If you have recently completed construction work on a home, you are likely expecting to be paid in a timely manner. Many renovation projects (e.g. kitchen or bathroom remodels) involve significant time and resources, especially large-scale jobs. Therefore, it’s important to ensure that the property owner holds up his or her end of the bargain by not only paying you on time, but also by compensating you in full. Fortunately, you as a contractor (or subcontractor) can legally request payment for your work by filing a mechanics lien. Here is a close look at this subject.
What Is A Mechanics Lien?
A mechanics lien is a legal claim for unpaid remodeling work performed on a property. Any individual who provides labor or materials for a home construction project (i.e contractors, subcontractors, and suppliers) can typically file a mechanics lien if they do not receive payment. This type of claim helps contractors gain a security interest in a property.
The Importance Of A Mechanics Lien
Mechanics liens are important for two major reasons. Firstly, they serve as a form of leverage for contractors and suppliers who complete remodeling work on a home. If these workers don’t receive payment, they can force a property to enter foreclosure.
Secondly, liens and other legal claims create a cloud on a property’s title. This means that if the homeowner attempts to sell the property, they will not be able to do so until this issue is resolved. Banks and lenders are generally reluctant to provide financial assistance to properties with liens.
Why Do Mechanics Liens Exist?
The process of receiving payment for property construction work is often long and complex. Projects in this industry typically require several upfront costs just to get started. In addition, homeowners sometimes struggle to identify every person working on a construction project. Liens function as a way to get the property owner involved when the party responsible for hiring fails to make payments.
How A Mechanics Lien Works
Every state has its own laws regarding the exact process and timeline for filing mechanics liens. In New York, for instance, a lien must be filed within eight months of the last date when work was completed or materials were supplied. (For single family homes, this period is four months.) However, here are four essential steps to generally follow.
Provide Preliminary Notice
A preliminary notice is a document sent at the onset of a construction job to notify the general contractor (GC) and property owner that you are working on the project. This is also sometimes called a Notice to Owner (NTO) or Notice of Furnishing. A preliminary notice can ultimately help ensure effective communication on a construction job.
Send A Notice Of Intent
A notice of intent to lien (NOI) is a document that warns the GC and property owner that you will file a mechanics lien if they fail to issue payment within a specified time period. This notice is only required (legally) in certain states, including Connecticut, Illinois, Pennsylvania, and Wisconsin. However, it serves as an effective way of pressuring the party responsible for payment.
File A Mechanics Lien
To file a mechanics lien, you need to complete a lien claim form. This document typically includes details about the property and the type of construction project done. You can fill out this form at the county recorder’s office. Each state has its own template for this form.
Release Or Enforce The Lien
Once the lien has been filed and you have received payment, you must release it in order to avoid facing penalties. If you have only received partial payment for work completed, you can submit a conditional release. If you still have not been paid yet, then you may enforce the lien. This requires legal action to foreclose on the property.
Talk To The Mechanics Liens Experts
Reach out to the professionals at Mathis Title Company for more information about mechanics liens. We proudly provide real estate settlement services and legal advice to buyers, sellers, and lenders throughout Northern Virginia.
If you have performed construction work on a property and have not been paid, Mathis Title can assist you with the process of filing a mechanics lien. This legal claim will help guarantee you receive payment for your work while also allowing the property owner to sell their structure. There are several different types of mechanics liens, each one named for a different type of worker (e.g. construction lien, materialman’s lien, design professional’s lien, etc.). Mathis’ team is highly knowledgeable about lien laws in Virginia and can thus help you meet all of the requirements.