Believe this: When a contractor runs out of cash and has his back against the wall on a project, he will say just about anything to prevent others from filing a mechanics lien.
Whatever the contractor’s problems are on the project, they are not your problems
Whatever the contractor’s problems are on the project, they are not your problems. Why? Because anyone who files a mechanics lien is going to further complicate his situation with the property owner. But if you’re not paid, you should simply consider your hand as forced.
With that said, you’ll quickly inherit those problems if you withhold from filing a mechanics lien and let your lien rights expire.
One of the most popular things a contractor will say to prevent you from filing a mechanics lien is that they will file the mechanics lien and it will protect everyone – including you – on the project. Do not fall for this trick.
This statement is absolutely untrue in every single jurisdiction across the United States. It is no more than a ploy by the contractor to talk you into waiting longer before filing a mechanics lien, and is borderline fraud.
Contractors say this sort of stuff all the time. In fact, I was inspired to write this post after being copied on correspondence from a client where a contractor made this very assertion. Here are their words exactly:
[We are] filing a lien today to protect everyone’s legal interest. I think the law is pretty clear and your attorney will determine that. Our lien will protect all of us.
This is a bold lie, and nothing else. It’s just another example of rumors that circulate around a construction project that are detrimental to a clear understanding of mechanics lien laws.
If the law is clear about anything, it’s clear about the opposite of this particular statement. The mechanics lien anyone files protects themselves only, and no one else. If any party gets paid on a mechanics lien, no one else will have any claim to those funds except in contract, which means you’ll be subject to the whim of the contractor to pay or not pay the debt.
The contractor who filed the mechanics lien will have all the leverage with the property owner to get paid because of their lien, and then once they are paid, they’ll hold the cash and have all the leverage against you in a contract dispute.