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.
What is a mechanic’s lien and what do i need to know
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.
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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.
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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.
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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.
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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.
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Construction Liens, Claims, Virtual Project Assistants
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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
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Construction Liens, Claims, Virtual Project Assistants
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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.
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You can loose your
lien rights if the name
of the Owner is not
technically correct.
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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”.
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Construction Liens, Claims, Virtual Project AssistantsRisk&Expense
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8. Best Advice
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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.
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www.pacificlien.com - 916-380-9340
