A mechanic’s lien is, short and simply, a contractor’s best friend. It is the most powerful tool available to general contractors, subcontractors, and suppliers to obtain payment. Liens allow a contractor to force the owner to sell a property in order to satisfy the amount owed for construction work. Lien rights should never be waived, compromised, diluted or allowed to expire. Contractors and suppliers that give in to the notion that protecting or filing a mechanic’s lien will hurt their ability to get future business are thinking foolishly and irrationally. Why give up the ability to get paid now, so that you can get business in the future from the same party that isn’t paying you now? Even parties with the best of intentions have financial difficulties or go out of business. You should never allow someone else’s problem to become your own. The best way to protect your financial interests is through mechanic’s liens.
In protecting the right to file a lien, you must be aware of the requirements for filing a mechanic’s lien. Some states require contractors or suppliers to provide certain notices prior to commencing work or supplying or renting materials. Failure to give these pre-commencement or pre-furnishing notices can result in a waiver or a dilution of lien rights. Kansas lien laws do not currently require such notices, but Missouri lien laws do require certain statutory notices to be provided to the owner in order to subsequently claim a lien. These notices can vary depending on whether the project is residential or commercial in nature, and whether you are renting equipment or actually performing work on the property.
The most litigated issue is whether a lien has been filed in a timely manner. Contractors and suppliers must impose deadlines in their collection procedures to assure that the process of drafting and filing a lien can be completed before the statutory deadlines expire. In Kansas liens of general contractors expire four months after completion of the contract, while liens of subcontractors expire three months after completion. Currently the deadlines may be extended to five months after completion, but only if an extension is filed within the original deadlines. Liens in Missouri must be filed within six months of contract completion. Keep in mind that the time for filing a lien starts when the contract is completed, not when punch list or warranty work is completed. Additionally, parties cannot agree to amend or suspend these lien deadlines.
Contractors and suppliers must serve a 10-day notice on the owner (in Missouri) prior to filing a lien. They must also give themselves and their counsel adequate time to obtain and identify information necessary to file a lien. This information should include the proper legal names of the owner and the general contractor as well as a legal description of the property. Documentation should also include contracts, change orders, pay applications and invoices, and labor, material, and equipment summaries necessary to prepare reasonably itemized statements. Liens require very specific and exact information, and time is required to complete liens correctly. It is very dangerous to wait until the last minute to file a lien. Also, just filing a mechanic’s lien is not enough to protect your rights. You must file suit in a court of law in order to enforce and foreclose on your lien. In Kansas, suit must be filed within a year of filing the lien. In Missouri, liens must be filed within six months of filing the lien.
The lien process can look complicated and expensive to the inexperienced. However, the truth is the mere threat of a lien can frequently lead to a resolution of issues. If it becomes necessary to file a lien or suit to enforce the lien, the claimant gets the attention of the owner as well as its lender. Then the pressure and incentive to get the matter resolved becomes even greater. Contractors and suppliers that choose to abandon their lien rights are assured of getting no payment, while others who engage in the process almost always see the benefit of their efforts.