We filed a Mechanic's Lien and a prelim late, but the money is still owing and an attorney called and wants us to release Lien, what are my other options if i release Mechanics Lien
1 reply
Oct 8, 2018
I'm sorry to hear about that. Let's break this down into two separate topics: (1) What happens if a lien is filed where preliminary notice was sent late?; and (2) Options other than a mechanics lien that are available for recovery. First, when a preliminary notice is sent late - a claimant can still protect some of their work on the project. Specifically, the work performed 20 days prior to sending notice is protected, as is all work performed after the notice is sent. If a filed lien claim exceeds the amount recoverable due to a notice being sent late, a claimant can attempt to adjust their claim either by amending their lien claim or by reducing the amount claimed via an action in court, potentially. Further, if the lien is being challenged, recall that an honest mistake doesn't automatically make a claim fraudulent, and that an owner's first reaction to a lien claim is typically to challenge it. Anyway - there are options other than enforcing a lien claim that can result in payment. For one, once a lien has been filed, sending a Notice of Intent to Foreclose can be effective - even if the claimant doesn't intend to file a foreclosure suit. This notice states that, if payment isn't made and made soon, the lien claim will be foreclosed via lawsuit. Further, regardless of whether the lien claim will be leveraged, sending a demand letter based on specific legal threats (such as breach of contract or unjust enrichment, to name two) can be effective - especially when sent via an attorney. Further, depending on the amount at stake, small claims court could be an option - individuals may sue for up to $10,000 and businesses may sue for up to $5,000 in small claims court. Finally, if all else fails, litigation might be a viable option - but litigation can be both risky and expensive. Of course, before deciding whether to file suit or potentially even a small claims action, it would be wise to consult a local construction attorney - they'll be able to review any and all relevant documentation, communication, and other information relating to the dispute then provide advise on how to move forward.