Mechanics Lien laws often become targets of the state legislature and a focus of legislative committees. As many of these laws have been on the books for decades, they quite often need to be updated to address the practice of today’s construction industry. The very word “Mechanics” was used in a genre filled with words like Artisan and Craftsmen. These terms, while once part of the current culture, are no longer commonplace by today’s standards. Today we think of a mechanic as someone who repairs cars; however, when the laws were first written a mechanic was someone who installed or repaired mechanical devices in a home or building. Some states now call this type of mechanics lien a Construction Liens. By using the term Construction Lien, you take away the misleading “Mechanics Lien” title while still addressing the correct purpose and scope of the lien laws.
Lien laws were originally designed to protect property owners. In the past a contractor or anyone helping to improve Real Estate could file a claim against the owner of the property, which they directly, or indirectly, helped to improve. By creating laws which required specific processes to be followed, the owner became more aware of what they needed to do to protect themselves from someone claiming a lien against their property
Today, the lien laws serve to “keep the process honest” for everyone involved, including the Owner, Contractor, Laborer, Subcontractor, Material Supplier and more. Because these lien laws are Statutory, all who seek protection under the lien laws must comply completely with the letter of the lien law. Unlike common law, which may be argued as to fault, or degree thereof. Lien Laws are uncontestable. You either comply or you don’t. There is no such thing as intent or partial compliance.
Every state has their own take as to the structure of their Lien Laws. Some require Preliminary Notices to be served on the Owner, Contractor and Lender at or near the start of the project. While others allow protection within the statute without requiring any preliminary notice. However, the tendency for most states has been to include some type of preliminary notice at the start of a project to allow all parties to share information about the construction project and avoid errors if – and when – it becomes necessary to file a mechanics lien.
For those needing to protect their job-related accounts receivable with Lien Laws on Private Construction or Bond Claims and Stop Payment Notices in Public Construction, it can be challenging to verify the alleged information regarding the project so that the preliminary notice has accurate content and is served on the proper entities, as well as knowing when the law is amended and the correct forms, timelines, and serving requirements are met. To do this, and do it well, some method of tracking the Assembly or Senate Bills in the states where you do business is required. Can you do this yourself? Sure, if you have the staff and your staff has the time in addition to everything else they are required to do. Chances are, however, that this type of tracking and investigative research requires more discipline that is afforded the average employee charged with preparing your preliminary notices.
An attorney can do this for you; the only concern is that you will need to pay attorney rates. By the time you are done using an attorney you may find that your receivables were protected but your profit was not.
It may appear that it is less expensive to do it in house; however, once you account for the task of keeping current with the lien laws, you will realize that you may actually save money by turning to a preliminary notice service provider. If you choose to use a preliminary notice service and the service is experienced and insured, the risk – as well as the process – becomes not only smart but affordable as well.
