Construction companies often do not receive full payments when starting a project. Clients pay a deposit. They usually also sign a contract affirming when final payments are due.
In some cases, property owners may attempt to withhold payment to address issues with the property. People without any good faith intent to pay what they owe may exaggerate or fabricate concerns as a means of justifying their refusal to pay what they should.
A mechanics lien allows a construction company to use the property as collateral for the amount still due. Timely action is necessary to secure a lien and also to enforce one after securing it.
Mechanics liens offer a limited window of opportunity
Under current state statutes, there is a strict timeline that applies to mechanics liens. Filing a request for a construction lien usually needs to occur within 120 days of completing the work on a property. After recording the lien, the business then needs to promptly take action to enforce it.
Ideally, the property owner moves quickly to resolve the situation and pay what they owe. Otherwise, the construction firm may need to foreclose on the property.
Typically, they only have up to six months after the date of recording the lien to enforce it by foreclosing on the property. If property owners remain uncooperative after a construction company secures a lien, waiting for them to respond could endanger the company’s right to demand payment.
Business leaders trying to address unpaid final invoices may need help obtaining and enforcing mechanics liens. Getting legal guidance can make it easier to obtain and enforce a lien in compliance with state law.