Should you automatically file a lien at the end of a project for your retention?

8 months ago

We had a project that ended for us a year ago. We have been hounding the contractor monthly and weekly for our retention. They supposedly had issues with the owner which held things up. It is very rare that we have ever received our retention in less than 5 or 6 months, so by reading the law it seems we would need to figure the cost of a lien in our bid and file it as soon as we are done with our project. And that will eventually inhibit our ability to get jobs. What is the solution to this?

Senior Legal Associate Levelset

I’m sorry to hear about your trouble obtaining retention payments – unfortunately, this is all too common in the industry. Let’s look at some Wyoming specifics regarding retention payments and mechanics liens. First and foremost, as you likely know, Wyoming doesn’t really regulate the use of retainage on private construction projects. While other states mandate retainage be released within certain timeframes, Wyoming’s legislature has refrained from doing so on private jobs. So, without some statutory penalty to speed up retention payments, parties who have yet to be paid retainage may have to take things into their own hands. For many construction businesses, the most effective way to do this is by leveraging the right to file a mechanics lien. When retention remains unpaid at the end of the project, it’s important for a construction business to keep one eye on their lien deadline. In Wyoming, this deadline will depend on the role of the potential claimant – for those who are not hired directly by the property owner, the deadline to file a mechanics lien will be 120 days from the earlier of either (1) the last date on which labor or materials were furnished to the project, or (2) the date on which the project was substantially completed. Keep in mind, though, that a Notice of Intent to Lien must be made at least 20 days prior to filing a mechanics lien in Wyoming. So, keeping those deadlines in mind, a Wyoming construction business will have 3+ months from either their last furnishing or the project’s substantial completion (whichever occurs earlier) before they really have to decide whether they want to pursue filing a mechanics lien. During this time, many potential claimants find that if payment talks aren’t going as planned, warning or even threatening a lien will be filed can help to speed up payment. Even in a situation where a business doesn’t intend to go through with a lien claim, the mere threat of a lien can help to compel payment. Further, keep in mind that a Notice of Intent to Lien can really be sent well before a lien claim would ultimately be filed – the “20 days before the lien is filed” is just a deadline. When a Notice of Intent to Lien is sent to both a nonpaying customer and the property owner, extra pressure is put on that customer to make payment. Property owners don’t take kindly to having liens filed on their property, so having one on the horizon could help to speed things up. So, if sent a little earlier in the process, a construction business is better able to leverage the potential for a mechanics lien claim in order to obtain retainage. Regarding incorporating the cost of a lien into a bid – generally, construction businesses who send preliminary notice and who properly leverage a Notice of Intent to Lien will be able to avoid actually having to file a mechanics lien claim. Further, while nobody should have to pay for a lien filing to obtain what’s rightfully theirs, in the grand scheme of things, filing a lien isn’t terribly costly – online services are available to help file mechanics liens at a relatively low price. Further, free forms are available online – and claimants could pursue filing a mechanics lien themselves. Obviously, no one should have to incur the expense or have to take the time to pursue payment they’ve already earned, but compared to filing suit in order to recover payment, filing a mechanics lien is an economical (and effective) option. There’s always a chance that a lien claim won’t be paid and that a claimant might end up needing to enforce their lien claim, but the majority of liens are resolved without the need for further legal action. For more information about Wyoming liens and notices, this resource should be valuable: <strong>Wyoming Lien & Notice Overview. I hope this was helpful! Please feel free to pose any other questions you may have here at the Construction Legal Center.

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