Mechanic’s Lien: A Contractors Path to Getting Paid
I am finding that more subcontractors are getting stiffed on jobs, and only after about ninety-plus days of holding an accounts receivable open, do they want to start discussing the lien process. Is it too late to do a lien? Short answer is probably.
That doesn’t mean you’re stuck without a remedy. It only means you’ve lost some leverage in getting paid without having to stare down the barrel of a lawsuit.
But because my practice is focused around ways to help my clients avoid lawsuits, I cannot emphasize the Mechanic’s Lien procedure enough. If done right, it’s one of the easiest ways to get paid when someone otherwise doesn’t want to pay you.
How to File a Mechanic’s Lien?
First, if you’re a sub or supplier, you should be sending out your Notice of Right to Lien within 31 days of when you start on site. I’m not always seeing these Notices go out as a matter of habit, and when I ask a sub why they don’t send them, the answer is they didn’t know they had to send anything until they weren’t getting paid.
A Notice of Right to Lien isn’t a notice of non-payment, though. It’s a notice that lets the property owner and your general contractor know that if someone decides not to pay you, you have the right to attach the property as security to get paid. And since you’ll want to be paid for every day on the site, and for every piece of material that gets incorporated into the site, you need to send out the Notice.
And, let me play devil’s advocate here. What do you think a general contractor thinks of a sub who isn’t savvy enough to send out that Notice? If there were a hierarchy of which sub is getting paid first, maybe a general pays those who have a greater understanding of lien law, because they pose a greater threat.
Contractors and Subcontractors in California
This notice requirement is even more important if you’re a sub or prime contractor that does jobs over in California, as California’s Preliminary Notice applies to more parties and you have less time to send it.
The good news, though, is that a contractor can get all these forms in a broad package (even a California package), and fill in the dates and names as needed so that it become a habit with new projects rather than a burden.
If you need any help getting up and running with your mechanic’s lien forms or other business contracts, please do not hesitate to contact Reno business lawyer Heather Ijames.