Understanding What Happens After You File a Lien
The world of mechanics liens is full of deadlines! Whether you’re filing a lien or had a lien filed against your property, you might wonder, “How long does a lien last”? While there are some state regulations that affect the answer, the general “need-to-knows” about what happens after the lien is filed should be drilled into your process.
Register for this discussion and Q&A find out:
- Learn when mechanics liens expire, the requirements, and deadlines
- Learn how to extend a lien
- Protect yourself from the property owner shortening the lien window
- Reduce the risk of having to release the lien without payment
Lori J. Drake CBA (00:01):
Good afternoon, everybody. Thank you for joining us today. As we talk about what happens after your lien is filed here, there we go. Sorry. My bad. There you go. I haven’t heard about us set. We know the construction industry is a confusing place, so we try to offer solutions to kind of take away the headaches. We have software that handles liens and waivers. Uh, we do contractor profiles and risk management reports. We have online payments and then we also have the community, which is what I am managing, where we get credit managers and credit professionals together to kind of share their education and experience and mentor and keep learning and stuff like that. Today we have Tom’s, I’m probably gonna say it wrong. Skilly see us. He is actually an author for Levelset and, uh, saw this topic that he had wrote about and thought it would be a great thing for everybody to listen to. Tom, do you mind introducing yourself a little bit?
Tom Scully (00:58):
Sure. No problem. You said my name, right? It’s Tom Scully. So I am a whiter and I’m not a presenter or a webinar host, so I hope everybody kind of bears with me here, but, um, I was a contractor for years. I kind of grew up wanting to be that guy on the job site, working by himself, like the peace and quiet and the job site. So I got into renovations. I worked, did that for several years and always experienced the issue that everybody has with cash. And I had a young family at the time. So for me, trying to track down my cash, trying to get paid for jobs that I had, you know, credit out on can be very difficult. So I decided to get out of contracting. Now I write a lot of home improvement and construction stuff, and I had the opportunity a year ago, a little more than a year ago to partner with Levelset and in doing so, I get the opportunity to kind of educate contractors on what they can do to avoid the things that I was dealing with. So, uh, you know, very happy to be partnered with the team. And now I can write instead of banging nails. And I appreciate that.
Lori J. Drake CBA (02:01):
We are very glad to have you today. So thank you for joining us today. We’re going to cover understanding what happens when a lien is filed. We’ll learn when liens expire and the requirements and deadlines, you know, three different states for that. We’ll learn how to extend the lien in some states, uh, protect yourself from the property owner, shortening the lien window. This is something I had never heard about. So I can’t wait for that part. And then we’re also gonna talk about reducing the risk of having to release the lien without payment. I’ll go ahead and let you take over for that.
Tom Scully (02:36):
Thank you for that. So everybody knows, um, when a bank holds a mortgage lien, that means is going to last for as long as the money is owed on the property. Uh, when it comes to the tax lien and the government, and you owe gov the government money, they are not going to release that mean until they get paid. Obviously that’s we know that’s not. The government works and leans on. Vehicles can last. They cannot last the vehicle. The way vehicles are made today, you can pay for a vehicle for 10 years and it won’t even make it that long, but that’s completely different than with a mechanics. Lien can ext liens last. They actually expire. Unlike those lanes, a mechanics lien will expire. It’s usually sometimes between like 90 days in a year, but every state has its own rules as to how long before the lien actually expires.
Tom Scully (03:21):
Um, the takeaway is that they do expire. They’re not like the mortgage or the tax lien, or even the vehicle lien. They do expire after they do the lien is no longer valid and it has to be removed. So if they expire, can our project owner wait them out? So the question is, if a mechanics lien can expire and turn to dust, it’s not very effective. All the project owner would have to do is wait them out. It would seem like, uh, they could hang back, let the contractor sweat and have nothing else happens there. Scot-free in theory, they could try that approach, but a contractor who’s determined to recover their cash is not going to let that happen in order to take full advantage of a mechanics lien, the contractor has a certain deadline by which they have to excuse me, a certain deadline by which they have to take an enforcement action.
Tom Scully (04:10):
Now like most things with mechanics liens, these deadlines vary from state to state. And I can’t even just 50 different deadlines, 50 different regulations can’t even give you all of them, but I can give you some of the examples of the states that I work in. I’m in Newark. And when I worked, I worked in New York, Connecticut, and Pennsylvania, New York contractors have one year to enforce the lien from the date of filing. So the date that they filed, their mechanics lien, they have up to one year to actually enforce the lien and we’ll go over what that means. Connecticut has one year as well. So from the date you file, you get one year to actually enforce the lien. And Pennsylvania has a deadline of two years, which is pretty long compared to other states. Now it’s important to understand that the contractor doesn’t have to actually float like foreclose on the entire lawsuit.
Tom Scully (05:01):
All they have to do is start it from that window. So when I say, when I say enforced lien, it means take action. It means to start the lawsuit, get things moving forward. They don’t actually have to pour close on the entire lien. In that way. I know we can go to the next slide, Lori, this, this is my favorite part. Extensions are sometimes a possibility in some states, there are states where the mechanics liens are so confusing and convoluted that like it’s, it’s hard as a writer to keep them to keep them straight because I write about all of them. But since the entire point of the seminar is to understand how long a lien lasts. We should look at how you can push the extension because some states allow, I love this topic because only six states allow extensions, but there are some of the most confusing states.
Tom Scully (05:52):
So what’s another one. Like what’s another layer just to confuse it even more there. Six states, like I said, they’re Alaska, California, Florida, Idaho, New York and Oregon. I’ll start with Alaska cause it’s like the most straightforward. But as we continue down with those states, they get more and more confusing. So like I said, Alaska is pretty straightforward. The typical deadline for enforcing the lien is six months. So from the date that you actually file the lien, you have six months to take enforcement action. If you file an extension within those six months, you get an additional six months from the date of the extension. So you could get up to 12 months if you’re able to file your extension at the last day of your original six month period, probably shouldn’t wait that long, just in case there’s an issue with paperwork. Uh, but you have to file the lien with the same office that you filed the lien extension with the same office that you filed, the original lien, that’s pretty straight forward.
Tom Scully (06:51):
Like you’re going to double the window. As long as you do it within your original six month window, California gets a little dicier California’s deadline for enforcing the lien is just 90 days. So it’s much less than Alaska. But if the property owner, this is, this is really the eldest to this cause this gets a little confusing. If the property owner and the contractor come to a credit extension agreement, they can file that extension with the same office as the original lien. So if the contractor and the customer decide that, Hey, we’re going to work this out. We’re going to put a credit agreement together. The contractor can file that agreement with the original office. And that extends the deadline gives them that extra 90 days. But, uh, they still only, even if they get that extra 90 days, they only have up to a year to file to foreclose on the lien from the completion of the project.
Tom Scully (07:43):
So that’s, that’s very confusing. And at the end of this, I’m sure there’s going to be some type of, we’re going to, we’re going to work this onto an article so you can actually review that. But basically within 90 days, if you come through an agreement with the customer, you can extend it an extra 90 that’s California. Now, Florida, Florida is a whole different animal. Typically mechanic’s lien in Florida lasts for a year. So you have to fork. You have to start your foreclosure action. Within one year from filing of the actual lien, the lien can only be extended if the contractor provides additional goods and services for the customer. So if the, if the contractor files and lien and then continues to work with the customer, they can keep extending. But what they’re actually doing is doing an amended lien, which kind of just starts the whole cycle over again. So it’s kind of, it’s very confusing, but if the contractor wants to, they can keep amending a lien indefinitely, but they’re still, they’re going to go broke doing that.
Tom Scully (08:47):
Now, Idaho, the typical enforcement lien is six months, but the contractor can buy themselves at an extra month extension. If the project owner makes a partial payment. So if I’m a customer and project owner in Idaho, I make a partial payment. You’re able to extend the deadline. If I don’t make a partial payment, the customer can’t extend the deadline or the contract again, extended deadline. So to me, it just makes sense that if you’re a customer, a customer in Idaho, you don’t make the partial payment, but that’s, you know, obviously that’s not legal advice such as how it reads out beyond that partial payment. If there’s a credit agreement established, they have the same type of rules as California, where you can put that credit agreement onto, um, onto the original lien. They have some very strange terms for the way they explain it. And they’re actually kind of vague, but you just, I would assume that you’ve just filed a credit agreement with the same office where you filed the original lien.
Tom Scully (09:47):
Now, new York’s, you know, this is my home state and I love it. I was just telling Laurie how much I love New York, but new York’s essential rules are probably the funniest. So in New York, once a contractor files, a mechanics lien, they have up to one year to enforce it within that year. Contractor can extend the deadline by filing an extension in the county office for us as the county clerk in which the original lien was filed. So if I live in Ulster county, I file a lien in Ulster county where the project is. I can file an extension with the same county clerk. I get an extra year at that point. But if I, if I miss that deadline, I, you would think that the lien would expire. Like it does everywhere else, but not in New York. Even if I actually missed the, of the original one-year deadline, I can go to a court and file for an extension.
Tom Scully (10:34):
And if the court approves that I get an extra year, which is insane to me because you don’t even have to watch the deadline as long as you can get the court to approve it. But that’s, that’s kind of like the, the recurring theme with all of these extensions. They’re just off the wall. So Oregon, I don’t even completely understand. So I’ll do my best to explain it. But then the rules are so confusing that I don’t even totally understand. Oregon’s deadline for enforcement is 120 days from filing. So if you file a mechanic’s lien, you get 120 days. But if that mechanic’s lien has language that extends the deadline than an extension is possible. What that doesn’t mean is that if you file a lien, you can then file an extension. The original lien has to contain language that says there that the deadline these day be extended. So on the day that you file the lien, you have to have that into the contract. I don’t know how they can make that work. I don’t know. I haven’t, I don’t have a clue about as to what that language looks like in the contract, but that’s what you can do. And you can’t do it after you filed the lien.
Tom Scully (11:47):
There’s also a clause where if you come to a payment plan, the plan itself extends the deadline for up to 120 days from the last day of the payment plan that you outlined with the, with the actual customer. So if the customer doesn’t pay and you put a six month payment plan in place, you get the six months of the payment plan, and then you get 120 days from the last day of that payment plan. So the big takeaway here is that extensions are awesome and they’re not even at all confusing, except for everything that’s confusing and convoluted about them.
Tom Scully (12:19):
Love it. That’s that we can skip to the next slide. We’ve got it. So that’s a lot of, a lot of confusing information about extensions. I get that and I go through it fast. I speak fast. That’s, that’s how it goes, but the customer, I don’t know if everybody knows this. And Laurie alluded to it earlier, the customer can shorten the deadline. And I feel like this is a really important topic that not a lot of customers are aware of, or I don’t know if a lot of contractors are aware, but it can be a very big deal. And I’ve actually been writing about similar subjects recently. So I feel pretty good about that. So by now we know each state has its own deadline for enforcing the mechanics lane. And we know that some ridiculously confusing rules allow contractors in some states to file extensions, but it’s also possible for the project owner to shorten the deadline.
Tom Scully (13:06):
By following, I noticed a notice to foreclose. This is different than a notice of intent to foreclose, which you would actually, the contractor actually sends. This is something that the project owner does to cut the amount of time that the contractor has to file a mechanic’s lien. So if the customer quote is finishing their job, finishing, working with the mechanics liens, and they find out there’s a mechanics lien on the, on the property, they can file sundae. Notice of intent, excuse me, let me start back. If the project owner notices that there’s a lien on the property, they can file a notice to foreclose, which can take a six month window depending on where you are or a one-year window, depending on what states allow it and cut it up to 30 days. So you can have just 30 days as a contractor to actually take action to foreclose on a lien.
Tom Scully (13:59):
It’s probably the basic, the basically it’s basically the customer telling you it’s time to put up or shut up. So if the customer says, Hey, you, you, you foreclose on that lien. You’ve got to then get on your horse and get the job done. You’ve got to put everything together. In 30 days, you’ve got to have all your documents, all your invoices. You’ve got to, you’ve got to line up a lawyer. You’ve got to do everything in 30 days. Otherwise that mechanics lien expires, but the same rules apply as before with the regular standard deadlines. As the contractor must initiate the lawsuit, not actually complete the process so they don’t have to finish for closing. It doesn’t have to be everything in 30 days, but they’ve got to start the process. Now, I think I know a support closure makes a lot of sense for customers or project owners to do, because it, it forces a contractor to take the necessary steps to start the lawsuit.
Tom Scully (14:51):
If they feel like the contractor was bluffing, cause that’s, that’s a possibility. Or if they feel like maybe the liens not valid or they feel like they have a really good chance of winning in court, a notice to foreclose can actually tear the lien claim to shreds because they’re, they’re telling them, all right, rubber’s got hit the road. Now you want to actually, uh, collect on this money. You better take me to court. I don’t know if we’re giving up the ghost by saying this. And I hate to do that because you know, Levelsets wonderful. But I think project owners should probably try utilizing notices of foreclosure more often. It sounds scary, but most contractors think they have until the typical deadline to get their ducks in a row. So, you know, in New York, I gotta have my, I have my regular window, but if the customer is able to file a notice to foreclose, I could be, you know, sent reeling because I don’t even know I don’t have my ducks in a row. It wasn’t ready. I thought I was going to have certain amount of time. Now I’ve got to get everything together in 30 days. If they do that and the customer isn’t able to make the contractor, isn’t able to make it happen. The leaning spires,
Speaker 3 (15:57):
Tom Scully (15:57):
Is there’s only one real way to protect yourself against the notice to foreclose. You’ve got to be ready to foreclose. You have to, you have to have your paperwork in a row. You’ve got to get, you gotta send preliminary notices and notices of intent when they’re required. Some states require preliminary notices and you have to have them sent in. Uh, you got to keep impeccable records. You have to think about your payments or payment reminders. And maybe the most difficult evolve is you’ve got to line up an attorney. You’ve got, I would think that most good attorneys would see that there was a notice to foreclose and be able to at least initiate the lawsuit in that time. But if you don’t have somebody lined up, you’re you’re on your own there, you’ve got, you’ve got to file with the court. You’ve got to take care of Eric, take care of everything yourself. And that could be, that could be a little overwhelming for a contractor. That’s busy handling projects, growing their business and doing the best they can. So for, for that reason, it might be good to have a go-to construction attorney on your side.
Lori J. Drake CBA (16:59):
Or we can go to the next slide we got through that fast. I got one more. I got one more. I wonder where it went.
Tom Scully (17:10):
Um, go ahead. I don’t know. It’s it’s not, uh, I don’t think it’s a long one so that the idea is to reduce the risk of, uh, having to release the lien without payment. If the lien is going to expire, there’s, there’s only a few ways that you can go though, the contractor gets paid, they go to the customer, pays them, they get their money. They release the link, the contractor can’t, or doesn’t foreclose in time. We know that that’s a possibility because if it’s only 30 days and they can’t get their stuff together, they could actually just run out of time and not be able to get the job. The foreclosure process on the lien could just, so if they go, if it’s a year and they go a year and they don’t get the foreclosure in place, it can expire the court. They go to court and the court decides the outcome, regardless of whether it’s for the customer, for the contractor or the link can be found to be invalid.
Tom Scully (18:04):
And there’s several ways that that could happen if they don’t send preliminary notice. If they, if they sent it late, if they aren’t foreclosing on time, there could be a number of things that make the lien and valley. So regardless of what happens, uh, the lien may require, it depends on the state, but may require a formal release to truly disappear from the property record. So the contractor who filed the lien actually has to file a formal release releasing when it’s forced to in these states, that require it. There’s two ways that can be done. The deadline from when the lien is actually satisfied and a deadline from when the date of a written demand is received. So some states require the contractor. They have a certain amount of time after the lien is satisfied, whether through the port or from the customer, paying them while other states require a written demand letter. And they have a certain amount of time from the time that is received to actually go to the county clerk’s office and have the lien release.
Tom Scully (19:02):
So between these two outcomes, liens satisfaction, isn’t very scary. Obviously you’re going to get paid. That’s what the whole thing is about that. That’s not so terrifying. If you get paid, you should really saline. All you need to do is head down to the office that you actually filed it with. So, like I said, for New York, it’s a county clerk and it’s usually the county clerk and mostly most of the other states and complete the proper paperwork, but written demands can be a little bit more on nerving states, hold contractors, liable with penalties and fines. If they don’t release the lien by a certain deadline, a well-written demand letter from somebody who really knows how to write one can sound pretty scary, cause they can be demanding that they remove the, the lien before the actual deadline even passes. And if they make that sound scary enough, some contractors will actually give up their rights prematurely.
Tom Scully (19:53):
And that could allow the project owner to be, could give them the upper hand if they owe the money and they forced the contractor to release the lien early, the contractor has really no recourse. They can try a regular civil lawsuit, but that’s so expensive and long drawn out, but that’s not really may not be worth it depending on the amount of money, what can also happen. And this is pretty, pretty common. Um, and I, and contractors need to be aware and actually put this together beyond the actual demands and satisfactions and deadlines. Contractors can be lured into releasing their liens for promises of a payment from a project owner, but you can’t cash a promise at the bank. You know, you can bring a bag full of promises there, and they’re not going to give you a dime. Contractors need to remember that they’re running a business and that they have a document that promises payment.
Tom Scully (20:43):
They’ve had it the whole time. There’s a document that says that they’re going to get paid and promises and that, and that’s the original contract. If the contract, if the contractor has to file a lien to get paid, then obviously the legally binding document that promised them money wasn’t even enough. So why except the sob story or a promise for anything other than what it is releasing the lien before receiving a payment is a bad idea for the contractor. Because all that contract, all that customer has to do is say, Hey, I’m going to pay you release the lien. You do that. And next thing you know, they walk away scot-free they don’t have to pay for any of the materials or any of that, as long as they get it outside of the deadline. So how can you reduce the risk of having a lien release without payment, any contractor who releases their lien before they’re actually getting paid is just, they’re undermining the actual value of the lien.
Tom Scully (21:33):
The lien needs to stand over the customer until they get paid. And they can do that even with a payment plan in place. So as long as they have the agreement that shouldn’t bother the customer, that there’s a lien on the property, the best way to protect yourself from having to release, at least to release a lien is to keep your ducks in a row. In all of your projects, a project owner can’t force you to release a lien. If you’re meeting all of the requirements, set forth by the state. So that means making sure that you meet your notice requirements between notices of intent, preliminary notices, making sure that you’re watching the important deadlines, like getting your mechanic’s lien filed in time and making sure that you keep impeccable records. You want to have all those invoices. You want to have licensed documents. You want to have insurance documents, anything that a customer can do in court to try to make you look bad. You want to make sure you have squared away. Once you have all that. And like I said, a good construction lawyer on your side, you don’t have to release that lien early. It doesn’t matter if the, if there’s a demand to release it, letter of mail to you, as long as you’re within that deadline and you haven’t been paid, you don’t have to release the deadline.
Tom Scully (22:42):
I’m sorry. Release the actual lien and contractor needs to understand that, to release it early, without being paid is just undermines. Everything that they’ve done. And with that big spiel from me, I think it’s Q and a time.
Lori J. Drake CBA (22:59):
Sorry about that missing slide. I’m not sure what happened there. Great news is there’s been a lot of communication going back and forth between the chat and the Q and A’s. So this is a lot of new information for people and it’s definitely well received. I do have several questions. Uh, first one is from Chad. This says, how does someone go about making invalid? So he wants to make a lean invalid. Yeah. So it’s probably maybe from the property owners side where you said that they could do fine.
Tom Scully (23:32):
Well, so my kind of my go-to came to answers is always like, if you have a question about something like that, go with a, find a construction attorney, but what they should do is they should get to know the actual rules and regulations in their state or the state of which the project was actually held. It doesn’t matter if it’s in another state, you have to go with that other state. They should check to make sure that, that the customer, I’m sorry, that the contractor met all the preliminary notice requirements, a notice of intent to lien, make sure that they hit all the deadlines that they were supposed to hit. If they miss those, the, the lean, whether or not it was valid or not, or whether they were getting paid could be invalid. And there are states where it’s like a sliding scale. So if you, if you are late on your, your notice, it’s not that your whole lien is invalid, but that the amount from before you sent the lien from the date that liens, not that part of the money is not protected. So if a customer feels like they got the preliminary notice late, or that the lien was filed late and it’s for the whole amount, at least some of that actual lien is going to be invalid. At least some of them, the amount,
Lori J. Drake CBA (24:39):
There’s a lot of different things. It sounds like that can go into that.
Tom Scully (24:43):
Absolutely. That’s why construction attorney is probably best
Lori J. Drake CBA (24:47):
Problems. I got a question for Erin Dooley’s affect the person’s credit.
Tom Scully (24:53):
Okay. So this is a good one. Yes and no. That’s like always the answer. Everybody hates the get. Yes and no, it can show up on a credit report. It doesn’t always, uh, I believe there’s, there’s some rules with experience. I’m not sure what they actual rules are, but what can show up is if, if the, the contractor is successful in foreclosing on the lien and they have to get paid for their, their money and they sell off whatever, whatever the lien claim is to a collection agency. If that collection agency then goes ahead and close it and, um, comes after you that’ll show up on your credit report. So the lien itself may or may not, but if you don’t pay the actual, the actual lien amount after a successful foreclosure that’ll show up on a credit, that’d be a big problem. So yes and no, like I said,
Lori J. Drake CBA (25:45):
That’s on everything. Um, Mary says, you said some liens expire within 90 days, whatever state that was. So do you have to file for closure basically when you file?
Tom Scully (25:59):
So no, you have, you have the 90 days to file for foreclosure. The problem is, is if you wait to the 90th day to start your lawsuit process, you’re going to be outside of that deadline without a doubt. Something’s going to happen where you don’t have the right paperwork or the court closes, or the second you get there because somebody went home sick. So you can’t, you can’t wait the 90 days you can wait within that window, but it’s best to get that stuff squared away earlier as the earliest as possible.
Lori J. Drake CBA (26:26):
Thank you. Uh, John says, I have never heard of a property owner being able to shorten a lien. How would property owners know that they could do that? And if so, I guess when they do what they’re going to file, do the supplier or whoever filed the lien get notified.
Tom Scully (26:44):
Okay. So, um, not all states can do a notice to foreclose, not all customers and every state can do that. Only certain states can. I’m not sure which they are. Okay, I’ll look that up and I’ll let you know, but they’ll have to check what the regulations within their state. I imagine that the regulations will be statewide so they can just, they can figure it out from there. But what they will have to do is they will have to notify the contractor of the notice to foreclose. So the contractor doesn’t have to worry about not finding out. And then the window closing, they have to be notified if they’re not, I imagine that the, the original window would still stand. So even if they filed that document and they don’t get it out to the contractor, the original window would still stand. That would be up to the court. But that’s the way that would probably work out. Okay.
Lori J. Drake CBA (27:35):
Let’s see. Sam says, are there any demand letters that you can send to collect on a lane once it’s filed?
Tom Scully (27:42):
Okay. That’s a, that’s a pretty common question. So demand letters are great because they let somebody know you’re expecting money, right? Like that’s great, but what they don’t do, they’re not standardized and they don’t really have any teeth. They don’t have any bikes. They’re not legally binding documents. They’re just, Hey, you owe me money. You gotta pay me what, what they should send instead is a notice of intent to foreclose. We, we have them on low in, uh, we offer them as a service through Levelset and that’s a legally binding document. Some states require them. So it’s kind of, I like, I, for whatever reason, I love nautical, um, like nautical theme. So what I like to say is it’s like a shot across the bow. So it’s like, it’s like that last warning shot before that the battle actually starts. So if you send a note, a support, notice of intent to foreclose, they know that you’re serious. They know that, you know what the rules are in some states, it’s a regulation and a requirement that you have to meet. And then once you do that, that’s when they know, Hey, the next step is we’re going to battle, which in this case is foreclosure.
Lori J. Drake CBA (28:46):
I think that would look scarier than a demand anyways.
Tom Scully (28:49):
Absolutely. Yeah. It definitely, it’s a more official document when it comes, you know, w w w letterhead on it, and it looks like the right requirements. And they’re talking about foreclosing it’s way, scarier than just, Hey, do you gotta to pay me?
Lori J. Drake CBA (29:02):
I probably used to have
Tom Scully (29:04):
Even been in a, for probably months at that point anyway. Yeah.
Lori J. Drake CBA (29:08):
I don’t says only you say it only six states allow extensions. Do you know how someone could get their states to follow the laws of the other six states?
Tom Scully (29:20):
Uh, well, I don’t, I don’t know. I don’t know how to force a state to do what you want them to do. Cause that’s kind of a, if I could figure that out, it’d be well much better off. I would say the best case. If you consider that New York, you can actually miss the deadline and still try to go through a court to get an extension. I would say that the best case, if that’s the scenario is to get an, a construction attorney and see what they say. Um, chances are, it’s not going to be the first lien deadline that they’ve got to try to hit. So I’m sure that they know what to do. And they’d probably spaced it before, but I guess it could be possible, especially if you consider new York’s requirements.
Lori J. Drake CBA (29:56):
Right? Thank you. I got a new question that just came in from Jason is an intent to lien different than an intent to foreclose.
Tom Scully (30:05):
So and so a notice of intent to lien and also tend to foreclose. So the notice of intent to lien, if I’m understanding this correctly, is that you’re going to file a lien on the property. So you’re letting them know that, Hey, if they don’t pay you, you’re going to file a lien. Notice of intent to foreclose is letting them know, Hey, like their lien is here. I’m going to foreclose. As far as I know, the notice of intent to lien is the there’s the state. Some states have a requirement that requires a notice of intent to lien. I’m not sure if they have a, how many states have a notice of intent to foreclose, but notice of intent to lien are different.
Lori J. Drake CBA (30:44):
Thank you. I got Michael asking is your right to extend based on the state where you’re based or where the job is.
Tom Scully (30:54):
I love that question so easy. This is not a yes or no question. It is going to be based on the location of the project. So if I was working in Connecticut, I actually had to learn from activities. Um, so wherever that project is, it’s that local government’s laws that actually govern whatever, um, the mechanic’s lien laws are there. So you have to meet the other areas, requirements. It doesn’t matter where your office is. It doesn’t matter where you live only where the project is.
Lori J. Drake CBA (31:24):
I know that can be a tricky one for people that operate in different states.
Tom Scully (31:29):
Well, the Hudson. So I live in the Hudson valley and you’ve got two states within 45 minutes. And so it could be very confusing.
Lori J. Drake CBA (31:38):
Uh, Adam asks if Alaina’s file and then satisfied, how long does a contractor have to remove the lien from the title?
Tom Scully (31:46):
Okay, sure. So it depends. Um, if it’s satisfies for them, how it says it satisfied the court. Sometimes the court will take care of the lien, but if th if not, it’s going to depend on what their state laws are. And even if the lien is satisfied, the customer may still have to file a, um, a, a written request to have it removed. If not, they don’t really have a deadline that we have to work with.
Lori J. Drake CBA (32:11):
Perfect. This one came through anonymous. It says, what is the difference between prelim and lean?
Tom Scully (32:19):
Okay. So preliminary notice is I love this. Cause I read it this all the time. I can give you my whole field. The preliminary notice is like a friendly, um, introduction between your customer or you between your customer and your company. So I like to say that it lets the people who are cutting the checks, know who you are, which is great, but at the same time, it also meets the requirements. Many states have to protect your lien rights. So if you don’t send a preliminary notice within the certain deadline, depending on whatever state it is, you may not have lien rights. What were they comparing it to the lien? Okay. So the lien is a claim against the property for unpaid, uh, services, supplies, or labor. So what that is is basically you’re saying, Hey, you didn’t pay me. I bought a lien on your property. If you don’t pay me, I can potentially force the sale of your property and take my proceeds out of that. So the preliminary notice is a lot friendlier and it’s, it’s a requirement before you actually get to the lien itself.
Lori J. Drake CBA (33:17):
Perfect. Um, Michael also asks, do you know anything about leans on in Canada?
Tom Scully (33:23):
So I don’t, I do know that a lot of the language doesn’t translate exactly the same. So there, there are notices in Canada that have a lot of weight. They can actually shut a job down, whereas in the U S most of them don’t do that. So I, I, all I know is that there’s a difference. I’m not really all that well versed on Canadian mechanic’s lien law yet, but it’s something I’m looking to get into with these. It seems pretty interesting. Yeah.
Lori J. Drake CBA (33:47):
I’ve seen a lot of stuff coming up about that, but yeah, I’m not familiar with it either yet. Something we’ll definitely have to look into. I got another question from Adam while he’s asking what states require a preliminary notice, but I could actually help you with that. After the webinar, we have a whole list of different states that require different things, and I can get that over to you. Yeah. Jason says our customers get so confused on the prelims and they think it’s a scary thing.
Tom Scully (34:14):
I think that a lot of people use the language pre lien, and that does sound scary. I mean, I think we actually have an article of why maybe not to call it a lien. If I remember correctly, a prelim does sound scary, but a preliminary notice is a lot, a lot friendlier.
Lori J. Drake CBA (34:30):
I think that’s last question. Nobody’s problem went through there, Tom, thank you for this. Like I said, I know that this was a lot of great information, a lot of stuff that some people probably hadn’t heard before. Um, and you know, it’s definitely something that I was interested in and hopefully we can get you on here with some more information or even about Canada someday.
Tom Scully (34:52):
I appreciate it. I hope it wasn’t too dry. I know it’s kind of, I like the topic personally, but, you know, it’s, I know it can come across lot drives a lot of inference.
Lori J. Drake CBA (35:01):
It is. But I think anybody dealing with lanes kind of knows where you’re going with it. So yeah, it’s not as bad as accounting figures and stuff like that. Uh, for if anybody wants any additional information, we do offer a class by Thea Dudley. It’s in our credit management academy center and she actually goes into a lot of basics, but she also talks about liens and the different things you can do and not do, and the prelims as opposed to the lanes and all that sort of stuff. So I will go ahead and put that link in the chat box. And then she also has a book out there. Um, I’ll put the link as well. If you actually go to that link, you can download the first 11 pages for free. And if it interests, you just shoot me an email and I can get you a copy of that book as well. Uh, hold on. Looks like somebody might be, oh no, they’re just letting you know that law is dry in general, so they understand. Well, thank you again, Tom, for joining us and thank you everybody else for joining us as well. And I hope you have a great evening. Thank you.