I gave someone a lien waiver less than 2 years ago
But I didn’t get paid the full amount
He asked me for the lien waiver in order to pay me
But he never did
What can I do ?
1 reply
Sep 25, 2019
Whether or not the right to file a lien will persist will depend on the type of mechanics lien waiver that was given in exchange for the promise for payment. If an unconditional lien waiver has been given, then there will generally be no right to lien - even if payment hasn't been made. But, if a conditional mechanics lien is given, a lien claimant doesn't waive their right to lien until payment is actually received. So, one extremely important factor here is the type of mechanics lien waiver that's been submitted.
Another key factor is whether the property has changed hands. In Illinois, the deadline to file a mechanics lien is 2 years as long as the property hasn't changed hands. In order to be effective against someone who purchased the property after the work was done, then an Illinois mechanics lien must be filed within 4 months of the completion of the project for the lien to be effective against the party who purchased the property.
With those to ideas in mind, if the lien waiver submitted was a conditional lien waiver, and if the property has not changed hands, a mechanics lien might be an available option that could help to recover payment. More on how mechanics liens can lead to payment here: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid.Options outside of the mechanics lien process
If a mechanics lien isn't available, there are still other options for payment recovery. Levelset discusses that idea in this article: Can’t File a Lien? Here Are Some Other Options For Recovery. Still, let's take a quick look at some other options that might be on the table where mechanics lien rights might no longer be an option.
Demand letters
For one, sending a demand letter can get the payment talks moving in the right direction. By threatening legal action if payment isn't made, the customer will better understand that nonpayment isn't an option - and that legal claims will be made if necessary. More on that option here: Demand Letters for Contractors – How To Write One That Gets You Paid.
Notice of Intent to Lien
Another option may be to utilize a document like a Notice of Intent to Lien. Even in a situation where it's unclear whether lien rights exist, the mere warning or threat of a potential lien claim might be enough to compel payment. And, a Notice of Intent to Lien is just that - it acts like a warning shot and informs recipients, like the customer and/or the property owner, that nonpayment won't be tolerated, and that a lien may be filed, if necessary. More on that here: What Is a Notice of Intent to Lien and Should You Send One?Threats or claims under prompt payment laws
Yet another option might be to make a threat under the Illinois prompt payment laws. When payments aren't made on time in Illinois, the state's prompt payment laws may apply and a customer may actually incur serious interest penalties. So, informing the customer of potential penalties and threatening to initiate a suit under the Illinois prompt payment laws could work to compel payment. And, if necessary, actually initiating a payment claim might be helpful, too. More on how to do that here: How To Make A Claim Under Prompt Payment Laws.
Other legal claims, small claims court
Finally, other legal claims may be available - like breach of contract. And, pursuing legal claims might not be the most efficient recovery method, but it can be an effective one. Plus, for smaller disputes ($10,000 or less) Illinois small claims court might be a viable option to keep the cost and time of litigation to a minimum.