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3 common misconceptions about mechanic’s liens

On Behalf of | Apr 27, 2022 | Construction Law

Running a business can be a challenging experience even under the best of circumstances. Unfortunately, it is not uncommon for payment disputes and contract discrepancies to quickly derail an organization’s profitability. In the construction business, this can greatly impact the company’s flexibility in completing new projects and growing the business.

For many, a mechanic’s lien represents a way to secure payment. While this might seem like a straightforward administrative process, there are numerous legal challenges and loopholes to avoid. Additionally, many misconceptions about the procedure can damage preparation and negatively impact the efficiency of the process.

Misconception #1: There are no time limits on filing a mechanic’s lien

Many business owners attempt to preserve a professional relationship and give clients ample opportunity to fulfill their financial obligations. Unfortunately, the lien process is complex and can quickly unravel as time goes on. Some mechanic’s liens center on supplies while others focus on labor still more note a combination of both. It is wise to begin the process as early as possible, however, as the length of time that has passed can greatly impact the overall value of the lien.

Misconception #2: Errors on the mechanic’s lien form can be corrected at any time

Whether it is a typo or a miscalculation, you must correct errors as soon as possible. The organization that completes and files the mechanic’s lien could face legal repercussions of what could be construed as fraudulent paperwork. The subject of the lien could argue that the organization made mistakes intentionally to overstate the value of the work or to include amounts that should not be permitted. It is crucial that the paperwork is completed correctly the first time so errors are not introduced into the proceedings.

Misconception #3: Any contractor is entitled to file a mechanic’s lien

While it might feel like contractors of all types can seek financial compensation through a mechanic’s lien, only those who provided labor or material for a real property project are entitled to seek compensation in this manner.

A mechanic’s lien might seem like a straightforward paperwork process but there are numerous levels of intricate details, deadlines and stages that must all be satisfied through the legal process. No matter your experience level or the scope of your organization, it is important to seek legal guidance should a mechanic’s lien become necessary.