As a commercial construction firm or general contractor, you could take the view that handling a mechanics lien is the property owner’s problem. But you know that if your vendors are causing trouble for your clients, you are the one who will be held accountable. While mechanics liens are sometimes unavoidable, you can minimize their impact.
A Brief Overview of the Mechanics Lien Process
The mechanics lien is a tool a contractor can use to ensure payment of work completed. Once a craftsman completes work, they can demand compensation. If s/he does not receive payment, to force the issue s/he may place a lien on the property where the work was performed.
A mechanics lien can trigger several actions, including a forced foreclosure on the property. Additionally, craftsmen and suppliers may place forms of liens on a property, including the following professionals:
- Lumber suppliers
They each may have their own perspectives on pursuing the money they rightfully earned. However, liens should only be used when absolutely necessary and it’s critical to resolve them quickly.
Responding to – and Resolving – Liens
General contractors and commercial property owners must respond to liens quickly to ensure that the worst effects do not come to pass. The most effective way to avoid liens is to pay your vendors what you owe them in a timely manner. However, if this does not work and a vendor places a lien on a property, parties may need to resolve the matter in court.
Protect against Liens with Well-Drafted Contracts
By clearly articulating payment and non-payment conditions in your contracts, you can protect yourself from future liens and protect your business from unnecessary expenses and obstacles.