Homeowners are protected by surety bonds if contractors fail to complete work on new home construction. But what happens when the homeowner fails to pay the contractors for the work they completed? Promising to make good on payment isn't going to pay the contractor for their time and the equipment they used. Fortunately, there is a remedy for contractors who don't receive a timely payment. It's called a contractor's lien, mechanic's lien, or construction lien, depending on the state's laws. Here are three ways a contractor's lien will help you if you are a contractor who hasn't been paid on time for the work you have done on a new home construction.
A Firm Deadline Will Be Set
When filing a contractor's lien at the courthouse, a firm deadline will be set by the court. The time frame will be based on the laws of your state and, possibly, on the amount of the monies that are owed to you. If you don't receive payment in full by the deadline, you'll be able to litigate the matter in court. You can file a contractor's lien through a construction lawyer. Notification of the filing of a contractor's lien will be sent to the debtor and their lender(s) via certified mail.
Your Debt Will Be Prioritized
Construction projects typically involve multiple tiers of various parties, such as architects, designers, material suppliers, contractors, and subcontractors. Filing a contractor's lien will prioritize the various debts the homeowner owes, with your debt becoming top priority. If other contractors have also filed liens, the priorities are placed based on a first-come, first-served basis. For this reason, it is crucial to hire a construction lawyer as soon as you realize you the homeowner will not pay without recourse. That way, your debt will receive top priority.
You Will Be Given Authority to Collect the Debt
Sometimes, debtors simply do not have the money to pay their debt in full. While going through litigation procedures will be the next recourse if they fail to meet the deadline, they still may not be able to pay if they don't have the funds to do so or the ability to liquidate any assets. A contractor's lien will give you the authority to collect the debt if the payment is not received after litigation by means of seizure of the property to be sold at auction in order for your claim to be paid.
For more information, contact companies like Sauro & Bergstrom, PLLC.Share
14 July 2017
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