However, a new claim of lien cannot be filed after the 120-day period has expired. Thus, if a claim of lien contains an error and the error is not discovered until after the 120-day period has expired, the party making the claim loses the right to assert a lien regardless of whether payment has been received. The lien generally attaches to any funds on the construction project owed to the nonpaying party. To exercise this right, the subcontractor or supplier must deliver a notice of claim of lien on funds to the party that owes funds to the party that has failed to pay the subcontractor or supplier. If the recipient of a notice of a claim of lien on funds disregards the notice and pays the nonpaying party, the notice recipient may become personally liable for satisfaction of the lien up to the amount paid.
Subrogation simply means stepping into the shoes of another.
In the context of construction, subcontractors and suppliers that have not been paid are permitted to step into the shoes of the parties that dealt directly or more closely with the owner and, importantly, to assert all of their lien rights. This includes the ability, if available, to file a claim of lien against the owner's real property. The exercise of lien rights, in most instances, will delay payment and interfere with the progress of construction. In many cases, it will add unanticipated expense - thereby increasing the owner's cost while reducing the net amount received by a contractor, subcontractor, or supplier. Thus, lien rights should be exercised judiciously.