In this blog, presented by SunRay Construction Solutions and R. Russell O’Rourke, Construction Attorney, O’Rourke & Associates Co., LPA, you can learn in detail about these steps and processes that should be followed once your lien is filed. This will enable you to increase your chances of getting paid successfully.
When you've invested your time, effort, and expertise into a construction project, it's only fair to expect timely compensation for your hard work. However, there are instances where you may find yourself in a situation where payment is overdue. This is where the mechanics lien becomes your essential tool to secure the payment you rightfully deserve.
Understanding the Mechanics Lien
In essence, a mechanics lien is a legal tool that helps you safeguard your financial interests when you've performed work on a construction project but have yet to be compensated. It's a critical instrument that ensures that contractors and subcontractors are not left in the lurch when payments are delayed or withheld.
The Lien is Filed – What's Next?
The waiting game begins. Once your lien is in place, you should give the other party some time to realize that it has been filed. Typically, this might take anywhere from an hour to a day or so. What occurs next can generally be classified into a few scenarios:
In some cases, you may encounter silence. This is particularly common when financing is not an issue for the other party. They might not respond until they seek permanent financing, and the lender discovers the liens, compelling them to pay off the debts to release the liens.
On the other hand, you might face aggression. The other party, usually through their lawyer, might make threatening statements, such as claiming that the contractor owes you nothing or accusing you of slander of title. They may even threaten legal action in an attempt to intimidate you. This is where the importance of having impeccable paperwork cannot be overstated.
Another reaction could be a defensive stance. They may choose to issue a Notice to Commence Suit, which essentially gives you a 60-day window to file a lawsuit. Failure to do so within this timeframe could result in the loss of your lien rights. If you receive this notice, promptly inform your attorney and provide them with all the relevant details to prepare for the lawsuit.
Additionally, they may opt to bond off your lien, which alters your lien rights. We will delve deeper into this concept shortly.
In certain instances, the other party might seek negotiation. They could contact you, proposing that they will make the payment within a few days if you release the lien. It's crucial not to agree to this without involving your attorney, as releasing the lien prematurely could jeopardize your lien rights. Your attorney can guide you through the negotiation process effectively.
5. Payment – The Ultimate Goal
Sometimes, the best-case scenario unfolds, and the other party is prepared to make the payment. In such instances, exercise caution and release the lien only after confirming that the payment has been cleared. Work closely with your attorney, who can ensure the payment process is completed accurately.
Choosing Your Negotiator
- Negotiations require careful handling to avoid ending up on the losing side. When it comes to negotiations, consider who should be the primary negotiator.
- If you take on the role of the negotiator, keep in mind that once you commit to something, you can't easily backtrack.
- However, if you have a lawyer negotiating on your behalf, they can provide a buffer and seek further instructions from you. Your lawyer's ability to claim plausible deniability can be advantageous in negotiations.
- If you retain the ultimate decision-making authority, it's often best to let someone else handle negotiations. This way, you can maintain the flexibility to continue pushing for favorable terms.
Whether you're negotiating personally or through your attorney, some key considerations apply:
- Assume that all your conversations are being recorded. Consider recording them yourself, especially when dealing with parties in other states, as the rules regarding recording conversations may vary.
- If you have a construction lawyer, utilize their expertise to navigate negotiations effectively. Their knowledge of the legal landscape is invaluable in resolving disputes and securing payment.
The Path to Payment
Reaching resolution through the court system or dispute resolution process can be a costly and time-consuming endeavor. Here are some important factors to keep in mind:
- Most cases never reach trial; they are often settled along the way. Choose a lawyer who can guide you through this process efficiently and cost-effectively.
- Be transparent with your lawyer and provide them with all relevant information, including emails, texts, documents, and other case-related materials. Preparing your attorney adequately is crucial to avoid unpleasant surprises during the trial.
- Understand your options for dispute resolution, whether through negotiation, mediation, litigation, or arbitration, as outlined in your contract.
- Be prepared for potential counterclaims if you decide to file a lawsuit or arbitration.
In conclusion, securing your payment through a mechanics lien is a multi-step process that involves patience, negotiation, and potentially legal action. To ensure the best possible outcome, engage an experienced attorney who can help you navigate this complex terrain. Always remember to provide your lawyer with all the necessary information and documents, whether favorable or not, to strengthen your case. Finally, bear in mind that Ohio law allows for the collection of legal fees if you prevail in a mechanics lien case, but these fees are typically drawn from the foreclosure proceeds. Therefore, wise negotiation is key to ensuring the best possible outcome.
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