Should I File A Construction Lien?

When A Construction Lien Is Appropriate

You or your company have completed a substantial project for another party. It’s been weeks and you have not been paid. The other party will not return calls, texts, or emails. They have gone silent. Now what?

Often, the level of success attained by a contractor or service provider is attributable to efficient and timely invoicing that produces operating cash flow. A company operating at full capacity that fails to keep up with accounts receivable is arguably in a worse position than a company struggling to find work. Unfortunately, the time between sending out invoices and receiving payment is largely out of a contractor’s hands. Time waiting for a remitted payment can cause some apprehension, and rightfully so. This can especially be the case when dealing with new customers or an uncertain economy. So, what happens when an invoice goes without response for 60, 90, or even 120+ days? Depending on the industry this can be unsettling, but you might be entitled to seek a lien as a method to recover payment.

Construction Lien Basics

One tool the law offers to remedy this issue is a “construction lien” or, as referred to in other states like Minnesota, a “mechanic’s lien.” States have expanded the scope of the liens to include many service industries and trades.

A construction lien gives the service provider a security interest in the property that will give them priority if the debtor tries to sell the property. Once recorded, the lien will put any potential buyers of the property on notice that the debtor owes the service provider money. This is done by the lien “attaching” to the property which has been worked on or improved by the service provider.

Mechanic’s liens can be a good solution to not only catch the attention of a debtor but to expedite the process of getting paid. It is important to note that these liens can be time-sensitive and different states have different deadlines by which the liens must be filed or enforced. In North Dakota, a lien is perfected if it is recorded within 90 days of the completion of the work. A lien is not lost for failure to file within 90 days. However, the lien must be filed within 3 years after the date of the first item of material is furnished or it will be lost.

If you are having trouble collecting payment for work you have completed, contact us!

The information contained in this article and on this website is for informational purposes only. Do not rely on information on this website as legal advice.

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