I did not take the preliminary steps to secure my lien rights and now we’re worried about not getting paid on a project… what are our options? What if a NOI or lien do not work?
Aug 24, 2017
There a few points of discussion here:
1) whether you are practically able to get a lien recorded and use it to get paid;
2) whether any lien you file would be legally/technically valid; and
3) what are other options.
If you didn't send a preliminary notice, you first want to determine if a preliminary was actually needed. There are always exceptions to rules, and there may be some specific exception you fall into - this is likely rare in AZ, however. If you needed to send a prelim, and actually missed the deadline completely, you likely lost the ability to file a valid mechanics lien. This is especially true in Arizona where you actually need to include a certification with the mechanics lien filing that you sent the notice, along with proof.
There are options other than a notice of intent to lien, or lien itself, though. These can include demand letters, or just filing a lawsuit. Just because a party doesn't have the ability to file a valid lien doesn't meant they don't deserve to be paid - and have the right to get what they are owed. Filing a lawsuit for breach of contract, unjust enrichment, or some other cause of action dependent on your situation is always an option. Depending on the amount owed, small claims court may be an option. If not, it is likely that an attorney will be required, so you may wish to speak with an attorney to get a better overview of your particular situation and the possible avenues to recovery.
Whether sending a preliminary notice is a problem depends where you are in the process. The preliminary notice preserves lien rights for work done within 20 days before the notice was mailed. If you are in the middle of the project, send the notice. Your claim will not be fully secured by a lien, but at least some of the work will be. If you completed work over 20 days ago, you are out of luck as far as lien rights.
Just because you do not have lien rights does not mean that you are not owed the money. You can still bring claims for breach of contract or unjust enrichment. Whether or not it is worth the cost of litigation depends on: (1) the amount of money owed; (2) the reason you are not getting paid (are there problems with your work?); and (3) whether there are any assets from which to collect or settle the case against the party that owes you money. To determine the answer to those questions, you should consult a lawyer.