Mechanics liens are a powerful tool. Simply by performing work on a project, those in the construction industry incur a right to the underlying project property. Granted, there are typically some other requirements – like sending timely notice – but the point stands: mechanics lien rights are a powerful remedy and they’re pretty unique to the construction industry.
While a construction worker may have some right to the project property if they go unpaid, there’s a limit. We see questions like “If I go unpaid for my work, I can take the material back, right?” The answer, quite probably, is “no.” This is best exemplified from a recent story out of Louisiana.
A Roofer Went Unpaid, So He Took The Roof Back…And Then He Was Arrested
The beginning of this story honestly isn’t particularly unique. A Louisiana roofer agreed to replace their customer’s roof. The contract was completely verbal, and they’d agreed that payments would be made to the roofer with the proceeds received from the customer’s insurance. After six months passed with no payment, the roofer began demanding payment. Upon these demands, the customer attempted to set up a payment plan with a partial down payment. The roofer refused, threatening to take the roof back if payment wasn’t made.
About a week later – he actually did it! Days before Christmas, this roofer took the roof back – even taking the roofing paper with him. At first glance, that might be worth a chuckle. But with the roof gone and with the unpredictable Louisiana weather, the customer wasn’t able to tarp the roof before it rained. As a result (again – days before Christmas) the customer suffered over $10,000 in damage to their ceiling and furniture.
The roofer was arrested for two misdemeanors: simple criminal damage to property and criminal trespass.
Check out the full story here by The News Star.
What should the roofer have done instead?
Before getting too far into what the roofer should have done – let’s remember: this contractor went unpaid for six months! Can you blame him for being angry? Payment in the construction industry often comes late and sometimes not at all. He was right to be fearful and vigilant about getting paid – but he went about it all wrong.
What else could he have done?
First, he could have used a written contract. Gone are the days where a handshake deal will suffice. With a written contract, all parties have an agreed upon set of expectations for the project. When things go south, everyone involved can refer back to the roofing contract. However, in this case, the failure to execute a written contract was not necessarily fatal.
Preliminary Notice, Notice of Intent to Lien
Next, preliminary notice should have been given. When a contractor agrees directly with a property owner to perform work in Louisiana, Notice of Lien Rights must be sent. By doing so, a contractor preserves their lien rights and, if a project takes a turn for the worse, a mechanics lien might be an available remedy. Even where a contractor doesn’t want to file a lien, preserving the ability to file a lien keeps the property owner honest. If they don’t uphold their end of the deal, a lien claim could potentially be made. What’s more, the Notice of Lien Rights informs the owner of potential outcomes if they fail to perform.
Whether or not lien rights were actually preserved, the next move might have been to send a Notice of Intent to Lien. A Notice of Intent to Lien is not required in Louisiana (or most other states, for that matter), but it’s a very effective document. This notice gives the property owner a heads up – if the payment dispute at hand is not resolved, the contractor won’t hesitate to file a mechanics lien. Even where lien rights might not be available, the Notice of Intent to Lien can still work – most owners are not willing to call that bluff.
Last Resorts: Mechanics Lien, Notice of Intent to Foreclose
Finally, a mechanics lien (in Louisiana, called a “Statement of Claim and Privilege”) might have been filed. This remedy is available to Louisiana direct contractors even when the contract isn’t in writing. If a Notice of Termination was filed at the end of the project, a general contractor will have 60 days from that date to file their mechanics lien. If no Notice of Termination was filed, that 60 days runs from the substantial completion of the project.
Even after a mechanics lien is filed, there’s still another step before foreclosing a mechanics lien. This is the Notice of Intent to Foreclose. A Notice of Intent to Foreclose isn’t required in any state, but it’s effective. This document serves as one last warning shot. If payment isn’t made, the lien will be foreclosed. Again, similar to a Notice of Intent to Lien, when an owner receives a Notice of Intent to Foreclose, the risk of calling a claimant’s bluff here is likely too high to ignore.
Don’t steal, communicate effectively, and if necessary, be prepared to leverage lien rights. But seriously – every state provides mechanics lien laws for its builders. These laws were put into place to protect those in the construction industry, and give them a tool to combat nonpayment. Trespassing and stealing back materials – or an entire roof – is not the way to enforce payment. Plus, it could even get you arrested.
Getting started? Check out How to Start a Roofing Business: 9 Tips to Grow & Thrive.