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Should I accept a payment plan?

After filing a lien the homeowner finally reached out because their investor stopped all construction. They want us to remove the lien and to get an agreement notarized of a payment plan because apparently they don't have the money. Would this be something I could actually enforce if I needed to?

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Jun 15, 2020

It's extremely common for a mechanics lien to cause concern for a lender and the homeowner, and it's also common for a lien claim to completely halt construction on the project. Ultimately, that's kind of the point - to force their hand. Levelset discusses that in detail here: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid. Generally, once a lien is filed, there's a negotiation period where the owner, their lender, etc. will negotiate payment with the lien claimant. It's absolutely common for them to offer a payment plan in exchange for releasing the lien - but timing a lien release for payment is tricky. That's discussed in detail, here: Construction Lien Release Process: the Timeline is Tricky. For claimants, it could be dangerous to release a lien claim unless there's some kind of security to make sure that payment will be made. But, also, it's important to be flexible if at all possible. Entering into an agreement like a promissory note or a personal guarantee can help secure payment without a lien in place - so, if you can have the owner or lender commit to securing payment, releasing the lien may be an option worth considering. For further discussion on alternative security: Don’t Want to Use a Mechanics Lien? Here Are 5 Other Options.

How to force payment after a mechanics lien is filed

Filing a mechanics lien enforcement lawsuit could be one way to get paid. Though, most claimants want to recover payment without having to file a lawsuit. Often, simply threatening to enforce the lien - via a Notice of Intent to Foreclose - will be enough to get paid. This detailed discussion on payment recovery after filing a lien will be valuable: The 4 Steps to Take After Filing a Mechanics Lien. And, certainly, if you need help deciding what to do next, consulting a New Jersey construction attorney could help.

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