So, you fulfilled all of your notice requirements and you filed your mechanics lien on time. The other party still hasn’t made payment, and you begin to wonder…now what? Here’s what you need to know about what happens after you’ve filed a mechanics lien.
Why mechanics liens work
First, before discussing what happens after the lien is filed, let me first address why mechanics liens are effective ways to collect on non-paying projects. This is an important point when discussing what happens after a mechanics lien is filed because it touches on why mechanics liens sometimes prompt payment without any further action after the filing itself.
A mechanics lien works in a number of different ways to help you get paid. Here are some of the more effective reasons they help contractors get paid.
- Without a mechanics lien, you can only sue the party you contracted with. With a lien, you can sue the property owner, those up the contracting chain from you, and the surety bonding the project.
- A mechanics lien can prevent a property from being sold, transferred or refinanced
- Without a mechanics lien, you have no security when you file suit on your breach of contract claim. With a lien, your claim has the property has security.
This is a perfect storm of aggravation to the project and the parties working on the project, which frequently results in getting you paid without any action beyond filing the lien.
What happens after you file a mechanics lien?
There are a few proactive steps you can take to help speed up payment after filing a mechanics lien. But what happens if your mechanics lien does not produce immediate payment?
Read more: How Long Does a Lien Last?
Most states require the lien be “enforced” or “foreclosed” within a certain timeframe. This typically means that you bring a lawsuit against the person you contracted with and/or the other relevant parties (property owner, prime contractor, surety, etc.). In most circumstances, the lien stays on the books while your action is pending, and if you win…you have the security of the property to ensure you get paid.
It is very important to recognize that you only have so long to enforce or foreclose on your lien. If you fail to do this within the specified time frame…your mechanics lien will expire completely. And remember, his is a full lawsuit, so you should contact a local construction attorney to help guide you through this process.
The time you have to enforce or foreclose on a mechanics lien varies depending on the state where the project is located. You can check out our State-By-State Lien Law Resources pages, to find the enforcement deadline in your state. Or, answer a few simple questions in our Payment Rights Advisor below.
Lastly, an important thing to keep in mind is that, in a few states, such as Florida, Georgia, and New York, where the owner can force your hand and cut the deadline short. So keep an eye out for any mail or notices during this waiting period.
What do I do after my lien expires?
Well, this is a pretty sensitive subject, but mechanics liens don’t last forever. If you’ve missed the deadline to foreclose, the claim may have expired, but it doesn’t necessarily disappear. You may still have to file a lien release, if requested to.
But, don’t fret. Just because you can’t enforce a lien, doesn’t mean you’re out of options! You can always bring your lawsuit against the party in your contract (if you are within the statute of limitations for your state).