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You are not alone if you have never heard of a Mechanic’s Lien or if you have heard the word but are still determining its meaning.
Take the time to properly understand the mechanic’s lien laws in your State or any other State you do business in, when you are a general contractor, sub-contractor, building material suppliers, a professional in the construction industry or even a labor provider. By being aware of the mechanic’s lien laws in the State where you do with you can ensure that following procedure, protects your income.
A mechanic’s lien is a formal claim against real estate that aids in securing payment. A Mechanic’s Lien is a lien filed on the Owner’s property by the general contractor, sub-contractor, building material suppliers, a professional in the construction industry and labor provider for monies owed to them. It imposes a claim on a property until full payment is received. The claim is a lien on the property, and it only gets distinguished when the claim is paid off via a property refinance, sale or by perfecting it in court by filing a law suit against the property owner, or simply paying it off directly to the party who filed the claim/lien.
Every State has construction lien laws, which allow contractors and suppliers to place a lien on the property where work was performed if they aren’t paid. Due to the lien’s attachment to the property title and owner-created hassles, it is the last option but a very effective instrument for helping construction businesses get paid.
The process of submitting a lien is not overly complicated at first glance. It only takes a few minutes to fill out a construction Mechanic’s lLen form, especially with the i-Lien software, that simplifies the process, and submit it to the recording office of the jurisdiction where the property is located. Depending on the State, the party filing the claim has sixty days to two years (on average) to negotiate payment with the property owner after filing a claim.
However, rather than seeing a Mechanics Lien as a single document, it’s wiser to view it as a process. It is because, in most situations, a contractor must issue specific notices at the start or throughout a project to safeguard their right to file a lien eventually if they don’t get paid. You can find that you don’t genuinely have lien rights when you need them, if you skip a step or miss a deadline.
Even the most minor errors in the Mechanic’s Lien process may invalidate your payment claim. The devil is in the details, and American Mechanics Lien rules demand unprecedented specificity. Additionally, the regulations vary based on the real estate’s location and the project’s type.
Despite the challenges, a Mechanics Lien is the most powerful payment guarantee for construction companies. It may be more effective than taking legal action to execute a construction contract (which ultimately depends on a judgment lien). Contrarily, a construction lien frequently enables a contractor to receive payment without needing to retain legal counsel or appear in court.
You must first be aware of the urgency to submit a mechanic’s lien. You risk having your request rejected if you wait too long to file and only do so when a mechanics lien is required. You must provide clear notices in advance, usually at the start of the project, to maintain your right to file your lien. These notices are generally known as “Preliminary Notices to Owner” and “Notices of Intent to Lien (NOI).” The following are three main steps before even filing a mechanic’s lien:
The procedure for filing a lien shouldbegin with sending a preliminary notification with proof of mailing or via Certified Mail where required. It is the Preliminary Notice to Owner that establishes the Lien Rights to get paid. Preliminary notifications, also known as “Pre-Lien Notices to Owner” or “Preliminary Notices to the Owner,” are written communications given by the construction party to the project ‘s property owner to let them know who is involved in the project. In order to prove that the Notice was sent, you must “Proof of Service, such as US Post Office Certified Mail with return receipt or a stamp on the PS3877 form
Besides having the legal requirement in most States to provide a Preliminary Notice to Owner even on small jobs, consider these notices a form of inexpensive insurance for your construction business. Even though everything might go without a hitch, this is only to ensure that you have established your Prelien Rights and you are prepared to protect your income and get paid, if there is an issue.
The next stage in the procedure is to submit an NOI, “Notice of Intent”, also known as a “Lien Warning Notice” or “Notice of Intent to Lien.” You will deliver this notice as a final reminder if you have been working on the propertybut have yet to receive payment. Doing this will offer the paying party one last opportunity to pay the cost before you place a Mechanic’s Lien on their property.
Before filing a Mechanic’s Lien, some States may require claimants to send a Notice of Intent; nevertheless, even if this is not a requirement in some States, it is still advisable to provide a Notice of Intent. Delivering an NOI lets the parties know that you’re genuinely concerned about it and gives them a chance to work out a payment solution.
The parties making the payments will want to avoid having liens, so doing so will help everyone involved resolved the unpaid balance. The notice is always delivered following a Preliminary Notice to Owner and before the filing of a lien. States that require NOIs have different deadlines. Inform yourself with those different requirements for the States you do business in.
Construction businesses may formally file a Mechanic’s Lien form sign and notirized with the county where the property they performed work is located,if payment is not made by the conclusion of the 20–30-day notice period.
Mechanic’s Liens are the best strategy for recovering payments for unpaid suppliers and contractors. The job site becomes collateral for a contractor’s debt when a mechanics lien is filed. It encourages the party with a lien to make restitution and put the dispute to rest.
State-specific deadlines vary, but generally speaking, a Mechanics Len needs to be filed within a certain amount of time from the final day that labor or supplies were provided. A Mechanics Lien must then be enforced within a certain time from the day it was filed and at that point a lawyer will have to be involved in order to perfect the lien.
Preparing your Mechanic’s Liens involves more than downloading a form, filling it out, and submitting it. Lien laws are complex, so you must take care and provide the necessary details in your construction Mechanic’s Lien forms. And you need to be attentive to use the proper form.
The good news is that i-Lien Software makes the mechanic’s lien process a breeze. You no longer need to spend hours getting your construction mechanic’s lien forms right. The i-Lien software automates and streamlines the process of creating Construction Lien notices & Mechanic’s Lien documents to save time, safeguard your rights, and help you get paid quickly! Call us Today!
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As a contractor, building material supplier, professional architect, designer or construction labor provider you count on getting paid quickly for your hard work, so it may be stressful (and very frustrating) when it doesn’t. Customers may refuse to send money for a building project until contractors threaten legal action, whether because of a shortage of funds, displeasure with the job, or another reason.
Fortunately, contractors have preventive legal measures at their disposal to guarantee that they are paid for their job; the two we’re concentrating on today are the Preliminary Notice to Owner and the Notice of Intent to Lien (NOI) or Lien Warning Notice.
There is a clear distinction between “sending notices of intent to lien” and “sending preliminary notices to owners,” even though the terms are frequently incorrectly used interchangeably plus to make even more confusing the necessary legal paperwork for both has various title names based on the State.
A Preliminary Notice to Owner or Notice to Owner is a standard legal form informing the property owner who the parties are involved in his/her project, with the proper language required under each State of the project work; an NOI is a more serious warning document indicating an intent to file a lien. The differences between a preliminary notice and an NOI are found in the ramifications of each document.
To safeguard your legal right to payment for the services you provided, if you’re a contractor who likes to get paid for your job, you must understand the distinction between a Notice of Intent to Lien and a Preliminary Notice. And in this post, we’ll help you in doing just that.
What Is a Preliminary Notice to Owner in Construction?
The first step in establishing lien rights on a construction project is sending Construction Preliminary Notices to Owner. Missing the deadline or failing to give the required Preliminary Notice typically results in the loss of Lien Rights and the inability to file a Mechanic’s Lien in the case of non-payment.
Even though it may not be mandatory in a particular State, sending a preliminary notice is very beneficial. These notices emphasize your invoice by keeping the property owner, general contractor (GC), and other top-of-chain stakeholders informed about your work. Additionally, it fosters strong working relationships by making the project transparent.
Consider a preliminary warning as a preventative measure rather than a response. Contractors often file preliminary notices at the outset of a project, perhaps even before project work has started, and almost always far before any payment issues surface. It is a low-cost insurance product created specifically for the construction sector.
There are a few things to keep in mind about preliminary notices:
● Every construction company in the country should use a preliminary notice, but in some places, it’s necessary to protect your lien rights.
● Depending on the State a project is in, a preliminary notification may go by various titles like Notice of Furnishing in Michigan, Notice to Owner in Florida, etc.
Who Files It?
The Preliminary Notice is often sent by material suppliers, contractors, and subcontractors. All or any of them may issue a preliminary notification to the responsible party in contractual arrangements, which is often the construction lender, the general contractor, or the property owner.
Second-tier and lower-material suppliers and subcontractors may submit the form for public contracts. However, it is just the general contractor who needs to deliver the document for projects sponsored by a lender.
Which States Require It?
Nearly all states mandate the Preliminary Notice. The contractors’ and subcontractors’ rights to file a mechanical lien and pursue unpaid clients will be essentially worthless in nearly all states if a preliminary notice is not submitted.
In all but Texas and Mississippi, prime or direct contractors are obligated to file a preliminary notice. Only upon demand or delivery of other non-lien-related documents triggers the requirement for the notice in these two states.
What Is a Notice of Intent to Lien?
Now that we have discussed preliminary notice, let’s look at the Notice of Intent.
An official demand letter is what the Intent to Lien letter or Notice of Intent to Lien is. It must be prepared after giving preliminary notice but before submitting a mechanic’s lien claim. Compared to the first document, which is typically given as a precaution, this one carries much more legal weight.
It usually occurs after mailing the preliminary notice and before submitting a lien claim as the second stage in the lien rights procedure.
Although they pack a powerful legal impact, Notice of Intent to Lien documents alert property owners to your intentions. Consequently, they often provide better and faster outcomes, with contractors receiving payments an average of twenty days sooner.
NOIs also have the advantage of being pertinent to parties besides the debtor and carrying more weight. As a result, more attention is required, and more success is generated. After delivering an NOI to an overdue customer, most of the time, payments are made within twenty days.
Who Files It?
The party that wishes to collect money from a customer who hasn’t paid on time files the Notice of Intent to Lien. To make the client aware that they still owe you money, you can serve a Notice of Intent to Lien whether you’re a material supplier, a contractor, or a subcontractor.
Which States Require It?
The following states demand that suppliers, subcontractors, and contractors file a Notice of Intent to Lien:
● Wyoming
● Arkansas
● Wisconsin
● Colorado
● Pennsylvania
● Connecticut
● North Dakota
● Missouri
● Illinois
In Florida and the other states that remain, sending a notice of intent to lien is optional. Even though they are not required to do so, contractors who reside in these states should still strongly consider submitting a notice of intent to lien to safeguard the right to payment.
Preparing Construction Preliminary Notices to Owner and NOI Is a Breeze with the i-Lien Software
Even if your state doesn’t mandate it, the general legal advice is to file both a preliminary notice to the owner and an NOI with a construction notice. It gives the property owner ample notice that you intend to use every legal method to recoup the debt.
You must provide the proper paperwork in the correct format to avoid losing your legal right to make a mechanic’s claim.
The good news is that i-Lien Software Golden Omega makes it a breeze to prepare Construction Preliminary Notices to Owner and Notice of Intent to Lien.
You no longer need to spend hours getting your construction mechanic’s lien forms right. The i-Lien Software automates and streamlines the process of creating construction lien notices & mechanic’s lien documents to save time, safeguard your rights, and help you get paid quickly!