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Can a business file a lien agaisnt another business for unpaid invoices

Custom parts were ordered by a company, the parts were made and the invoice sent. The company canceled after being invoiced and is now refusing to pay.

3 replies

Feb 26, 2020

Mechanics lien rights are generally available to those who have supplied labor or materials used in the permanent improvement of real property - like construction work. So, if custom materials were ordered and used in improving land, a building, etc. but not paid for, then mechanics lien rights may well be available. But, if you're asking about custom parts that aren't contributing to the permanent improvement of real estate, then lien rights might not be an appropriate recovery tool. Notably, though, mechanics lien rights arise against the property where work was done - not against any individual or business. And, if specially fabricated materials were ordered but not actually delivered to the job site, then it might be an uphill battle to pursue lien rights. If it sounds like mechanics lien rights might be a good option for this debt, these resources should be really valuable: (1) California Mechanics Lien Guide and FAQs; and (2) How to File A California Mechanics Lien – Step By Step Guide To Get You Paid. And, note that the mere threat of filing a mechanics lien - like with a Notice of Intent to Lien - will often be enough to get paid.

Custom materials and mechanics lien rights

When custom or specially fabricated materials are actually incorporated or installed into the project, then there's little doubt that mechanics lien rights exist much like they would for any other material supplier. But, when those same materials are ordered but don't make it into the project, then the availability of lien rights can be a bit of a grey area. Califonia's mechanics lien statute repeatedly states that lien rights will be available when the work or material is "provided to" a work of improvement. So, there may be an argument that mechanics lien rights should be available if the material is delivered to the job but not actually incorporated. But, where the materials never even make it to the site, then it'd seem less likely that lien rights would be on the table. Further discussion here: Specially Fabricated Materials and Mechanics Lien Rights – An Overview.

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Apr 24, 2023

Did you ever get paid on this?

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