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Ensure Lien Coverage and next steps for a Notice to Proceed T&M job

ArizonaMechanics LienPreliminary NoticeRight to Lien

I have a contractor who is withholding payment on a T&M job with which we had a notice to proceed. I'm curious if we are covered by our Preliminary Notice we filed with this Notice to Proceed and if the contractor has any rights to charge back any resulting fees or not.

1 reply

Dec 4, 2019
Preliminary notice must be sent within 20 days of first furnishing labor or materials to an Arizona construction project. When that notice is sent, it preserves the right to lien for the work performed throughout the rest of the job (that is, keeping in mind Arizona's 20% notice rule). So, if notice is sent and work is performed but not paid for afterward, then the claimant will generally be entitled to file a mechanics lien to recover payment. Keep in mind, though - costs associated with delays won't generally be lienable. Rather, liens will generally only be available for amounts that are owed for work that's actually been performed. Regarding back charges - a contractor can't back charge their subcontractor for fees associated with the sub's payment claims resulting from the contractor's failure to pay in the first place. And, if the contractor does owe payment, they cannot simply back charge specifically to make those costs away without good reason for the charges.

Mechanics lien resources

For more information on Arizona mechanics lien claims and lien claims in general, here are some great resources: - Mechanics Lien 101 - Arizona Mechanics Lien Guide and FAQs - How to File an Arizona Mechanics Lien – A Step by Step Guide to Get You Paid

Recovery methods before pursuing a mechanics lien claim

Finally, it's worth noting that it's generally a good idea to try and recover payment through less-adversarial means, where practical. Let's quickly look at recovery tools that could help before pursuing a lien filing:

Invoice reminders

Sometimes, all that's needed is a simple nudge in the right direction. Sending a simple invoice reminder serves to remind a customer of the debt they owe in hope that they'll do the right thing and pay what's owed.

Demand letters

Escalating things a bit with a payment demand letter could be helpful, too. A strong demand letter will include specific legal threats, letting recipients know you're serious about getting paid and willing to take the necessary steps to do so.

Notice of Intent to Lien

Finally, keep in mind that because mechanics liens are so powerful, the mere threat of a lien claim will often be enough to get paid. By sending a Notice of Intent to Lien, a claimant provides a warning shot before filing their lien claim. And, by sending the warning to the property owner and the claimant's customer, it might be easier to put additional pressure. More on that here: What Is a Notice of Intent to Lien and Should You Send One?
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