Enforcing a Construction Lien

Now that you have successfully filed your construction lien claim, whether the lien involves a commercial or residential property, the next logical question is what must be done to enforce the construction lien and to receive payment for the materials and/or services that were provided. The next step in this process is called foreclosing upon the lien claim and is accomplished by either filing a state court action, or commencing an arbitration depending upon what the construction agreement provides. Obviously, in the absence of a signed construction agreement, or similar invoice for materials and/or services signed by the parties, a construction lien claim could not be filed. As such, we must first look to the terms of the contractual documents to determine the appropriate forum to commence an action to foreclose upon a lien.

Most contracts contain language which specify the venue and/or jurisdiction where disputes concerning the contract must be resolved. Provided the agreement contains such a forum clause then it must be followed. In the absence of a forum clause the appropriate venue to file an action to foreclose upon a lien claim is in the county where the property against which the lien claim was filed is located. Like all civil actions, a complaint would be filed against the owners of the property seeking a monetary judgment for the amount of materials and/or services that were provided to the owners, and further, a claim to foreclose upon the lien which would seek to sell the property during a sheriffs sale.

During a lawsuit to foreclose upon a construction lien, the owners may claim that the contractor/vendor is not entitled to payment for the materials and services that were provided due to certain defenses which they might assert. As such, the lawsuit would proceed in a typical fashion with the exchange of discovery, depositions, and other pre-trial motions which might be filed by either side. Should the parties settle the dispute, then in that event, the matter would be concluded and the lien would discharged upon receipt of payment. Should the dispute not settle and the matter proceeds to trial, the contractor will seek a judgement against the owners, and further, will seek to have the subject property sold during a sheriffs sale should the owners not pay for any judgment which they might obtain. Should that occur, the subject property can be sold during a sheriffs sale and any equity that remains after priority lien holders are paid may be transferred to the vendor/contractor to satisfy the judgement in whole or part.

This article is intended only to scratch the surface of this process, and thus, merely provides the basics of what a vendor/contractor would do after filing a lien claim. Obviously, consulting with competent counsel would be the suggested approach after filing the lien claim and prior to commencing any action to determine the best course of action.