After sending a preliminary notice or filing a mechanics lien, you discover that it contained incorrect information. Should you send a new document? Amend the original? Rip it all up and start again?
In many cases, incorrect information that is accidentally entered (such as a typo) or was relied on by several parties to a project (such as owner information) is generally correctable. In some cases, you can amend the documents with corrections. Others may not require corrective action at all.
However, sometimes even a simple mistake can be fatal to your right to file a lien.
I’m assuming in this article that you did not include incorrect information willfully, commit fraud, or file a frivolous lien. Those can carry severe penalties, and you should probably consult a good construction lawyer immediately. The information here addresses a case where the error was an honest mistake.
*I’ll preface this article by noting that the statements here are not to be taken as legal advice. The statutes that determine the process for filing and correcting liens are different in every state. Be familiar with the lien laws in states you work in, and consult a lawyer if you have any further questions.
Incorrect information on a preliminary notice?
Have you ever received a call from a panicked person stating that you sent them a notice for a project they know nothing about? Upon further research, did you determine that the owner information on the notice was incorrect?
The person on the phone can rest easy. A preliminary notice does not constitute legal action against them.
By its nature, a preliminary notice is a statement to the property owner that work has begun on their property and that the company doing the work has certain rights. While the rights are legal in nature, the notice itself is just that — a notice.
Back to the person on the phone. If the property in question is not their property, there are no consequences to the person who received the notice in error. (The only potential consequences would be to you, the sender.) The caller may not understand this, insisting instead that you “do something” to remove the notice.
At this point, all you can do is attempt to appease them as best you can, and send them a letter acknowledging the mistake. Let them know that you will not be pursuing your lien rights on their property.
Now that you know an error has been made, however, you will probably need to send a corrected preliminary notice to the rightful owner of the property you are working on.
Send a notice now
Send a notice with Levelset (it’s free!) to make sure you get this part right.
And you will need to send the revised notice before the deadline set by the state the property is in. (As long as it’s not in Oregon, which only gives you eight days from start of work to send the notice…but I digress.)
If the delay caused you to miss the preliminary notice deadline, it may affect your lien rights, depending on the laws in that state. For example, in Oregon you lose the right to collect on any work performed more than eight days before the notice was sent.
So, if a delay was caused by not having correct owner information, a company could lose their right to lien a portion of the project. In other states, a company could lose their lien rights altogether if a notice wasn’t received by the correct property owner.
Mistake on a mechanics lien?
If your mechanics lien claim contains incorrect information, it can be a more serious matter. Generally, if the lien deadline hasn’t expired, you can file an amended lien to correct any mistakes.
If the deadline has already passed, there are a few options depending on the type of mistake that was made. We’ll look at the specific steps to take in three situations: If the…
- Lien amount is incorrect
- Owner is incorrectly identified
- Project information is incorrect
Lien is filed for an incorrect amount
Getting the lien amount right on your claim is important. There are certain costs you can — and can’t — include on a mechanics lien in each state. However, if you simply miscalculate what you are actually owed, there are some options.
If the amount of the lien is too low, and the deadline has not passed, you can either release the lien and file a new one, or amend the existing lien to reflect the correct amount.
If the deadline has already passed, you may not be able to change the amount. Luckily, a discrepancy in the amount does not necessarily invalidate the lien. You may simply need to ask your customer to pay the higher amount and show proper documentation before you release the lien.
If the amount of the lien is too high and the filing deadline hasn’t expired, you can either file an amended lien a partial release of the lien for a certain amount. So, if the lien was filed for $100,000 and the amount owing is actually $10,000, you may be able to file a partial release for $90,000. Once the remaining $10,000 is paid, the lien can then be released in full.
If you have to foreclose on the lien through a lawsuit, the lien amount could be more problematic. At this time, you’ll have to provide proof of the amount owing, and any corrections can be made then.
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The owner information is incorrect
Let’s say you asked the GC for the owner’s information and they gave you the tenant’s (their client’s) information. When it comes time to file a lien, you file it with the tenant listed as the owner. Since the tenant doesn’t own the property, they don’t have an incentive to pay you and release the lien.
Keep in mind that a mechanics lien attaches to real property — not to a person. If you discover this kind of a mistake, and it is before the lien deadline, you can likely file an amended lien with the correct property owner’s information.
The amended lien will be sent to the correct property owner and your rights will still be intact. The tenant may request that you release the lien with their name on it, which it’s probably a good idea to do.
If the lien filing deadline has already passed, some states are pretty lenient when it comes to minor errors, as long as you acted in good faith and the mistake wasn’t willful.
For example, according to construction lien laws in Florida, “a minor mistake or error in a claim of lien, or a good faith dispute as to the amount due does not constitute a willful exaggeration that operates to defeat an otherwise valid lien.”
New York’s mechanics lien rules say “A failure to state the name of the true owner or contractor, or a misdescription of the true owner, shall not affect the validity of the lien.” Your best bet, once you find out a mistake has been made, is to contact the recorder’s office and find out what you need to do to correct the information.
The job information is incorrect
Here we are assuming that the error is a typo in the job address or some other small mistake. We are also assuming that the property owner information is correct. In this case, filing an amended lien should clear up the incorrect address.
However, if the lien filing deadline has already passed, it may be up to the court at this point. Depending on the severity of the error, a judge may decide that your lien is, in fact, invalid.
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Triple check for mistakes on notices & liens
If you catch your mistake before the deadline has passed, incorrect information on a notice or lien doesn’t necessarily mean all is lost. If you’re still within the time frame to submit or file the document, you can likely correct it.
After the deadline, all bets are off. At this point, your options depend on so many factors: what state you’re in, how the courts have interpreted past cases, how severe the mistake was, etc.
The information you include on construction documents can be critical to your ability to get paid. It’s important to check, double-check, even triple-check each and every detail on a form before you file it.
This is also a good reminder to plan ahead, and give yourself plenty of time before the due date. That way, if you catch a mistake, there is still time to make changes or refile if the information is incorrect.