Lien Rights Explained, Part III

July 2, 2018 Uncategorized 1 Comment

Construction Finance mechanics liens lien rights

For the past couple of weeks, we’ve been going over the basics of liens, including what a mechanic’s lien is (Lien Rights Explained, Part I) and the preliminary notices often required to preserve lien rights (Lien Rights Explained, Part II).

For the final part of this captivating trilogy, I want to go over the information that you need in order to actually file said lien.

First of all, in order to file a lien, you need to have the project information.

Who actually owns the property?  Where is the property located?  When did you last provide labor or materials on the job?  These are all things you will need to know in order to file a valid lien.

Sounds easy enough, right?

Yeah, about that…

First of all, you have to make sure you have the right owner.  This sounds obvious, but corporate ownership can be complicated:  You might think “Well, this project is a Big Burger Barn, so the owner is Big Burger Barn”, but often, Big Burger Barn actually has a whole slew of corporate subsidiaries, and the real owner is ‘BBB Land Development, LLC’.  Merely sending everything to Big Burger Barn may leave you with an invalid lien.

Similarly, identifying the property is a two part process:  There is the street address that you see listed on Google (i.e. 123 Big Burger Barn Road), but there’s also the legal address.  In order to get the legal address, you will most likely to have to go talk to the county clerk.

Also, you know that street address I just mentioned?  It…may not exist yet if this is new construction.

I know.

What can I say?  If this stuff were fun and easy, there wouldn’t be lawyers who do nothing but this all day.

Because of these potential challenges, there are two things that I want to stress:  (1) Get as much project information as you can at the beginning of the job.  Before you set one work boot on the ground, figure out who actually owns the property.  Keep track of when you started the work, and when you finished.  Have a paper trail.  This way, should payment complications arise, you aren’t going to be stuck trying to figure out if you started work on the 15th or the 19th, and whether the property is really owned by Big Burger Barn, BBB Land Development, or Chester’s Chutney that just happens to be leasing to a Big Burger Barn.  (2) Don’t wait until the last second to start preparing your lien.  You will discover that there’s some information you didn’t collect. You will find out that the property has no street address.  You will realize that the paperwork is more confusing than you’d anticipated. You will have 70 other things going on that week, and zero free time to spend on trying to find your answers.  As such, if the deadline for filing your lien is October 10, don’t wait until October 8 to start on everything.







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About the Author

Tipper Coker

Lawyer. Vice president of business development. Hopeless nerd who's read far too many AIA contracts.

  • Frank

    July 9, 2018at4:51 am -

    Great topic…liens are such a critical part of financing construction.