When a construction project is done, it is time to get paid. But sometimes, the property owner refuses to pay, or suddenly becomes hard to get ahold of. No matter the circumstances or the owner’s excuses, the builder could find itself deep in a financial hole.
In this situation, perhaps the greatest leverage the construction company has is possession of the property. A contractor’s lien, also known as a construction lien or mechanic’s lien, is the way construction firms can use that leverage to seek the payment they deserve.
In some states, the contractor or subcontractor seeking to enforce the contract must notify the owner, though this is not true everywhere. The lien may be filed any time after the contract is made, but generally the work should be underway before they record the lien with the court. It must be recorded within four months of the last day the contractor or subcontractor performed any task on the project.
A contractor’s lien will hopefully get the property owner’s attention. If that party is not eager to go to court over the dispute, they may be willing to negotiate a settlement. This could result in the builder getting less in payment than they originally bargained for, but it may be worth it to avoid litigation. Whether or not a settlement offer is worth accepting depends on each party’s individual circumstances.
This is one way construction companies can protect their rights. For other strategies and information about their particular issues, owners should consult with a construction law attorney.