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Construction projects can be complicated affairs, and so it’s not really surprising that project disputes often arise. Some of these disputes are minor and easily resolved with a quick conversation or meeting. But other times, these disputes can escalate to the point that the progress of the entire project can be put into jeopardy.
Considering all of the unique aspects of construction work — retainage, change orders, and progress payments are just three examples — many construction disputes come down to a disagreement about how much one company (a subcontractor for example) is owed by another company (let’s say the prime contractor) on the project.
Do lien rights still exist if the amount owed itself is in dispute?
Disputes Don’t Cancel Lien Rights
The short answer to the question posed above is: of course they do!
A dispute, whether it’s over workmanship, the amount of money owed, or something else entirely does not automatically negate the ability to file a mechanics lien.
After all, that’s the entire point of a mechanics lien claim! You’re making a claim to get paid money that you are owed — money that you earned — that other people are claiming isn’t owed to you. If there wasn’t a dispute to begin with, then there would be no need to file a mechanics lien!
When it comes to filing a mechanics lien, you have the right to claim for the amount that you think you are owed. It doesn’t matter if the parties on the opposing side of your claim are saying that you are owed less. But it would be a very bad idea to submit an exaggerated claim…a subject we’ll cover in the next section.
Don’t Exaggerate the Claim
Knowingly exaggerating a lien claim is a terrible idea that can have serious consequences. How serious? Well, it’s a 3rd class felony in the state of Florida. So…pretty serious!
However, because of situations such as retainage, change orders, and progress payments, sometimes determining how much you’re owed can be quite a challenge. Case in point: change orders.
While an approved change order definitely qualifies for lien rights, what about an unapproved change order? What if there’s a dispute as to whether work for a certain change order was approved or not? The best thing a contractor can do about change orders is to always get proof of approval and to never, under any circumstances, perform any work on an unapproved change order!
Filing a mechanics lien is a very serious step, but liens and disputes go hand-in-hand. Without one, you’d never have the other. When filing a mechanics lien, contractors should make a claim for all the money that they earnestly believe they’re owed, and not a penny more.