5 Construction Lien Facts to Know Before You File

When filing a construction lien, it is important to know the answers to these five questions:

1. 1. 1. The first thing you need to know is, “Yes. Filing a construction lien will drastically improve your chances of getting paid.” One of the strongest tools contractors and suppliers have to protect themselves is filing a lien. It is among the only ways a builder, supplier, or contractor can attach a claim to real property.
      2. Will filing a construction lien help if the debtor files for bankruptcy? Yes, you can still file a lien after the other party filed for bankruptcy, but you cannot take any other actions to collect the debt that might violate the automatic stay. Once a person or company has filed for bankruptcy, an ‘automatic stay’ is in place. You are still permitted to file your lien, but the automatic stay prevents any creditor from pursuing collection activity.
      3. A construction lien levels the playing field and gives you significant leverage to get the money that is rightfully owed you. A property owner cannot sell or use the property as collateral if the records show a lien. If a subcontractor files a lien, then a general contractor will find that having an unpaid lien can affect their bonding ability and they may not get paid on the job until the lien has been cleared. A lien is filed on a project is often also a breach of contract.
      4. Before you file a lien on the property, you must be sure that you have the legal right to do so. It’s a well-known fact that understanding the relevant lien statutes is complicated, especially in Texas, but it’s essential to know whether you qualify to file a lien. Each state has its own regulations related to time requirements for pre-lien notice filings, the projects open to construction lien filings, and much more. Dig in and determine whether you qualify to file a lien if the responsible party doesn’t pay you.
      5. A primary reason construction liens are not valid or denied is that the document has fundamental information wrong. Facts to check include the correct address of the property you’re filing a lien against. We recommend confirming the address before and after writing it in the lien affidavit.  If you are using the common address, confirm that it is 1st Street and not 1st Avenue or East 1st St. as compared to West 1st St., for instance. Be sure you have the legal business names and the correct property owner’s name. If you list yourself on the contract as Joseph Jones, LLC d/b/a Jones Drywall, don’t fill out the lien documents as Joey Jones.

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2. You don’t always have time to analyze legal lien statutes and run down to the correct county property records office. We offer online notarization and document filing to simplify your life. Get started today with a pre-lien notice and discover how we simplify and streamline a complicated process.