Understanding Liens
You did the work, you deserve to get paid. A lien is a tool that can help make sure that you get paid for the work that you have done.
A lien is a legal claim or right against a property that acts as collateral during a project and gives a contractor legal action to recover money owed.
Requirements and deadlines for filing vary from state to state, so you want to make sure that you know your specific state’s requirements so that you aren’t left in a lurch.
Most states require that a pre-lien is filed before a lien can be filed. A pre-lien is a document that informs that a contractor or subcontractor is going to be working on a project, and sets the foundation for the ability to file a lien later on in the process if one is needed. While the deadline to file the pre-lien does vary from state to state, generally it does have to be filed BEFORE the project is completed. If a pre-lien is required and there is no pre-lien in place it becomes extremely difficult, if not impossible to file a lien, and further complicates the process of getting you paid.
Just like a pre-lien, a lien also has a deadline for being filed that varies from state to state. Some states are a couple of months, while other states allow for 2 or more years to file. So make sure you know the deadlines for your state, because once that deadline is past, so do your chances of being able to file a lien and possibly your chances of getting paid.
Make sure you keep records of the contract(s), invoices, payments, and any communications with the customer so you can support your claims if you do have to enforce the lien. If you have to enforce the lien, and there are several other creditors with a lien against the client, the lien that was filed first takes precedence in the proceedings.
At Lien Counsel, we make the whole lien process easier for you. Offering lien services nationwide, we keep up-to-date on the different states’ deadlines and requirements to help you through the entire process.
Partnering with legal, tax, and bookkeeping professionals, Lien Counsel is more than just for liens. We help provide resources for construction businesses, helping you build your business.