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Mechanic’s liens can help get contractors paid

| Sep 4, 2020 | Business Collections |

Contractors will usually complete projects after a client puts a deposit down. This may cover their materials, but there’s usually a balance left after the job is completed. While most clients will pay the balance due right away, some don’t. This can leave the contractor in a difficult position.

In most cases, a demand for payment, such as an invoice, is all that the customer needs to get the matter handled. When there’s a customer who refuses to pay, contractors have another option. They can file a mechanic’s lien, which can strongly encourage the client to pay what’s owed.

This type of lien has very strict requirements so it must be executed properly. It requires the filing of a preliminary notice in almost all cases. Typically, this is done at least 20 days prior to filing the lien. Notification must be made to more than just the property owner. If you’re a subcontractor, the general contractor must be provided with a copy, and the lender for the mortgage must be notified.

As part of the filing, you’ll need to provide a detailed statement about for what the money is owed. This includes all the services and products for which you require payment.

Once the person pays the money that’s owed, you can have the mechanic’s lien removed. This step means that you’re relinquishing your claim to the property since your bill was satisfied. It also clears the lien so the individual can sell the property if they desire.

Collections can take considerable time from a contractor’s schedule. You might opt to have your attorney handle these matters so you’re free for other duties.

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