Many contractors know that they are treated unfairly by clients. But, they are not sure of what their options are. They don’t know how to proceed, even when payments are late or a building owner implies that they will not pay for certain services. The state of Connecticut recognizes the value in the hard work of a contractor, and realized the position that a contractor is in after having completed a job but not paid – you can’t go back and undo your hours of labor and work, so they created by law a mechanism to ensure you get paid.
What is a Mechanic’s Lien?
This is where a mechanic’s lien comes in. A mechanic’s lien is one person’s right to place a lien on property owned by another person until a debt is paid. The property could not be sold without you getting paid. In simpler terms, a lien is a guarantee that you will receive compensation for goods or services that you provide. So if you are in construction, and you do not get paid for the work that you did on a building, you can file a mechanics lien. The debt that is owed to you becomes the priority, and the property owner cannot sell the property until you are paid. A mechanics lien can be filed on any type of building, commercial or private.
As the contractor you or your lawyer will record the lien on the property against the property owner.
If you have not received payment for work done on property, you could file a lien. But keep in mind that you should not jump the gun. A lien shouldn’t be filed until work is completed on a project. This means that late payments might not warrant a lien. Even though this is frustrating, the building owner might still pay before construction officially ends. If this happens, there is no need to file a lien. Trying to start the liens process too early could be a waste of your time and money. If possible, communicate with the building owner about their payments.
In addition, payment provisions should be outlined in your contract with the building owner. So you might sign in the contract that construction will halt until X amount of money is paid to you. This is a good way of making sure that you get paid because it will break the work up into chunks and you won’t have to continue until you get paid. Making sure that you have a contract of some sort will be mandatory if you do go through the mechanic’s liens process. If you do not have a contract you are not in a position to record a lien. This is one of the biggest challenges to mechanics liens. We suggest you consult with us about the provisions in your standard contracts so we can make sure you are protected legally.
Your contract will, hopefully, be as specific as possible. For example, if you were doing a home improvement, the contract should be very specific to make sure that you offered the rights given by statute to homeowners in your contract. Generally, there’s a three-day right of rescission that gives the homeowner the right to cancel a line of credit or home equity loan, if necessary.
As I’ve said, the contract ideally should be very specific. But many times, the contracts do not contain provisions. So if the homeowner disputes the lien, the contractor could actually lose right there. This is why it is important to make sure you have a good contract and a good lawyer to create and enforce the lien.
Factors in Filing
Many clients contact us when they are thinking about filing a mechanics lien. But, they aren’t sure if this is the right choice for them. We review our potential clients’ cases to determine the best course of action for them. If you think that you have a claim for a mechanic’s lien and would like to file one, there are a few things to consider first. Making sure that you have a strong case will ensure that you are not wasting your time with the lien.
As mentioned above, one of the useful factors in filing a lien is making sure that you have a contract with the building owner. If you have a contract, you can clearly show where the other party violated it. This will make it easy to prove how much is owed to you.
Another factor to keep in mind is if filing a lien will be worth it for you. What is the money amount that will make going through the lien process worth it to you? This is probably a personal decision – there is no hard and fast number. One way we make it easy for you to determine if the lien is worth it is by charging a flat rate for a mechanics lien. Talking to an attorney could help you determine if the lien process will be worth it for you.
Also consider the time that has elapsed in the project. As I mentioned earlier, you don’t want to file a mechanic’s lien too early on in the construction process. But, you also don’t want to file one too late. You must bring a lien against the other party within 90 days of finishing work on the property. If you wait until after the 90 day period, you can’t bring a lien against the property owner. There are some exceptions to this rule, but it is much easier to just make sure that you begin the lien process within 90 days of leaving the job site.
One other issue to consider is if you are an unlicensed contractor. If you are an unlicensed contractor, filing a mechanic’s lien can be difficult. It is very easy for the other party to defend against the lien. They can simply say that because you are not licensed, the contract is invalid. You subject yourself to penalties from the state if you are not properly certified and possible arrest. So, oftentimes if you are unlicensed, a mechanic’s lien is not in your best interest. But, you can contact an attorney to learn more and determine the best way for you to proceed.