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What is a mechanic’s lien and what do i need to know
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What is a mechanic’s lien and what do i need to know

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Following the regulations of filing a Mechanic's Lien is hard enough, but do you "really" need to know. These slides discuss the strategy questions behind pursuing a lien.

Following the regulations of filing a Mechanic's Lien is hard enough, but do you "really" need to know. These slides discuss the strategy questions behind pursuing a lien.

Published in: Business, Economy & Finance

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  • 1. What is a Mechanic’s Lien and what do I need to know before filing one? “There will always be an inherent conflict of interest between contractors and owners. Contractors want the most amount of money for the least amount of work and Owners want the most amount of work for the least amount of money.” Douglas D. Harding. PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 2. • mechanic's lien n. the right of a craftsman, laborer, supplier, architect or other person who has worked upon improvements or delivered materials to a particular parcel of real estate (either as an employee of the owner or as a sub-contractor to a general contractor) to place a lien on that real property for the value of the services and/or materials if not paid. PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants Translation: If you worked on a job, either for the contractor or the owner, you have the constitutional right to file a lien on that property (“cloud its title”) for nonpayment of progress payments, change orders, damages, or retentions. Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 3. PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants • If you are owed money on a private works construction project, you can file a lien anytime during the project or as late as 90 days after your last work or 60 days after a Notice of Completion*. • 90 days* after you file the Mechanic’s Lien forms, you have to file hire an attorney and file a lawsuit to preserve your lien rights. A “Lien” occurs when you file a statutory form with the County Recorder. The Bottom Best Practice Tip: Have your “ducks line up” by preparing relevant documentation, accounting records and compliance records prior to actually filing a Lien. * All states have different date requirements. Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 4. • While the law generally favors contractor’s rights, they don’t make it easy… – There are a lot of documents that must be filed… – Documents must have specific wording or they will be rejected; – Deadlines to meet or you loose your rights; – There are business and political consequences of filing a lien; • Filing a lien means eventually hiring an attorney and the expense of a trial. PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 5. • Filed a Preliminary Notice on Time; • Corporate, business and professional licenses are up-to-date; • Documentation of the debt must be certain and non-speculative; • Documents must be filed in a timely manner; • Documents must be filed with the right parties and in a manner prescribed by law; • Does the other party have any affirmative defenses? • Will the other party have the ability to pay? • Is the fight worth these expense? • Will this alienate my client? • Will my client support the claim? • How much staff time will be required to document the claim? • How much time will I have to spend with attorney’s and accountants? • Will my business suffer because of the complications of a lawsuit? • Are there opportunities for settlement without going “all the way”? Legal Considerations Business (political) Considerations PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 6. • You Must Prove: – The defendant(s) is/are the legal owner(s) of the property; – You are a properly licensed legal entity with the right to pursue a mechanic’s lien; – The other party had a contractual duty to pay and failed to do so in breach of the agreement; – The amount due is accurately calculated, auditable, and certain (best to have a third party confirm this before filing); – There is a “causal nexus” between the other parties actions or inactions and your losses. PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants You can loose your lien rights if the name of the Owner is not technically correct. Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 7. Recovery Strategies  Breach of Contract & More  Foreclose Lien (File Lawsuit)  Formal Claim for Additional Compensation  File Claim on Bond  File Stop Payment  File Mechanic’s Lien  Formal Notice of Lien  Written Demand  Correspondence Damn the Torpedoes – File mechanic’s lien, claim on bond and foreclose immediately. Retain legal team & experts. Its Just Business – Formal written notice; mechanic’s lien filed as a matter of course. “I don’t have time for this. They can come to me now”. Negotiation – Open and professional communication, confirmed in writing, allows for the possibility of settlement, “just protecting my rights”. PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project AssistantsRisk&Expense Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340
  • 8. Best Advice PACIFIC LIEN SERVICES Construction Liens, Claims, Virtual Project Assistants 1. Resolve the conflict before the need for a lien. Many times a professionally prepared Notice of Intent to Lien will accomplish more than the lien itself; 2. Treat every project like its going to be liened…BE PREPARED; 3. Proactively manage your project with all of the resources you can afford to be able to track cause and effect. 4. Develop a formal recovery strategy for getting paid prior to filing a lien by contacting Pacific Lien Services. Select a team of knowledgeable attorney and experts to assemble the claim document at the earliest practical moment. Prepared by Pacific Lien Services - www.pacificlien.com - 916-380-9340