Often times, a subcontractor or general contractor may be left with no other option after attempting to collect funds from a general contractor or owner then to file a Construction Lien to collect these funds at some future time. The party filing the Construction Lien, however, should be careful to ensure that the Lien is not overstated and it is accurate in its entirety. While Construction Lien Law allows a contractor to file a Lien against a property, it is also favorable to the property owner if the Construction Lien is improperly filed, overstated, or contains incorrect information. As a reference point, the process for filing a Construction Lien with regard to a residential property is entirely different than commercial Liens.
As to non-residential properties, a contractor must first be able to demonstrate the existence of a Construction Agreement. In the absence of a signed Contract, a party may not file a Construction Lien. The individual must then make sure that the Lien has been timely filed, which is within ninety days of the last date services or materials were provided. This period excludes any relevant warranty work which may be performed. Thereafter, a party must be careful not to overstate the value of the Construction Lien. An overstated Construction Lien may be removed due to its invalidity. A contractor must be aware of the statute which provides that if a Lien holder fails to file suit within thirty days of a demand by the property owner, or within one year of the filing of the Lien, then in that event, the Lien becomes invalid.
Once the Construction Lien has been properly filed, the contractor should be careful to ensure that the Lien has satisfied the above requirements and that a lawsuit has been timely instituted. If the contractor fails to follow the above requirements, then a property owner may seek to have the Lien removed and they would be entitled to any counsel fees and costs incurred in removing an overstated or invalid Construction Lien. If a lawsuit is not commenced within one year of the date of the filing of a Construction Lien, the Lien must be removed upon request by the property owner. If not, the owner can move forward to have the Lien removed and be awarded counsel fees and costs associated with doing so. These are just a few simple rules which a party must follow when filing a Construction Lien. While it is a good process to help to preserve and protect a contractor’s right, it can end up becoming something that an adverse party can use to subject you to sanctions, counsel fees, and costs. Therefore, it is always suggested that you consult with an attorney prior to filing a Construction Lien.