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how can an equipment dealer collect on a contractor for equipment rent? Leans on matierals?

South DakotaRight to Lien

rented a piece equipment, they made a pile of material that they will be selling, but did not pay us for rent of the machine.

1 reply

Feb 22, 2019
I'm sorry to hear you've gone unpaid. First, let's look at how mechanics liens work to compel payment. Then, we'll discuss some other potential options for recovery. Generally, mechanics lien rights will arise when labor, materials, or equipment is furnished for the permanent improvement of property. Where work does not provide some permanent improvement to property (i.e. where the ultimate result of the work performed only results in some temporary change), mechanics lien rights will typically not apply. Further, when a mechanics lien attaches to property when work is performed, that lien will attach to the real estate - the actual, underlying property where work was performed (as well as the improvement to that property). Where materials have been placed on a property with the intention that the materials will be sold and/or moved, it would not seem that a permanent improvement has taken place. It's worth noting, though, that regardless of whether a mechanics lien would be effective to preserve the right to payment, sending the mere warning or threat of lien can often help to compel payment. Specifically, many potential claimants have found that sending a Notice of Intent to Lien can get the job done, even in situations where they don't actually intend to file a lien claim. Beyond lien claims and warnings of liens, there are a number of potential recovery options for a party who has gone unpaid for their work. Specifically, threatening legal action (under theories like breach of contract or unjust enrichment) could work to compel payment - especially when sent via attorney letter. Or, if push comes to shove, taking the matter to small claims court could be a cheaper and more efficient way to compel payment than traditional litigation - though South Dakota small claims court actions are apparently limited to $12,000. For amounts exceeding that, or if it makes more sense to take the matter to litigation for other reasons, a claimant could always potentially seek a lawsuit.
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