Home>Levelset Community>Legal Help>Unlicensed Sub Contractor

Unlicensed Sub Contractor

As an unlicensed sub contractor in Arkansas do I still have rights to place a lien on a General Contractor? I have a signed contract with the GC of a larger hotel project. To date I have approximately 9,000 in unpaid invoices. I know that I will be responsible for the taxes on the amount of the invoices if ever paid. Are there other associated penalties in the State Of Arkansas?

1 reply

Jan 10, 2020

The Arkansas mechanics lien statute doesn't impose any specific licensing requirements for subcontractors in order to have the ability to lien. So, at least by the letter of the state's lien laws, an unlicensed subcontractor may still file a mechanics lien if they go unpaid for their work. It's important to note, though, that a mechanics lien filing doesn't attach against any one individual or business. Rather, mechanics liens attach to the project property where work was performed. And, while it's not always directly the owner causing payment issues, a lien at least secures the debt and forces the property owner and contractor to resolve the payment dispute. As for other potential fallout for performing unlicensed work - here's a resource from Cotney Construction Law, LLP that should provide some good insight: When Do You Need a Contractor’s License in Arkansas? Unfortunately, though, I'm not intimately familiar with Arkansas' licensing requirements and penalties - so it might be more helpful to consult a local Arkansas construction attorney for more information on that front. And, keep in mind that being unlicensed will only be an issue if the work that was performed actually required licensure.

Recovery options outside of the mechanics lien process

Note that mechanics liens are generally considered the nuclear option. And, there are usually some other steps available to help with payment recovery before a lien becomes necessary. For one, sending a simple invoice reminder might be enough to get paid. An invoice reminder is just like it sounds - it provides a gentle reminder to the customer that payment is outstanding and should be paid. Further, escalating things with a demand letter can be helpful, too. Payment demand letters will generally include specific legal threats and set a hard timeframe during which payment must be made. They let recipients know you're serious about getting paid and willing to do what it takes to make sure that happens.

Notice of Intent to Lien

Finally, because mechanics liens are such a good recovery tool, the mere threat of filing a lien claim can lead to payment. Sending a document like a Notice of Intent to Lien lets recipients know that if payment isn't made soon, a lien will be filed. And, a Notice of Intent will often be sent both to the customer and to the property owner in order to ensure everyone's aware of the dispute - which can help put additional pressure on the customer to make sure payment is made. Importantly, a Notice of Intent to Lien is actually an official part of the lien process in Arkansas. So, claimants will generally have to send the notice anyway. You can learn more about those requirements here: Arkansas Preliminary Notice Guide and FAQs.

Additional Arkansas mechanics lien resources

Sometimes, a lien filing will be necessary. For more information on how mechanics liens work and how to file Arkansas liens: - What is a Mechanics Lien? | Background on Mechanics Liens - Arkansas Mechanics Lien Guide and FAQs - How to File an AR Mechanics Lien

0 people found this helpful

Helpful