Find A Real Estate Lawyer Who Deals With Construction/Mechanic Lien Claims
Generally, a licensed contractor who provides labor, work, or materials for the repair or improvement of real property (land or home) and does not get paid for his or her work has a construction/mechanic’s lien on the property for the value of the materials, labor or work until the land/home owners pays the bill. Private property owners who want to prevent a contractor (or subcontractor) from clouding the title on the property (can prevent a pending sale) can exempt their property from liens by taking out a lien bond before the improvements begin. Public property, however, is often exempt from liens.
While these procedures may not be unduly complicated, the state laws vary greatly and you should consult with a real estate attorney who handles construction/mechanic liens to ensure you do not lose your rights to get paid. In many instances, you can recover attorney fees as part of the process. You should consult with a real estate attorney about your lien claims.
Perfecting Claim of Lien
The contractor must satisfy certain conditions to perfect its right to a construction lien. Each state has a different procedure for a contractor to follow in order to perfect its claim of lien. Usually, the contractor must serve the owner with a statutory notice. The purpose of the notice to give the owner notice of the contractor’s presence on the job so that the owner can protect itself from the possibility of paying over to its contractor monies which ought to go to an unpaid subcontractor. Failure to comply with the notice requirements may result in the contractor losing its right entirely. A local real estate attorney should be consulted.
After providing notice, if the contractor is still not paid, then next step will be to file (record) a lien in the local property appraiser’s office within the statutory period. Filing this beyond the time provided in the statute (in Florida it is 90 days) may result in the lien being ineffective. Also, if the lien document is required to be notarized, failure to do so will make it ineffective. A nominal fee is usually required for this filing. After filing, the claim of lien must be served on the property owner (and/or primary contractor). The procedure for completing this depends on the state statute and should be followed precisely; otherwise, the lien may become ineffective.
After the claim of lien has been recorded, the contractor must commence a court action to foreclose the lien (if not paid, the contractor may force the sale of the property to cover the outstanding costs) and recover for the labor, work, or materials within the statutory period of time (in Florida, one year from the date the lien is recorded). An untimely action may bar foreclosure of the lien but may not bar other potential remedies against the contractor or the owner (such as quantum merit, unjust enrichment, or breach of contract claims). In lien actions, the applicable law often provides that the prevailing party is entitled to an award of attorneys' fees and costs, and a possibly an award of prejudgment interest.
In Florida, the property owner can challenge a lien is pursuant to the "fraudulent lien statute" that provides that willfully exaggerated liens or liens prepared in a grossly negligent manner may be deemed fraudulent and unenforceable. The contractor that submits a fraudulent or exaggerate lien claim may also be liable to the owner for damages, costs, and attorneys' fees. To avoid this defense or, even a counterclaim, a contractor should make sure that its claim of lien is recorded timely, only includes the actual amount due for the labor, work, and materials rightly provided and should be prepared in good faith with due care and support from the contract, change orders, and financial records.
Other defenses may apply, depending on the facts and the applicable state laws, like a validly issued lien waivers.
Who Can Sue
Any contractor or subcontractor who supplied labor, work or materials for the improvement or construction on real property and who has not been paid for this labor, work or materials may initiate an action for a construction lien. Each state has its own procedure that must be followed in order to perfect the lien and then foreclose on the property to get paid.
If an owner or primary contractor has not paid you for your labor, work or materials in a project, you should consult with an attorney who handles construction lien matters. Failure to follow the proper procedures could result in a loss of your right to get a construction lien or mechanic lein.