Question
Mechanic lien process… I visited Superior court, and they were helpful but told me to visit District court. They were not helpful and said I needed a lawyer.
I am about 120 days out on 20k. I have spoken to two lawyers who said the dough is too small to sue for. So, I have a call in to a local attorney who helped me buy a house to help me do the lein in district court, if it makes financial sense to hire him.
Can I do this myself? I will search the Knowledge Base here, but what have you done?
Forum Responses
(Business Forum)
From contributor A:
What state do you live in? Here in Minnesota it would only cost a couple hundred to file a lien through an attorney and it seems to me that paying just 1 or 2% of the outstanding balance to file a claim is well worth it.
To sue somebody is different than filing a lien and the attorney may have thought that he wouldn't get a big enough fee to cover his time to sue somebody. May require a lot of his time, where a lien only requires a few hours of an attorney's time.
Contact an attorney that specializes in real estate or financial matters for advice.
P.S. You might want to check with your state for the limits of a "small claims" that you can do yourself. Considering all the attorney fees involved. Nothing is as small as nothing at all.
It seems to me the lien process is simple and other than material suppliers, only a few subcontractors follow the process (i.e. post-preliminary lien, etc.).
What is the best standard process for a cabinet shop working for a general contractor building custom homes? I think it goes something like this and admit I don't do the preliminary lien notice although imagine a good idea.
1) Have a solid contract with clear scope of work.
2) File a preliminary lien with contractor. Believe it isn't required if you're the prime contractor with the homeowner directly.
3) Have authorized change orders and attempt to collect in writing.
4) If the client doesn't pay, file a lien with the county recorder and start the legal process.
5) Hope the client pays and if not, hope you have the money in the bank to wait out the claim.
I heard of one client that was selling/installing cabinets for Emporium stores. Emporium project managers kept giving them work and weren't aware the company was going bankrupt. The cabinet shop was into this corporation $400k and luckily was paid down the road. Lots to consider.
A few things that I do to help protect me... If it is a custom home, I have the homeowners and the contractors sign the contracts - this gives me double the amount of people to collect from and prevents me from becoming a 2nd tier subcontractor if liens are filed. If it is a builder doing a spec, I will try very hard to get him to sign individually and as the company. Again, this gives me some additional recourse if the company goes under. It is a little harder on this, but I just put the name of the builder and the company name on the contract and more often than not they sign it without question.
All said and done, if they don't want to pay, it is going to be hard no matter what you do. Know your customers and protect yourself as well as you can. I would also say that it would be worth it to get a lawyer involved for the 20k, even if it is just getting a judgment.
Liens can be bonded around so that title can transfer and you not be paid.
If the owner paid the GC, they can sue you for slander of title (in CA). They do this as a counter-suit to get you to release the lien and force you to perfect it (foreclose on the property) or remove it.
In California you are required to send a preliminary notice that tells the lender, GC and owner that you will be working on their property and have lien rights. If you don't send this notice your lien rights are only valid for work performed from when you do so. We file this when we start shop drawings or are awarded the contract.
If the fixtures aren't attached to the real estate, you may not have lien rights against the property.
Generally an attorney that specializes in construction law would be a better choice.
You should be able to file a lien yourself for less than $50.
I told him I don't want to ramp up the costs, but would pay a couple hundred bucks to a lawyer to get the lien filed correctly. I will comb the regs on-line myself over the next few evenings to see if I can make sense of it.
Apparently, I have a choice of superior or district court. District won't do over 20K. I do not know pros and cons.
I was requested to and performed some minor follow-up work two months ago, so I am assuming for now that I am within the time limits.
MA used to require the lien right filing beforehand, but the ML rules were changed significantly in MA a couple of years ago, and this is one of the changes.
