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I have been told that you can't file a lien if partial payment has been received.

Contracted to install new roof by insurance adjuster/mitigator. A down payment of $6,000 was made. Balance due for work completed has never been paid. House has now been sold. Former homeowner not helping to secure funds from adjuster/mitigator. My husband wants to put a lien on the home (now with new owner who has no idea about any of this) and let them battle it out in court. Is this possible? An insurance investigator told me you couldn't lien on a house if the contractor had received partial payment and we would have to take to small claims court. Thank you

1 reply

Apr 2, 2020

A mechanics lien can be filed for work that was performed but not paid for. If partial payment has already been made, then lien rights would still exist for the amounts that haven't been paid yet. With that being said, things can get tricky when looking to file a lien against a property that's been sold. Levelset discusses that here: What Happens If I Filed My Mechanics Lien After the Property Was Sold? As laid out in that article, a mechanics lien can generally still be filed even if the property is sold before the lien is perfected. Generally speaking, mechanics liens tie directly to the project property - not to any particular individual, business, or other entity. So, if the lien would still be timely and valid, it can typically still be filed against the project property even if there was a sale. Of course, for the most clarity on that point, it'd be wise to consult a local North Carolina construction attorney. They'll be able to review your circumstances and provide specific analysis on North Carolina's lien statute and general practices in the state. So, they'd have a better idea on whether a lien will be available despite the sale of the property. For more information on filing a North Carolina lien: - North Carolina Mechanics Lien Guide and FAQs - How to File a North Carolina Mechanics Lien | Guide + Form Download

Recovery tools other than a mechanics lien

Naturally, there are always other recovery tools that could help. For one, sending a demand letter to your customer can help to force payment. That demand will usually discuss legal threats and payment deadlines, which will show your customer you're serious about getting paid. Further, sending a Notice of Intent to Lien can be a useful step, too. A Notice of Intent to Lien is a specific threat that a lien will soon be filed if payment isn't made. And, sending this threat to your customer, the current property owner, and maybe even the seller could put pressure on the customer to pay what's owed. And, that can help to force payment without haveing to go through with the lien filing process. Additionally, note that legal claims will be available if your customer fails to pay what's owed - like a breach of contract claim. Plus, if the dispute is under $10,000, then taking the matter to small claims court could be useful for bringing claims without the cost or complexity of traditional litigation. Of course, if given the option, a mechanics lien claim will be more effective than small claims in most cases. And, finally, keep in mind that sending a debt to collections is yet another option.

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