A Mechanic’s Lien Can Help You Get Paid, But Only If You Follow The Legal Procedures Correctly

Category: Mechanics Lien

A Mechanic’s Lien Can Help You Get Paid, but Only If You Follow the Legal Procedures Correctly

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.

https://www.cloudwillis.com/2019/10/08/first-party-creditors-should-beware-of-udaaps/

5 Ways You Can Lose Your Lien Rights in Alabama

A mechanic’s lien, or materialman’s lien, is a lien against a property that has been improved upon or remodeled. A contractor or subcontractor may file a mechanic’s lien if the homeowner or property owner refuses to pay for all or part of the improvements. You may file a property owner either for his or her failure to pay you directly, or for the general contractor or subcontractor’s failure to pay you for labor or products provided. Mechanic’s liens serve as a great form of protection for individuals who are paid once a job is complete and after they have already dedicated a significant amount of time and money into a project.

In Alabama, there are only two requirements a person must meet to file a mechanic’s lien:

The party filing the lien must have made some improvement to the property, which may have been in the form of providing labor, materials, engineering services, or any other type of labor that added value to the property in question; and
The filing party must either be the original contractor, a subcontractor, or someone who provided materials to the contractor or subcontractor.

So long as those two requirements are met, a person has a right to file a mechanic’s lien. That said, just because those two requirements exist does not necessarily mean that a person will be successful in his or her lien endeavors.

If you want to file a mechanic’s lien in Alabama, there are certain steps you absolutely must take, such as hiring a creditor’s rights attorney, and steps you should avoid, which are outlined in this post.

5 Ways You Can Ruin Your Chances at Recovery

A mechanic’s lien can be a useful tool, but only when you follow standard protocol for recovery. Here are five ways in which you can deter from standard protocol and forfeit your chances of reclaiming what is rightfully yours:

Operating Without a Proper License

Alabama requires all contractors, subcontractors, equipment rental companies, laborers, material suppliers, and professionals to be properly licensed in order to even do work within the state. Any person or entity operating without the correct credentials in place automatically forfeits his, her, or its rights to a lien. If you are currently unlicensed, contact a Mobile business attorney about what you need to do to obtain appropriate status.

Missing Deadlines

General contractors must file notice of a lien within six months of the last day of work in order to be eligible for recovery. Laborers only have 30 days from the last day of work, and all other claimants have four months. If you miss those deadlines, you forfeit your right to recovery.

Failing to Serve Notice to the Owner

Alabama does not require original contractors to file a notice of a lien to the property owner, but all other interested parties—including subcontractors, materialmen, engineers, etc.—must file a notice before they are able to file a lien. That said, material providers have the option to file a Notice to Owner Prior to Performance, which allows them to obtain the same lien rights as the original contractor but prior to furnishing any materials.

Claiming the Wrong Amount

Claiming the wrong amount on a lien is considered fraud in the state of Alabama, which can range from a Class A misdemeanor to a Class B felony. If it is discovered that you filed for more than what you are actually owed, you may be the one who loses, even if the property owner truly does owe you money.

Failing to Submit a Sworn Statement of Account

In some cases, a property owner may truly believe that he or she does not owe a service or material provider any money. For this instance, Alabama law allows property owners to respond to a lien with a request for a Sworn Statement of Account, which is a document provided by the service or material provider that details the labor and/or materials furnished along with the amounts due. If the delinquent property requests that you submit a Sworn State of Account and you fail to do so within the requisite time limit, you may jeopardize your chances at recovery.

Do Not Take a Chance and Work With a Skilled Creditor’s Rights Attorney

As you can see, there are several things that you can do or not do to jeopardize your lien rights. Avoid making mistakes entirely and work with an experienced Alabama lawyer who is familiar with the law and the steps that need to be taken to exercise those rights. Contact Cloud Willis & Ellis to schedule your consultation today.

What You Need to Know About Mechanic’s Liens in Alabama

When a homeowner or building owner requests work to be done on a structure and they hire out said work to contractors and subcontractors, they are legally obligated to pay for all work completed (so long as a proper contract is in place). If the homeowner fails to pay, the contractor can file a mechanic’s lien, which will prevent the owner of the property from being able to sell that property until all debts are paid. For contractors, a mechanics lien is a highly valuable tool, as it assures that the owner of the property will make all required payments for work completed.

At Cloud Willis & Ellis, our skilled Birmingham business litigation attorneys are familiar with the lien process and have helped countless contractors effectively enforce their rights. If you are having trouble collecting payment from a property owner, our lawyers will ensure that you comply with all Alabama laws relating to mechanic’s liens so that you can better preserve and apply your mechanic’s lien rights.

4 Things You May Not Know About Mechanic’s Liens

There Are Two Types of Liens in Alabama

Depending on your role in the job, you have the option of filing either an Unpaid Balance Lien or a Full Price Lien. An Unpaid Balance Lien allows subcontractors to recover the remaining balance for work provided up to the date that the lien was filed. A Full Price Lien lets general contractors and select others who contracted directly with the home or business owner recover the entire amount of money owed to them for all work completed.

Subcontractors Must Give the Property Owner a Preliminary Notice

Unlike most other states, general contractors in Alabama are not required to give a preliminary notice before filing a mechanic’s lien. However, the state does require that all other contractors—such as subcontractors and materials providers—must deliver a Notice of Unpaid Lien before filing an official lien. There is no specific time that a contractor must file a lien; the law only states that a lien can only be filed after a preliminary notice is given.

That said, a materials supplier can achieve the same rights as the original contractor. However, in order to enjoy those rights, they must file a Notice to Owner Prior to Performance, which must be given to the home or business owner before any materials are provided for the job.

You Have a Filing Deadline

Each contractor has a specified time frame in which they can file a lien, which can range between 30 days and six months.

Original Contractors: Original contractors have six months from the date that the entire debt becomes due to file.
Laborers: Laborers have 30 days from the last day that labor was provided to file a preliminary notice.
All Others: Other claimants, such as materials suppliers, have four months from the last day that labor or materials were provided to file.

There is an Enforcement Deadline

Just because you file a lien does not mean that the property owner will never be able to sell their home. According to Alabama law, a contractor has six months to enforce the lien. After that, if not enforcement action has been taken, the lien expires. To protect your rights and to ensure that you do get paid even if the property owner does not try to sell their property within six months, consult with a knowledgeable attorney about what steps you can take to guarantee payment.

Retain the Help of a Birmingham Business Litigation Attorney

If you are interested in learning more about your rights as a contractor and about how you can enforce payments, reach out to the business litigation lawyers at Cloud Willis & Ellis right away. Depending on your role in a project, your time for filing a mechanic’s lien may be limited. Call 205-322-6060 to schedule your consultation today.

Mechanic’s Liens – The Contractor’s Remedy For Non-Payment

Many homeowners will at some point decide to make some renovations to their home. As such, they find a contractor through referrals from friends and colleagues, hire the contractor to perform the renovations, and get started on the project. In a perfect world, all goes smoothly and the renovations are performed to their specifications, to the homeowner’s satisfaction, and on time – so now it’s time to pay the bill. The contractor submits the bill and waits – patiently – as the due date passes. A second notice is subsequently ignored, and requests for payment go unanswered. The work has already been performed and material and labor has been provided – what options does the contractor have to pursue the money owed to him? In this scenario, the contractor has the option to file a mechanic’s lien and have it enforced under Alabama law.

Requirements To File A Mechanic’s Lien

In Alabama, the law states that two requirements must be met in order for a mechanic’s lien to be filed. First, the filing party – the contractor, in our hypothetical scenario – must have made some improvement to the property such as providing materials, labor, engineering services, or any other type of labor that added value to the property against which the lien is issued. The second requirement is that of a specific relationship between the parties; the filing party must be the original contractor or subcontractor or those who supplied materials to those contractors and subcontractors. As long as these two requirements are met, the one of two different types of mechanic’s liens can be filed under Alabama law – a full price lien or an unpaid balance lien. The full price lien is filed when the filing party has a contract with the property owner, and the unpaid balance lien can be filed by a worker who does not have a contractual relationship on his own with the owner of the property.

The Basic Steps

Once the basics are established, the procedure to file a mechanic’s lien involves providing written notice of intent to file the lien, filing a verified lien statement, and filing suit and obtaining a judgment. Taking these in order, the notice requirement entails sending information to the property owner about the amount in question, the work that was performed, and the person or organization that is owed the money. The notice must also include information about the right to attorney’s fees and finance charges that can be assessed. The second step – filing the verified lien statement – must be done either within 30 days from the last work day in the case of individual laborers or within six months in the case of contractors; other filing parties would need to file within four months of the last work day. The statement must be filed in the county where the property is located. The last step, filing the lawsuit, must be done within six months of the final work day on the property.

Do You Need Help Getting Paid For Your Construction Project?

If you have performed contract work for a property owner and are having trouble getting paid for your time and materials, the attorneys at Cloud Willis & Ellis can help you determine whether a mechanic’s lien is the best way to get the money owed to you. Our legal professionals have successfully assisted clients throughout the Birmingham area recover money owed for their work and will work hard to get the same results for you. Contact Cloud Willis & Ellis now and get the results you deserve.

Resource:

alisondb.legislature.state.al.us/alison/codeofalabama/1975/35-11-210.htm

What Is A Mechanic’s Lien?

A mechanic’s lien (also referred to as a materialman’s lien or a construction lien) is a legal tool that is designed to help those who supply labor or materials for a construction project to collect money that is owed to them for work that they have completed but have unjustifiably been denied payment for. If you own a construction business, you may lose sleep at night worrying about not being about to collect payment for your services; therefore, it is a good idea to know a little bit about how a mechanic’s lien works just in case you ever need one. This article briefly outlines Alabama’s laws regarding who can claim a mechanic’s lien, how to file a lien, and how long your lien is valid.

Who Can Claim A Mechanic’s Lien In Alabama?

Under Alabama code section 35-11-210, a mechanic’s lien can be filed by a mechanic, person, firm, or corporation who acts on a qualifying contract with the owner (or his agent, architect, trustee, contractor, or subcontractor) of land and improves a building or improvement of land by:

Performing any work or labor,
Furnishing any material, fixture, engine, boiler, waste disposal service and equipment, or
Repairing, altering, or beautifying the land

Note that in Alabama even subcontractors may be able to obtain a mechanic’s lien against the property that they have been working on. But how do you actually file a mechanic’s lien?

How To File A Mechanic’s Lien In Alabama

In order to obtain a mechanic’s lien you must first go to the office of the probate judge for the county in which the property is located and file a verified statement of the lien. A ‘verified statement of the lien’ is a statement given in writing that states the amount of the demand secured by the lien and a description of the property on which the lien is claimed (generally providing the house’s address is sufficient). The person claiming the lien, or some other person who knows the facts surrounding the desired lien, must provide this statement under oath.

It is important to note that Alabama requires verified lien statements to be filed within a certain time period. Original contractors must file within six months after completing the last item of work or labor, or providing the last material. On the other hand, journeymen and day laborers have 30 days, and all other parties have four months.

How Long Is A Mechanic’s Lien Valid In Alabama?

Generally, Alabama code section 35-11-221 requires lien holders to bring an action to enforce their mechanic’s lien within six months “after the maturity of the entire indebtedness secured thereby…” In some instances this time period may be tricky to determine, but a competent creditor’s rights attorney can help determine when your lien will expire.

How Can We Help?

If you are interested in obtaining or enforcing a mechanic’s lien in Alabama it is a good idea to consult with a competent attorney. The experienced creditor’s rights lawyers at Cloud Willis & Ellis, LLC have offices in Birmingham (205-322-6060) and Mobile (251-545-4844) and are happy to assist you.

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