As a building contractor, the survival of your business depends on whether clients pay you the money they promise to pay for the work you do on their property.  Contracting companies might worry about getting negative reviews online from picky but outspoken customers, but ultimately, bad comments are just words; what can really harm your business financially is when a client does not pay you the amount you requested, even if the client tells you what a great job you did.  Of course, having a written agreement about how much money you will receive in exchange for what services offers you legal protection, but what do you do if the client doesn’t honor the agreement or refuses to sign one?  A mechanic’s lien is a legal instrument that can help protect building contractors from non-payment by property owners.  If you are considering filing a mechanic’s lien, it is important to follow the rules for filing one.  An Alabama creditors’ rights lawyer can help you file a mechanic’s lien and exercise the rights it grants you, if you already have one.

What Does a Mechanic’s Lien Do?

A mechanic’s lien operates similarly to a mortgage.  With a mortgage, the home buyer borrows the amount of the mortgage loan from the bank, with the understanding that, if the buyer does not repay its loan to the bank, then the bank can claim possession of the house and can take it away from the owner by following the proper legal procedures.  The home buyer and the bank agree that the house is “collateral,” meaning that it is the thing the home buyer must give to the bank in the event of nonpayment.  With a mechanic’s lien, the contractor, also known as a “lien holder,” declares that a certain amount of money is collateral for the debt that the homeowner owes the contractor.  If the homeowner doesn’t pay, the contractor can follow a procedure to take the money.  The difference between a lien and a mortgage is that it is not the homeowner’s choice to put up the money as collateral.  If the contractor files a lien and the court approves it, then the contractor can take the money whether the homeowner wants it that way or not.

How Do You Get a Mechanic’s Lien?

If you are the general contractor, directly employed by the property owner, you can get a full price lien, for the entire value of the project.  If you are a subcontractor, then you can only get a mechanic’s lien up to the amount of the unpaid balance.  You should file the mechanic’s lien as soon as possible after the project begins.  Once you have been paid in full, you should remove it.  You get the lien by filing a form with the court.  The lien application must include the amount of money you want to claim on the lien, as well as your name and address, the name and address of the property owner, and a description of the services you performed.  It must also include a description of the property; in Alabama, the description does not need to be very detailed, but it should at least include the address of the property.

Contact Cloud Willis Ellis About Mechanic’s Liens

You should act quickly to file for a mechanic’s lien, but it is a good idea to have a lawyer review your lien application before you file it.  Contact the Alabama creditors’ rights attorneys at Cloud Willis & Ellis for a consultation.