“You get what you pay for” is a popular warning sign suggesting that you cannot buy the quality needed without paying the price necessary to ensure top-notch service. Construction trade services should carefully heed this advice if they decide to engage a lay lien service to protect their mechanic’s lien and payment bond claims on a construction project. Such savings on legal services may work on occasion, but one misstep in satisfying the highly technical requirements can result in the complete loss of a lien or bond claim worth thousands and sometimes hundreds of thousands of dollars.
A few years ago, a client reached out about filing a mechanic’s lien on its behalf to secure about $100,000 it was owed for materials sold to a subcontractor on a construction project at a strip mall retail store in a large, midwestern city. By the time the claim came in, there was still time to record the lien, but the deadline to serve the required notice of intent had expired.
Prior to placing the claim, the client had furnished a job information sheet to a lien service, which provided certain information about the construction job, including the address of the strip mall. At the request of the client, the lien service, relying on the job information sheet, sent out a notice of intent before the deadline, but it contained a critical error. The notice was sent to the owner of another retail store in the strip mall, not the owner of the store that was being remodeled with the client’s materials. That meant the client lost the lien claim, and it became impossible to recover the receivable of more than $100,000 through the lien process.
This claim illustrates the importance of obtaining complete and accurate information if there’s a chance of filing a mechanic’s lien to enhance the prospects of getting paid on a construction job. To avoid errors and omissions, it’s recommended that a job information sheet be completed before furnishing any labor or materials for a construction project. These important steps include:
- a full, precise address for the jobsite and a description of the type of construction project involved;
- the full, formal legal name and address of the job owner, the general contractor and any other parties in the chain on the job above the potential claimant on the tier structure;
- if selling materials or furnishing labor to a customer that is not the owner or the general contractor, a description of the nature and type of services or materials being furnished for the project by the potential claimant’s customer, along with the full, formal name and address of the customer’s customer;
- whether the project is privately owned or publicly owned; and
- whether the general contractor or any party above the potential claimant in the tier structure on the job furnished a payment bond for the project. (If so, obtain a copy of the bond.)
Obtaining information in detail at the outset ensures that the lien is accurate and enforceable, and can also cut the costs of perfecting and enforcing lien rights.
If unable to furnish this data, an experienced construction attorney will recognize what is missing, seek out what is required and uncover the missing components to ensure success.
For example, another client needing to file a mechanic’s lien on a job provided an address that lacked sufficient detail. As it turned out, three separate buildings shared the same address on the client’s job information sheet.
Because the client, a materials supplier, had never been to the jobsite, it didn’t know which of the buildings was the actual construction site. A trained construction lien and bond attorney will recognize this as a problem.
After substantial research and investigation, the correct building was pinpointed to save the lien and recover payment in full. The fee for the lien work may have been higher than if the client had relied on a lien service, but in the end, it was substantially less than the loss of the lien claim that would have resulted without recognition of the address problem.
Experienced construction lien law attorneys look behind the information on the job sheet to legally verify it. If it cannot be immediately verified, an in-depth investigation is launched to obtain information that is essential for the perfection of liens to be considered valid and enforceable. This greatly enhances the prospect of being paid on a construction project.
While the use of a lien service may appear attractive from a cost standpoint, the fees paid add no value if what is filed is not valid and later proven unenforceable. One misstep by a lien service can cost more than engaging an experienced lien law attorney to protect the company’s interests.
