Most parties to a construction project have the right to file a mechanics lien if they aren’t paid. But many state laws only talk about contractors, material suppliers, laborers – the people who are swinging the hammers and providing the nails. A consultant, on the other hand, often finishes their work before the shovel ever hits the dirt. In some ways, they contribute to a project just as much as anyone. Does a construction consultant have mechanics lien rights, too?
Consultants in construction
Modern construction projects are often teeming with consultants. There are design experts, environmental specialists, even archaeological surveyors and services. Businesses, GCs, and property owners hire them to help complete a job, not unlike a typical contractor.
A consultant is an expert in a particular field that offers opinions and guidance for a project or business. Owners generally hire them for their expertise and advice, often before the project begins. Not all consulting experts work for themselves. A consultant may be a sole proprietor, the owner of a small firm, or an employee of a larger company.
There are several types of consultants in the construction industry, including:
- Architect (building, landscaping)
- Cost evaluation professionals
- Engineers (civil, structural, mechanical)
- Health and Safety consultants
- Client’s representatives
- Interior designers
Those are just a few examples, and the more specific their niche gets, the more they expect to get paid.
Mechanics lien rights by state
A consultant’s stake in the project is usually lower than a construction company or subcontractor’s. They don’t exchange labor and materials to complete a project. Instead, they exchange knowledge, skill, expertise, and time. Just the same, consultants expect to receive payment for their services.
There are some consultants that do have a right to mechanics liens rights in some states. Consulting contractors whose services lead to improvements to a site typically have some lien rights. Keep in mind, though, that these improvements usually need to be permanent.
Mechanics liens are available to any architect, engineer, or surveyor. They must prepare plans or specifications used in the improvement of a property.
Lien rights may be available to Florida architects, landscape architects, interior designers, engineers, or surveyors. However, they must have a contractor’s license if the law requires it.
In California, lien rights extend to architects, site improvement entities, and design professionals. This broad scope will cover many consulting services. It may even cover those not making permanent improvements.
As stated by Levelset CLO, Nate Budde, California also allows certain consultants to file a “design professional’s lien.” Beware, though, that the requirements are different. But it’s an additional route that California consultants may be able to take to speed up their payments.
Colorado offers lien rights to a broad spectrum of contractors – including consultants. This includes architects, engineers, draftspeople, artisans, interior designers, surveyors, and mappers that furnish labor to a site.
The Great Lake State is traditionally more restrictive than some other states. It affords mechanics lien rights to contractors, subs, suppliers, and laborers who provide improvement to real property. However, Michigan extended lien rights to architects, engineers, and surveyors in 2018.
Consultant lien rights by state
If you’re wondering where you state falls in regards to lien rights for these types of services, here’s a quick reference:
In these states, consulting firms have similar lien rights as regular construction contractors:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- South Carolina
- South Dakota
- West Virginia
While the following states do provide mechanics lien rights for professional services, the rules are different between contractors and consulting work:
- Rhode Island
These states provide no rights to design professionals or consulting services:
Consultants without a right to a mechanics lien
Most states require a consultant to provide skill, opinion, or service that leads to the permanent improvement of real property. As a result, many consultants will find they don’t have lien rights.
The list of those unlikely to file a mechanics lien includes health and safety experts, owner’s representatives, or cost evaluation professionals. Also, marketing firms providing materials or services for a site aren’t likely to find mechanics lien protection.
Also, design professionals aren’t always entitled to liens right by virtue of their job title. To have lien rights, their services must lead to an improvement in the site. If an architect submits plans that the owner ultimately doesn’t use, they aren’t likely to be covered by the state’s mechanics lien laws. The same would apply to engineers and other design professionals.
Gray area for consultants
You won’t find the term “consultant” in many state statutes regarding mechanics lien laws. At face value, this may seem to exclude them altogether. But, it actually provides some gray area that a consulting contractor can work within. They may find certain aspects of the project they completed are, in fact, covered under lien rights.
Whether you have lien rights depends on the services you provided to a construction site. You may find that your participation in a project does afford some lien rights. “Design work” can be loosely defined. In some cases, it may include some consultants, such as interior designers, or even owner’s representatives.
Rights may extend to an interior designer or owner’s representative who provides insight during the planning stage. If that insight then leads to the site’s improvement, they may be able to file a lien under the premise that they were acting as a design professional.
What to do when you don’t have lien rights
Even though your services may not be explicitly outlined in your state guidelines, you’re still entitled to your payments. Owners, GCs, and accounts payable clerks are familiar with certain documents. Preliminary notices and lien-related paperwork come across their desk everyday. Adopting a “when in Rome” mindset of using construction documents to speed up your payment may be the best policy.
There are a number of steps that construction businesses can use to speed up payment, whether a contractor a consultant.
Send a notice when the project starts
Preliminary notices are rarely required when you have a contract directly with the property owner. That said, sending one is still a good practice to adopt.
Preliminary notices improve communication and transparency on the jobsite – both of which contribute to faster, more reliable payments.
Send a demand letter if payment is late
Universal to all service industries, you should send a demand letter when payment is overdue.
The demand letter should provide a stern but professional outline of the next steps if you don’t receive payment. You’ll want to draw attention to the fact that contractors have lien rights, even if that doesn’t apply to your services directly.
Having a construction lawyer draft a demand letter can be an effective way to add extra weight to your letter get you paid faster.
Threaten a mechanics lien anyway
In the construction world, perhaps the most effective threat is a Notice of Intent to Lien. Threatening to file a mechanics lien with a Notice of Intent can be extremely effective at producing payments—even if you don’t have rights. Accounts payable personnel see them as a final warning, and want to pay them to avoid a lien.
Often, the threat of a lien is enough to get paid in construction work. Accounts payable staff are likely to take the NOI at face value, and see what they can do to make sure you get paid for your services.
There’s nothing illegal about threatening to file a mechanics lien. All professional construction outfits use them to produce faster payments. In the worst-case scenario, the accounts payable manager may call your bluff. At that point, you’ll need to take your claim to litigation.
Threats are one thing – actually filing a lien is another. If you don’t have lien rights, a mechanics lien could be considered fraudulent. The property owner could file suit against you for damages.
File a lawsuit
If you haven’t had any luck using these tools, you should consider filing a lawsuit for your payment. The basis for the lawsuit would likely be a breach of contract or a claim under your state’s prompt payment guidelines.
Litigation can be expensive, however, so you need to weigh the costs of going to court against the amount owed to you.
Don’t let payment problems get you down
If you do have mechanics lien rights as a consultant, and the GC or owner doesn’t make good on the past due amount, filing a mechanics lien may be the single most effective way to collect.
Of course, it’s crucial to understand your rights under your state’s guidelines. Also, be sure that your scope of work can find protection under your state’s lien requirements.