Understanding Mechanic’s Liens in Construction
By: Adrienne B. Haynes
Tags: Strategy, Business Law, Mechanics Lien, Documentation, Construction

Construction Law Series

By Adrienne B. Haynes, Esq.

Managing Partner, SEED Law

Construction law is a complex body of law that applies to almost every business decision a construction firm must make in day to day operations and in the development of their strategic plan. Being aware of these legal rights and obligations allows an owner to make more confident decisions, protect rights, minimize risk, and save money.

Getting paid is essential in keeping any business in operation and construction is historically a slow paying industry. Knowing your key terms and provisions around change orders, payment schedules and consequences for late payment or failure to pay, mechanic’s lien language, and warranties can help keep your cash flow unencumbered and minimize surprises. In the event there every is a challenge, having a plan for collections is wise. Construction companies often use methods such as contract clarity and mechanics liens to make sure that they are paid for the work they do.

A lien is a legal right or interest that a creditor has in another’s property, lasting usually until a debt or duty that it secures is satisfied. A mechanic’s lien is a statutory lien that secures payment for labor or materials supplied in improving, repairing, or maintaining real or personal property.

This is important because as a contractor, you want to make sure that if you’re performing work or have people working for you, you want to understand how to proceed if you’re not getting paid, or how your subcontractors can hinder your ability to proceed with a transaction.

Ask Yourself:

· For each project, do you know your remedies if you are not paid?

· If you’re doing business in multiple states, have you been advised on the differences in your mechanics’ lien protections?

· Has your business set up documentation procedures that would allow you to perfect a mechanic’s lien if necessary? Who is responsible for building that file?

The mechanics’ lien process begins at the START of a project with very specific statutory language. This notice must be included on the initial invoice or contract, or the right cannot later be perfected.

If the appropriate steps have been taken before work begins, in the event you’re not getting paid, notify your attorney and begin to compile the project information. To perfect the lien, your attorney will need specific information like the address, an accounting of the work and fully executed contract, and financial documentation. Each state’s laws differ regarding who may claim, requirement and timing of notice, notice language, timelines to file and the process post-filing.

This article is only an overview of mechanic’s lien considerations and is not intended to cover every legal right or obligation, consideration, exception, or restriction. These decisions should be well researched and discussed with a legal professional before being made.

To schedule a consultation with a SEED Law attorney, you can give us a call at (816)945–4249 or schedule your consultation today here.

Additional Resources:

MO. REV. STAT. §429.010