General Contractor needs to be paid by the client for services. The bank is paying him but the client owes him for items outside of the bank agreement. The client is not paying the bills. Should the GC file a Stop or Mechanics lien?
1 reply
Apr 7, 2020
It's hard to advise on when, exactly, to pursue a mechanics lien or stop notice. But, if you've performed work and haven't been paid for that work, then those options may be useful.
Granted, beginning with less-adversarial options - like sending invoice reminders, demand letters, or even a Notice of Intent to Lien - might be appropriate before diving right into making a claim.
What's the difference between a mechanics lien claim and a stop notice?
Mechanics lien claims and stop notices are both powerful tools for recovering construction payments. But, they operate a little differently. Let's quickly discuss those differences. It should be easier for you to decide how to proceed knowing how those claims work.
Additionally, this resource breaks them down in great detail: The Differences Between A Stop Notice and a Mechanics Lien.
Stop notices
Stop notices will freeze the project funds. This makes a stop notice an extremely effective option when there's a lender and when the project funds are crucial for carrying on the job. So, if you think freezing the funds is the best way to get your customer's attention and force them to pay what's owed - then a stop notice could be a very useful tool.
Here's a thorough breakdown of Washington stop notices: Washington Stop Notices | An Alternative Remedy for Nonpayment.
Mechanics liens
Mechanics liens attach directly to the project property. And, when a lien is filed, that will get the attention of the property owner as well as the lender. Typically, a lien getting filed will at least cause a sense of urgency from higher-tiered parties, but they may even freeze the project site altogether. No owner wants a lien on their property, and no lender wants their investment threatened by a lien claim. So, they'll want to clear up the dispute as quickly as possible, in most cases.
For more information on how mechanics liens work: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid.