Contractors and subcontractors often do significant work without receiving full compensation ahead of time. Property owners are often loathe to pay for a project in full before work begins out of fear of losing their money.
It is common for construction and remodeling contracts to explicitly outline the amount of deposit the property owner will pay and when they will pay the remaining balance for the work performed and the materials provided. Unfortunately, some homeowners may decide not to follow through with her obligation to pay in full once the work is done.
Securing a mechanic’s lien against a property can be one way to compel a New York property owner to fulfill their obligations to you or your company after you’ve helped build or remodel their property.
How to file a mechanic’s lien in New York
The process of securing a mechanic’s lien is relatively straightforward. When it comes to residential properties, time is critical for those seeking a mechanic’s lien. You will only have 120 days from the last day you performed labor on the property to file the necessary paperwork.
You have to send notice to the property owner that you intend to seek a lien, which gives them a final opportunity to pay you. You will provide information, including your contract and financial records for the project, which will help the courts determine the validity of your request for a lien
If granted by the courts, the lien will remain in effect for a year. You will have the option to extend it if the homeowner still hasn’t paid you, but it will be important to take action in a timely manner to avoid losing your rights due to the expiration of your lien rights.
Getting a lien won’t damage your reputation if you release it appropriately
Some companies express concern about mechanic’s lien because they worry that people could see such collection efforts as unnecessarily aggressive. The concern is that the process of securing a mechanic’s lien might ultimately damage the company’s reputation and limit the pool of customers that you can draw from.
However, mechanic’s liens are commonly sought by contractors and subcontractors in the construction industry for a reason. So long as your company goes through the necessary steps to release the liens it holds once a customer has paid in full, the simple act of securing a lien to compel payment shouldn’t have a negative effect on your reputation.