Understanding Your State’s Lien Statutes To Ensure Payment
by Danielle Maya, Cotney Construction Law
(Editor’s Note: Danielle Maya is a partner at Cotney Construction Law and has over 20 years of experience as an attorney. Cotney Construction Law is an advocate for the roofing industry and General Counsel of Western States Roofing Contractors Association. Maya can be reached at (866) 303-5868.)
When most people think about a mechanic’s lien on a construction project, they assume that this only applies to contractors and material suppliers. However, there is another group of individuals who are a key part of a construction project that may also need to rely on this method of getting paid that many people do not even think about. Design professionals typically do not work onsite as much as contractors, but they are nonetheless an essential part of the construction project. In most states, design professionals are included in the same mechanic’s lien statute as contractors and material suppliers, but some states have set forth different rights, or sometimes no rights at all, for these professionals. As a design professional, do you know the local mechanic’s lien rules?
Design professionals include architects, engineers, surveyors, and other licensed professionals who are an integral part of the construction process and are responsible for the pre-planning, permitting, and other elements of project management. Far too often, design professionals are left unpaid for the services and work they provide, and are left trying to figure out the most effective way to recoup the money they are owed.
The most frequent way that design professionals go about getting paid is by suing the other party under breach of contract, if they in fact had a contract with the other party. However, another avenue that a design professional could take to ensure payment would be to file a mechanic’s lien against the property. Mechanic’s lien rights are a powerful tool commonly utilized by contractors and materials suppliers to secure payment for work performed on a construction project. This tool can also be extended and used by architects under certain statutes because they offer services to the project or have the purpose of improving the project.
However, what happens when a design professional performs services for a project and the project never gets constructed? To address this issue, some states have designed and enacted a design professional lien in cases where construction on the project never commences. For example, California allows design professionals to file a regular mechanic’s lien and a design professional lien. The design professional lien covers work performed prior to the beginning of construction or renovation. There are multiple requirements and steps that must be followed in order to be able to file a lien under this law in California. A couple of the requirements include having governmental approval or permit for a project, sending a demand letter for payment, and recording the lien with the local or state clerk’s office.
Additionally, all these steps have timing requirements, which means design professional liens are sometimes considered more difficult to comply with when compared to a mechanic’s lien. Therefore, it is crucial to know your state’s mechanic’s lien process before a project commences because it will allow you to properly comply with all the requirements in case you are left unpaid and need to file a lien.
On the other hand, the majority of states here in the United States treat design professionals the same way that they treat other construction parties when it comes to a mechanic’s lien statute. This means that you will need to follow and comply with all the same requirements and procedures as contractors and material suppliers. However, a few states bar design professionals from lien rights entirely, so the only remedy left in these states would be to sue for breach of contract.
States that have enacted a design professional lien provide these professionals with additional safeguards in the event of non-payment. Other remedies still remain in place, including breach of contract, but a remedy such as this may be useless if the owner of the project does not have money to pay the judgment. Since the two types of liens have strict procedural requirements, it is important to understand and adhere to all requirements in order to be successful in filing a lien and ultimately getting paid. It is helpful to contact a local construction attorney if you have any questions regarding your state’s lien statutes or if you need assistance in filling a lien.