Tuesday 11 October 2022

An Introduction To Lien Basics

An Introduction To Lien Basics

Having an idea about laws and regulation is one thing but knowing about legalities that entail the legal process is completely different from having a general perception about laws. The latter involves minute details of the process involved in executing the provisions of laws, having knowledge about the documents that are required, time of filing, the method of filing and so on. There are legal firms offering lien services for contractors who want to avail the benefits of filing lien to protect the money that remains unpaid to them for a project. They are considered experts in filing mechanics lien that is popular among the contractor fraternity especially in construction projects.

Being familiar with the legal terminologies and documents will help contractors and construction companies to understand the process better and decide which appropriate document would be necessary to give maximum protection to their money. Here is an introduction to some commonly heard names of different legal documents related to liens.

An Introduction To Lien Basics

Pre-lien Notices

Notice to Owner is what it means and there are many other names too – Notice on Bond, Preliminary lien, and Notice of Furnishing. This notice if often a prelude to filing mechanics lien and ensures your right for file a lien. If you are a contractor, the notice serves as a warning to the project owner and he is kept informed about what you are up to. It gives owners an opportunity to investigate facts and early filing of a per-lien ensures the contractor of maximizing the sum of mechanics lien.

Mechanics Lien

Filing a mechanics lien would ensure that a property is attached to the money that is receivable to the contractor, which is thus secured. There is a small time frame for filing mechanics liens and the onus is on lenders to resolve liens before money can be distributed. Refinancing a property where lien exists is not possible and for selling it, liens must be removed.

Bond Claim

Filing a bond claim order is a quicker process for settlement of claims for payment receivables by contractors because these are personally guaranteed. The amounts that are owing and due are secured by this document that as to be completed within a short span of time. The bonds are issued by insurance companies and the sooner they are filed the better it is because bond rights are often limited. Similar to liens, sometimes bond claims need to be preceded by a notice of commencement or a notice of delivery of materials.

Release of Lien

This is a document that has to be filed in the event the dispute related to the lien has been resolved or that payment has been received. The document is also called lien waiver or mechanics lien discharge. The document has to be filed to fulfill payment conditions, so the sooner it is made, the better. Generally, the document is filed in reciprocation to payment so as to avoid the embarrassment of bounced checks. Penalties can be imposed if the lien is not released even after payment has been received.

The lien services firm that you engage can guide you best and get the documents filed as per prevailing laws. All you need to ensure is getting in touch with a good firm in the industry.