In this blog, we will delve into the ins and outs of how liens work and discuss the steps you need to take to get paid.
What is the Lien Process?
Step 1 - Filing the Lien
The first step in securing your payment as a construction professional is to file a lien. This involves documenting your claim on the property for the amount owed to you.
Step 2 - Initiate a Civil Court Action
After filing the lien, the next crucial step is to enforce your lien rights through a civil court action known as a 'foreclosure.' In this legal procedure, you will name the property owner and assert your lien on the property.
Step 3 - Recover What is Owed
If the property owner fails to make the payment, you have the option to proceed with the foreclosure. This allows you to sell the property to recover the amount owed to you, giving your claim priority over other creditors.
Step 4 - Be Prepared for the Process
It's essential to be aware that foreclosure, like any court action, can be time-consuming and costly. Therefore, it is crucial to be prepared for the legal process and understand the potential benefits and expenses involved.
Step 5 - Weigh the Pros and Cons
Before proceeding with the foreclosure, carefully assess the potential benefits of recovering your payment against the costs and efforts required for the legal action. Make an informed decision based on the circumstances.
By following these steps and understanding the lien enforcement process, you can increase your chances of securing your rightful payment and protecting your interests as a construction professional.
Understanding the Timeline
- Timing is critical in lien enforcement.
- You have one year from the date of recording your lien to file a foreclosure suit.
- Failing to meet this deadline will result in the expiration of your lien.
- Adhere diligently to the specified deadlines to protect your interests.
Tips for a Successful Lien
Tip 1 - The 60/60 Rule
To optimize your chances of a successful lien, follow the 60/60 rule. As per this rule, begin the lien recording process around day 60 from your last day of work. Although you have a 90-day window to record the lien, don't wait until the last moment. Start the paperwork while you're still on the job to avoid potential delays.
Tip 2 - Act Swiftly
Preparing and recording a lien involves paperwork, notarization, and recording it in the clerk's office, all of which takes time. By following the 60/60 rule, you'll have ample time to complete the process without rushing. If someone promises to pay and requests you not to file a lien, remember you can always satisfy the lien after receiving payment.
Tip 3 - Utilize the 60 Days
Once your lien is recorded, make the most of the following 60 days to pursue payment aggressively. Don't hesitate to follow up with the customer, contact the property owner, or employ any means necessary to seek payment during this period.
Tip 4 - Seek Professional Assistance
If the 60-day period ends, and you're still not paid, consider reaching out to a construction lawyer or a reputable collection firm. Engaging professional services earlier in the process can increase your chances of successful debt collection.
What are the Considerations for Delaying the Lien Process?
- Evaluate the Circumstances: Assess the specific circumstances that might warrant delaying the lien process. Understand the reasons behind the delay and whether it aligns with your overall strategy.
- Avoid Passive Waiting: Instead of simply hoping for payment without any action, have a clear plan in place. Passive waiting may not yield the desired results.
- Weigh the Risks: Understand the potential risks involved in delaying the lien. It might impact your ability to secure payment or your position in the payment priority.
- Make Informed Decisions: Ensure that any decision to wait on filing a lien is well-informed and thought-out. Consider the consequences and possible alternatives before choosing not to pursue the lien.
Filing a lien is a powerful way for construction professionals to secure their payment. By understanding the lien process, adhering to the required timelines, and employing strategic actions, you can significantly increase your chances of getting paid promptly and fairly. Always be proactive and informed in managing your payment rights to ensure the success of your construction projects and business.