote: “foreclosing” on a lien means the exact same thing as “enforcing” a mechanics lien.)
Since this step can potentially be an expensive one, you must be wondering: is it worth it? Every situation is different, but generally speaking, we believe that foreclosing on a mechanics lien is worth it.