Home>Levelset Community>Legal Help>Can a mechanics lien be filed for services rendered prior to start of a yet to be defined project?

Can a mechanics lien be filed for services rendered prior to start of a yet to be defined project?

I have a deferred comp receivable claim submitted in December 2017 of roughly $340, 000 for services rendered to build the first project for a new clean coal technology. I also have a roughly $ 1 million claim for non-cause termination severance (as CEO) from the company (an NZ C Corp, but operating out of Phoenix) that employed me under an independent contractor relationship from 2012-17. The first project has not yet been defined or funded, but the likely locations are in AZ, CO and TX. Any funding ($10-50 M dependent on the location) will be secured by the project and/or by intellectual property consisting of 8 patents and business plan/basic designs held by the company. I developed the business plans and basic designs, and I participated in the development of the patents. I would like my lien to place me in priority for payment against first project funding or the sale of any intellectual property or stock in the company. I still own 21.1% of the company. My relationship with the other two major shareholders is adversarial.

1 reply

Jul 17, 2018

Regarding the right to lien - lien laws vary greatly across state lines. But, generally speaking, mechanics liens (1) attach to the real property (2) to secure payment for construction work (3) at the site where that work was performed (4)to improve real property. (1) Mechanics liens attach to real property. That is - real estate. So, when a claimant performs work on (or potentially for) a job site, their right to lien attaches to that job site. (2)As for the amount of a lien claim - a lien may typically only be filed for the value of the construction work, materials, and/or services performed - so amounts relating to things like patents, severance, and salary will likely not directly fall within the purview of a lien claim. However, not all states allow lien filings for professional services (such as architecture, engineering, design, surveying, etc.). This is especially true when professional services have been provided in anticipation of some future project. Which brings us to (3) – a lien attaches the property where work is performed (or, in the minority of states, where work will be performed). In the majority of states, lien rights will not exist for a project that has not commenced. Even in a situation where a lien might be filed for a project that has not commenced, a mechanics lien can only be filed if there is a specific piece of property where the improvement will be located. Otherwise, there will be nothing for the lien to attach to. This is all to say that, while it certainly sounds like a debt is owed, a mechanics lien is likely not a great fit for the above described situation - and other methods for recovery would likely be more appropriate. With the significant amounts allegedly owed due to the above scenario, it would likely be wise to consult an experienced business attorney that has experience dealing with construction. They will be able to take a deeper dive into the facts, circumstances, and documentation surrounding your situation and advise on a clear path for moving forward.

0 people found this helpful

Helpful