How to File a Lien
Exhaust all other options., Make sure you've given preliminary notice., Check your state's deadlines for filing a lien., Research the property., Draw up your lien., File your lien., Notify all necessary parties., Enforce your lien.
Step-by-Step Guide
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Step 1: Exhaust all other options.
Filing a lien is a public declaration that someone hasn't paid for contract work, and is a strong legal move to make.
Before you jump straight to the decision that you want to file a lien, talk to the property owner and attempt to set up another plan.
Be clear from the beginning of a job that you'll file a lien if debts remain unpaid.
Some states such as Washington have forms you can use to notify property owners of your right to file a lien if you aren't paid.You also can advise a property owner of your right to file a lien in your contract for the work.
If the property owner agrees to a payment plan, make sure it has a reasonable due date and get the plan in writing.
For example, if you completed some work on your client's garage for $2,000, you may work out a payment plan in which your client agrees to pay you $500 a month for the next four months.
You may want to hire a lawyer at this point to help you draw up an agreement.
You also might consider using alternative dispute resolution.
With ADR, you and your client share the cost of hiring a neutral mediator who helps you work out a mutually agreeable outcome.
The process often is less adversarial, more efficient and less expensive than filing a lien.Your local courthouse or your state court's website may have a list of ADR resources available in your area.
Hiring a debt collection agency is anther way to avoid the time and expense of engaging in formal legal processes by filing a mechanic's lien.
Debt collections agencies specialize in recovering debts and can put the pressure on your client without you having to take legal action.
If you decide to go this route, research and find a collection agency that has a good reputation and specializes in working with people who do the same kind of work you do. -
Step 2: Make sure you've given preliminary notice.
Most states require you to notify the debtor that you will file a lien if he doesn't pay you.
Typically you would give this notice within the first few weeks of work, before payment even becomes a problem.
If you fail to give preliminary notice, you may lose your right to file a lien if your client doesn't pay.Some states require that you use a specific form to provide notice.
Check with your local clerk of court's office to find out if your state has any specific requirements.
In most states, preliminary notice must be given within 10 to 20 days of the date you began work., You only have a brief period of time after you've completed the work to file for a lien, and in some states this period is as short as 60 days.Depending on where you live, you may not have time to exhaust all other options before you file a lien if you want to preserve this option.
For example, in Louisiana you only have 60 days from the day you finish the work to file a lien for non-payment.
This doesn't give you much time to pursue alternative methods of collection.
However, in neighboring Mississippi, you have a whole year from the date the debt became due.
That gives you plenty of time to explore other payment options with your client., To file a lien on property, you must conduct a title search on the property to ensure your client owns it and get the full legal description from the deed.
This process could cost several hundred dollars to complete.In some states such as Illinois, general contractors who file a lien before the deadline have priority over any other encumbrances on the property, even if another mortgage or a competing lien came first.If there are other creditors who have liens on the property, you should consider consulting an attorney to advise you on how those loans are prioritized legally and whether you should pursue alternative means of collection.Other liens on property that would take priority over yours could mean that even if you filed suit and had the property sold, you wouldn't recover any money and the debt would remain unpaid., A lien typically is a one-page document with information about the creditor, the debtor, and the property.
Most states have specific court forms to fill out.
For example, California requires a Claim of Lien form as well as a notice and an affidavit.You can learn your state's requirements by contacting your local clerk of court.
Check the formatting requirements of the county where you're filing the lien, because many counties have strict rules governing the paper size, margins, and font of the text.
If you don't follow these rules, the office will reject your lien.The type of information required on the lien also varies from state to state, but typically includes your name and address, the name and address of your client, the amount of money you are owed, a description of the type of work or services you performed, and the location of the property.
Make sure you've included all necessary information or your lien won't be any good.
For example, if you're placing a lien on real property, most states require a legal property description such as the one on the deed, not just a street address., Your lien must be filed with either the property recorder's office or the clerk of court.
Each state designates a specific office to accept filings of mechanic's liens, so make sure you've got the right office.
If you're claiming a lien on real property, it must be filed in the recorder's office of the county where the property is located.Expect to pay a filing fee between $25 and $50 depending on the location where you file.Although you often can file your lien by mailing it to the office, you may want to deliver it in person.
Many offices have a backlog on mailed filings, so this is particularly important if you're filing close to the deadline.
Additionally, filing in person means if there's something wrong with your lien you can find that out and correct it immediately., In most states you must notify the property owner immediately after you file the lien.
Some states require additional parties, such as other lien holders, to be notified as well.
You can find out who must be notified when you file the lien.In many cases, the property owner will make arrangements to pay the debt soon after receiving notice that you filed a lien. , If the debtor still doesn't pay after you've filed the lien, you must enforce the lien by filing a foreclosure lawsuit within a certain amount of time, usually a year.The foreclosure suit causes the property to be sold.
The proceeds of the sale are used to satisfy any liens on the property.Make sure you check your state law to see what your enforcement period is.
After the enforcement period runs out your lien is expired and has no value.
Some states have extremely short enforcement periods.
For example, in California you have just 90 days to file a lawsuit after filing your lien.Because filing a foreclosure suit involves filing a formal complaint in court and following the court's rules, you should consider hiring an attorney who specializes in foreclosures or in enforcing mechanic's liens. -
Step 3: Check your state's deadlines for filing a lien.
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Step 4: Research the property.
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Step 5: Draw up your lien.
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Step 6: File your lien.
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Step 7: Notify all necessary parties.
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Step 8: Enforce your lien.
Detailed Guide
Filing a lien is a public declaration that someone hasn't paid for contract work, and is a strong legal move to make.
Before you jump straight to the decision that you want to file a lien, talk to the property owner and attempt to set up another plan.
Be clear from the beginning of a job that you'll file a lien if debts remain unpaid.
Some states such as Washington have forms you can use to notify property owners of your right to file a lien if you aren't paid.You also can advise a property owner of your right to file a lien in your contract for the work.
If the property owner agrees to a payment plan, make sure it has a reasonable due date and get the plan in writing.
For example, if you completed some work on your client's garage for $2,000, you may work out a payment plan in which your client agrees to pay you $500 a month for the next four months.
You may want to hire a lawyer at this point to help you draw up an agreement.
You also might consider using alternative dispute resolution.
With ADR, you and your client share the cost of hiring a neutral mediator who helps you work out a mutually agreeable outcome.
The process often is less adversarial, more efficient and less expensive than filing a lien.Your local courthouse or your state court's website may have a list of ADR resources available in your area.
Hiring a debt collection agency is anther way to avoid the time and expense of engaging in formal legal processes by filing a mechanic's lien.
Debt collections agencies specialize in recovering debts and can put the pressure on your client without you having to take legal action.
If you decide to go this route, research and find a collection agency that has a good reputation and specializes in working with people who do the same kind of work you do.
Most states require you to notify the debtor that you will file a lien if he doesn't pay you.
Typically you would give this notice within the first few weeks of work, before payment even becomes a problem.
If you fail to give preliminary notice, you may lose your right to file a lien if your client doesn't pay.Some states require that you use a specific form to provide notice.
Check with your local clerk of court's office to find out if your state has any specific requirements.
In most states, preliminary notice must be given within 10 to 20 days of the date you began work., You only have a brief period of time after you've completed the work to file for a lien, and in some states this period is as short as 60 days.Depending on where you live, you may not have time to exhaust all other options before you file a lien if you want to preserve this option.
For example, in Louisiana you only have 60 days from the day you finish the work to file a lien for non-payment.
This doesn't give you much time to pursue alternative methods of collection.
However, in neighboring Mississippi, you have a whole year from the date the debt became due.
That gives you plenty of time to explore other payment options with your client., To file a lien on property, you must conduct a title search on the property to ensure your client owns it and get the full legal description from the deed.
This process could cost several hundred dollars to complete.In some states such as Illinois, general contractors who file a lien before the deadline have priority over any other encumbrances on the property, even if another mortgage or a competing lien came first.If there are other creditors who have liens on the property, you should consider consulting an attorney to advise you on how those loans are prioritized legally and whether you should pursue alternative means of collection.Other liens on property that would take priority over yours could mean that even if you filed suit and had the property sold, you wouldn't recover any money and the debt would remain unpaid., A lien typically is a one-page document with information about the creditor, the debtor, and the property.
Most states have specific court forms to fill out.
For example, California requires a Claim of Lien form as well as a notice and an affidavit.You can learn your state's requirements by contacting your local clerk of court.
Check the formatting requirements of the county where you're filing the lien, because many counties have strict rules governing the paper size, margins, and font of the text.
If you don't follow these rules, the office will reject your lien.The type of information required on the lien also varies from state to state, but typically includes your name and address, the name and address of your client, the amount of money you are owed, a description of the type of work or services you performed, and the location of the property.
Make sure you've included all necessary information or your lien won't be any good.
For example, if you're placing a lien on real property, most states require a legal property description such as the one on the deed, not just a street address., Your lien must be filed with either the property recorder's office or the clerk of court.
Each state designates a specific office to accept filings of mechanic's liens, so make sure you've got the right office.
If you're claiming a lien on real property, it must be filed in the recorder's office of the county where the property is located.Expect to pay a filing fee between $25 and $50 depending on the location where you file.Although you often can file your lien by mailing it to the office, you may want to deliver it in person.
Many offices have a backlog on mailed filings, so this is particularly important if you're filing close to the deadline.
Additionally, filing in person means if there's something wrong with your lien you can find that out and correct it immediately., In most states you must notify the property owner immediately after you file the lien.
Some states require additional parties, such as other lien holders, to be notified as well.
You can find out who must be notified when you file the lien.In many cases, the property owner will make arrangements to pay the debt soon after receiving notice that you filed a lien. , If the debtor still doesn't pay after you've filed the lien, you must enforce the lien by filing a foreclosure lawsuit within a certain amount of time, usually a year.The foreclosure suit causes the property to be sold.
The proceeds of the sale are used to satisfy any liens on the property.Make sure you check your state law to see what your enforcement period is.
After the enforcement period runs out your lien is expired and has no value.
Some states have extremely short enforcement periods.
For example, in California you have just 90 days to file a lawsuit after filing your lien.Because filing a foreclosure suit involves filing a formal complaint in court and following the court's rules, you should consider hiring an attorney who specializes in foreclosures or in enforcing mechanic's liens.
About the Author
Lisa Turner
Creates helpful guides on lifestyle to inspire and educate readers.
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