WHAT ARE SOME OF THE MOST COMMON CONSTRUCTION LIENS?

A lien is a claim against real estate owned by another person. In the construction industry, there are many types of construction liens that can arise before, during, and even after a project is complete. These types of liens are often overlooked when negotiating contracts and budgets for large construction projects. In fact, research shows that 50 percent of all new construction projects experience some form of lien at some point during the project, and the average cost of clearing these lien claims is $30,000. This means that the average contractor will lose $150,000 in profit due to unpaid contractors, suppliers, and other people associated with the project. The good news is that most construction lien claims can be resolved prior to the issuing of a final lien notice. In this blog post we will discuss some of the most common types of construction liens and their implications for both contractors and property owners.

Waiver of Lien

A lien waiver is a document that waives a person’s right to a lien on a property. The person waiving the lien must be the owner of the property for which construction work has been done and the contractor must be in a position of trust with the owner. If a contractor is not in a position of trust with the owner, then the waiver is not enforceable. A lien waiver can be used to settle disputes between the contractor and the owner regarding unpaid bills or materials. It can also be used during the bidding process to ensure that all potential contractors and subcontractors know that there will not be any lien claims attached to the project.Lien waivers are not public records, but are only accessible to the parties involved in the original contract.

Mechanic’s Lien

A mechanic’s lien is a claim by a contractor or subcontractor to be paid for labor and materials provided for a specific project. The contractor or subcontractor must provide notice of the lien to the owner and other lienholders within 90 days of the last date of labor or services. Once the contractor or subcontractor has performed the work, the contractor must submit a lien notice to the owner’s title insurance company. The lien notice contains a description of the work performed, the amount due per labor or service, and the name of the contractor or subcontractor. The lien notice must be recorded with the county recorder’s office. The owner has 30 days to pay the contractor’s original bill in full. If the owner fails to pay the bill, the contractor can file a lawsuit to enforce the lien claim.A lawsuit for a contractor’s lien claim can be expensive and involve hiring an attorney, expert witnesses, and other costs. However, contractors who successfully enforce their lien claim are entitled to receive the amount owed. The contractor must then pay off the lien claim before the property owner receives their final payment.

Subcontractor’s Lien

A subcontractor’s lien is a claim against a property for the value of labor and materials provided by a subcontractor on a project. A subcontractor’s lien is filed with the county recorder’s office and is treated as a mechanic’s lien. The property owner is on the hook for paying the lien in full, just like a contractor’s lien claim.Subcontractors are responsible for maintaining their own records and can face stiff penalties if their lien claim is not timely filed. However, it is important to note that a contractor’s lien claim can be resolved before a subcontractor’s lien claim is resolved.

Supplier’s Lien

A supplier’s lien is a claim against a property for the value of materials provided by a supplier on a project. The supplier’s lien is filed with the county recorder’s office and is treated as a mechanic’s lien.Suppliers are responsible for maintaining their own records and can face stiff penalties if their lien claim is not timely filed. It is important to note that a contractor’s lien claim can be resolved before a supplier’s lien claim is resolved.

Conclusion

A construction lien is a claim against a property for the value of labor and materials provided by a contractor or supplier on a project. The lien is filed with the county recorder’s office and is treated as a lien against the property. The property owner is on the hook for paying the lien in full, just like a contractor’s lien claim. Lien claims are a common problem in the construction industry, but can be resolved before the issuing of a final lien notice. In this blog post we discussed the common types of construction lien claims.