As someone who runs a construction business or works as a contractor in the construction industry, your revenue largely depends on clients paying their invoices in a timely manner. If someone fails to pay you as they should, you have only a few options for pushing them into compliance.
One of the most powerful is a mechanic’s lien. You can take a property owner to court over unpaid services rendered or materials provided. You can then record the lien so that the property owner cannot transfer, refinance or sell the property without first paying your company what they owe it.
If you go through all the trouble of securing a mechanic’s lien against a property, you obviously have every intention of pushing that owner into paying you as they should. Can they go back to court and remove the lien without paying you?
Technical mistakes can lead to lien removal
There are numerous scenarios in which California state law allows property owners to remove a lien previously granted by the civil courts. The first and most obvious would be when someone has paid the underlying debt but the business refuses to release the lien.
However, other technical errors on the part of the construction business could result in the courts removing the lien without the company receiving full payment. Failing to take the necessary action to enforce the lien after the initial judgment could provide a homeowner grounds to request the lien’s removal. There could also be a strong case for the removal of a lien in a case where the business initiated the claim later than the law allows but the courts granted the lien anyway.
Understanding your rights and obligations leads to better outcomes
Small mistakes in how you handle the process of obtaining or enforcing a mechanic’s lien on real property will determine whether your company can demand payment using that lien or not.
Rather than using some cut-rate, national service with one-size-fits-all options and risking mistakes that could lead to an unfavorable court ruling or an untimely removal of your lien from property records, it may be much better to get direct support for your construction company as you learn about and pursue a construction lean.
Making sense of the rules that influence the outcome of business disputes like unpaid construction invoices can help companies make better use of the laws that protect them.