Is a mechanic’s lien the solution to your nonpayment problem?

| Jun 14, 2021 | Construction Law

To be competitive, contractors in Louisiana and across the country often must keep their profit margins low. When clients pay, tight profit margins are not typically a problem. If one or more of your clients refuses to pay for the services you have already provided, you may not have enough cash flow to continue with your business.

While you probably have a few options for securing payment, filing a mechanic’s lien may be in your legal and financial interests. After all, a mechanic’s lien gives you a security interest in the property where you completed work.

A preliminary lien notice

In Louisiana, you probably do not have a legal obligation to provide a property owner with notice before you proceed with a mechanic’s lien. Still, because property owners typically do not want to give up their rights, sending a notice may lead to prompt payment.

A tight timeframe

Whether you choose to send a preliminary notice, you do not want to waste too much time before proceeding with a mechanic’s lien. After all, in most cases, contractors only have 60 days from when they substantially complete work to submit the lien filing. There are exceptions to this timeframe, however.

Your enforcement action

If threatening to file a mechanic’s lien and filing the lien do not work, you must enforce the lien. This means you must initiate a lien foreclosure action. You probably only have one year from the date you file the mechanic’s lien to do so.

Property owners do not usually want mechanic’s liens to turn into foreclosure lawsuits. Ultimately, you can probably expect the property owner either to pay you or to negotiate an acceptable resolution to your payment dispute.