Note: We also have a more recent article on frivolous liens published in May, 2017, “Frivolous Mechanics Liens: Intentionally Fraudulent vs. Honest Mistakes“
After you file a mechanics lien, parties who have interest in the project may ignore the claim, pay the claim or challenge the claim.
If they ignore the claim, you can of course file a lawsuit to enforce it. If they pay the claim, you’ll likely next be required to cancel the lien. This post discusses the third possibility, the circumstance of when someone challenges your lien.
Why a Lien May Be Challenged
Lien statutes are complex and hyper-technical, and if you file a mechanic’s lien without authority to do so or even with the slightest error, an interested party (i.e. owner or general contractor) may challenge your lien.
Here are some of the most common reasons liens are challenged:
– It was filed past the lien deadline
– The lien was filed by a party who was required to send preliminary notice, and didn’t
– The lien does not contain a legal property description
– The lien was not served on the necessary parties, or within the necessary time
How It’s Challenged (What Happens)
In most circumstances, the challenging party will send you a letter highlighting what they believe to be the defects in your lien, and make a formal request that you cancel the instrument. If you refuse to cancel the lien voluntarily, the party may petition a court to force the removal of the lien.
In some states (like Louisiana, California) if liens are improper and the claimant refuses to voluntarily cancel it, the claimant may be liable to the challenging party for attorneys fees and legal expense incurred in the challenge. Some states do not allow this recovery, and some states – like Washington – will award attorneys fees to the victor of a challenge (whether it be the claimant or the challenger).
If My Lien is Challenged, Is It Improper?
The answer to this question is “not necessarily.” When a property owner or general contractor retains counsel regarding a construction lien, one of the first things that attorney will do is send a threatening letter that the lien is “improper.” These letters sometimes take liberties with the law and its requirements. Or, these letter can come from a misunderstanding of the law or the applicable facts of the case. Remember, nobody wants a lien on their property, so the reaction may be to challenge any lien that is filed.
Furthermore, in most states, a challenge in court of an improper lien will consider only procedural or technical errors with the lien, and not necessarily whether the parties performed under the contract.
In other words, in determining if a lien is proper the court may not consider whether each party properly performed under the contract. Instead, the court is concerned about whether the lien notices were sent, the lien contents are technically correct, etc.
Remember that just because you receive a letter from an attorney does not mean that your lien is invalid. Here are some common mistakes made in letters or petitions challenging a lien:
– Challenge to the lien alleges that claimant did not perform under the contract (i.e. workmanship flaw, unauthorized change order, etc.) only;
– Person (even if an attorney) drafting letter challenging lien does not understand the lien statutes;
– Rules are quoted that may not apply to the particular claimant or project
If My Lien Is Challenged, What Do I Do?
If your construction lien is challenged, you have a number of options.
– You can retain or engage an attorney to represent your interests against the challenging party. If allowed in your jurisdiction, you may also represent yourself pro se in support of your lien.
– Sometimes, unfortunately, a claimant may not be able to afford counsel, and may not understand the lien statutes. In these circumstances, you may cancel the lien instrument as requested by the challenging party. The simple cancellation of the lien instrument should not invalidate your right to sue the party who did not pay you (the party you contracted with).
I Filed My Lien Through the Levelset Platform – Why Is It Being Challenged
As a software provider, Levelset prides itself on providing good information, and on empowering people and companies to take control of their security rights.
However, since Levelset is a software company, Levelset cannot give legal advice or make any determinations regarding you or your company’s right to lien. So, for example, a lien you filed through the use of our software may meet all of the technical and formatting requirements, but may be improper because your company was not authorized to file the lien.
Furthermore, since you provide the information contained on the lien document, if incorrect information is provided, there are circumstances when your lien may be improper.