Does Filing a Construction Lien Guarantee Payment?

I am often approached by contractors who wish to file a construction lien regarding either a residential or a commercial project. It is not atypical for many of these contractors to believe that filing a lien claim will guarantee the payment of the amount which is due to them. This belief is entirely incorrect, however, as filing a lien claim does not guarantee payment. Instead, all that it does is place a lien on a property, for no more than one year, during which the property cannot be sold or transferred without first addressing the lien claim. In order to receive payment for a lien claim, the lien must be foreclosed upon, which is discussed below.

Unless the property owner voluntarily pays the amount of the lien claim, the only way to receive payment once the lien is filed is to commence a lawsuit against the property owner. In that lawsuit a contractor would seek to foreclose on the lien claim in order to receive payment. During the lawsuit, the contractor would have to demonstrate that it had a contract, that it provided services, and that the owner failed to pay it for the materials and services it provided. In response, the owner could claim that the contractor breached the contract or assert other defenses. Once the lawsuit is finalized, whether by settlement or a trial, the contractor would then be entitled to enforce the lien claim to receive payment.

It is important to note, however, that a lien claim is only good for one year from the date it is filed. Prior to the expiration of that time, the contractor must file suit. Otherwise, the lien claim is no longer valid and must be discharged. If the owner demands, however, the contractor can be forced to file suit within 30 days. As such, a contractor must be aware of this possibility.

If you are a contractor that is considering filing a lien claim it is suggested that you consult with an attorney, as the process for filing a lien claim is technical, and thereafter, filing a lawsuit to perfect the lien claim is likewise technical. You should also be aware, however, that even if you do not file a lien claim that you may pursue an action against the owner to recover the fair value of the materials and services that you provided pursuant to your contract. Nonetheless, it is always suggested that you consult with competent counsel as to the best course of action in pursuing payment from a delinquent owner who has failed to pay for your services.