${site.data.firmName}${SEMFirmNameAlt}

Why do contractors use mechanic's liens?

Contractors normally don't require their clients to pay for an entire project up front. It's pretty common for them to accept a down payment with the remainder of the balance due on a specific schedule, which is sometimes simply at the end of the project. Unfortunately, not all clients pay contractors as they should.

When a contractor isn't paid, they have a few options. They can forgive the balance, which isn't a good option for most businesses. They can go through a collections process, which gives the client more time to pay the contractor. If the client doesn't pay as they should, the contractor may have the option of filing for a mechanic's lien.

How does a mechanic's lien help a contractor get paid?

A mechanic's lien is filed through the court. It places a lien on the client's property to ensure that the client will pay. When the mechanic's lien is placed on a property, the property can't be sold or transferred. The only way to remove the lien is for the property owner to pay the contractor the balance due for the project. This encourages some individuals to take care of the contractor's invoice so they won't have to worry about the lien showing up in a title search.

Are all mechanic's liens due to the client not paying?

These liens aren't reserved only for clients who don't pay. In some cases, they're utilized to secure help as a measure of good faith. A mechanic's lien isn't always filed due to the actions of a client. A subcontractor could file a mechanic's lien against a property if the contractor doesn't pay the subcontractor. This forces the property owner to become involved in the non-payment issue that has to with their project.

It's imperative that contractors pay close attention to their rights to collect the money they're due. Knowing what steps they can take to legally collect the money clients owe them can help them to avoid wasting time on ineffective methods. Some contractors might opt to focus more closely on their business and hand over the matter to their attorney. Doing this quickly is imperative because there are strict deadlines.

No Comments

Leave a comment
Comment Information
Contact us