Lien Rights Explained, Part II
Last week, we briefly discussed what lien rights are, and why they matter. (Lien Rights Explained, Part I)
As GI Joe (should) have said, though: “Knowing is only half the battle”.
After all, as previously mentioned, a lien doesn’t just magically appear the minute that the owner or GC decides not to pay. Instead, you have to jump through a few hoops to ensure that those lien rights are preserved, and a few more to actually file the lien.
Unfortunately for us all, lien rights vary from state to state. What works in Texas probably won’t work in Georgia (and vice versa). There are, however, a few common documents required at some point by most states.
So, for this week’s edition of What You Need To Know About Lien Rights, I’m going to briefly go over some of the things you may need to send in order to preserve your lien rights.
- Notice to Owner–typically, this document is sent at the very beginning of the job, well before any payment issues have come up. The purpose of the Notice to Owner is exactly what the name would imply–it tells the owner that you are providing labor or materials on the job. If you’re a subcontractor, that in and of itself is a huge step towards ensuring prompt payment, since the owner may otherwise know nothing about you. By sending this notice, the owner knows you’re on the job, knows you’re going to expect payment, and knows to make sure the GC releases payment to you when appropriate.
Not every state requires that you send a Notice to Owner, but regardless, it’s not a bad idea. After all, preventing a payment snafu from happening in the first place will be infinitely less stressful then trying to pursue a lien after you’ve gone two months without payment.
- Notice of Intent to Lien–this comes up later…it’s what you send to the owner and GC, letting them know that payment is overdue, and if you don’t get paid soon, you’re going to proceed with a lien.
Lien deadlines vary greatly by state, but regardless, the Notice of Intent to Lien is something you need to watch out for.
In almost every state, the notice must be sent before filing the lien…and sending this does nothing to pause the clock that’s ticking on your lien. So, if your state requires that a lien be filed within 60 days of last providing work on a job, but the Notice of Intent to Lien has to be sent 10 days before that, what it really means is that you have 50 days (instead of 60) to get the ball rolling.
Next week, I’ll conclude this series by going over the basics of how you file a lien itself.
Until then, though, make sure you keep an eye on your preliminary notices. Or, if you’d like, feel free to hand all of that off on our back office support. Services we provide for subcontractors
We deal with lien rights every day, and we’re experienced at making sure every client gets paid every time. While you certainly can handle lien matters on your own, our back office is always happy to help keep things running smoothly, so that you can focus on your real job.