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How do we deal with liens on long projects?

GC’s tell me that they don’t get paid retainage until the job is 100% final closed out. For an example, let’s say we do the demo portion of a big job. We are done within 3 weeks of the project starting, but there are still 9-12 months of work happening on this project. a. We have 90 days from last day on site to file a lien, however, these GC’s won’t think about paying retainage until the whole project is 100%, not just our scope. How do we handle that? It doesn’t seem to make sense for us to lien the project that still in the middle of being completed, or does it?

1 reply

Dec 14, 2018

That's a tough situation, and you bring up a very real point of tension that occurs between mechanics lien laws and retainage practices that's present nationwide. Where mechanics lien deadlines occur prior to the completion of the project, a claimant has a tough business decision to make: "Do I file this lien to collect retainage, even though the GC's retainage won't be released for some time? Or do I not file a lien and attempt to recover that retainage later?" Ultimately, it's just that - a business (and therefore relationship) decision. Mechanics lien deadlines are strict and they won't be extended for any reason in the vast majority of states. At the same time, construction is a business of relationships, and if other companies feel that you're too aggressive with lien filings, that could harm your reputation. Thus, when a lien deadline will come and go well before retainage payments will be released - it's up the the claimant's discretion as to what to do. Of course, it's worth noting that mechanics liens aren't the only method of recovering construction payments. In fact, most states (including Tennessee), have specific methods for recovering retainage outside of the mechanics lien process. So, where a claimant does not feel that a mechanics lien will be necessary to recover what's owed to them, that claimant will still be able to pursue other options for recovery - including via suit under retainage laws.

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