The first step to preserving your right to record a lien is to make certain that the owner and construction lender knows you are providing labor equipment or material to their job site. You do this by giving the Preliminary Notice. Unless you have contracted directly with the owner of the property on which the project is being completed, you must serve the "20 day" notice on the owner in order to lien the property later. In order to preserve your right to lien the property for all sums owed from the beginning of the job, this must be done within 20 days of the first date you begin work or supply materials to the project (hence the 20 days). If you do not, you can serve the notice later, but it only protects the value of the work or materials going back 20 days before the notice was served. If you do not serve the 20 day notice, any lien you record later will be invalid.
The Claim of Lien
If you are unpaid at the conclusion of the job, a claim of lien should be prepared. This is a form document readily available. It must contain a statement of your name and address, your claim, accounting for all payments, adjustments or offsets. It must also contain a general description of the work equipment or materials you provided, the name of the owner, the name of the person who hired you, and a description of the property sufficient for identification.
Note: you cannot include delay damages, or attorney fees in your lien. Knowingly doing so may void the lien entirely.
Recording the Lien
Once prepared, the lien must be recorded at the Recorder's Office of the county in which the project is located.
The lien must be recorded the earier of either 90 days after the work is completed, or thirty days after the owner records a notice of completion (if you are a subcontractor), or sixty days after the owner records a notice of completion (if your contract is with the owner).
Filing a Legal Action to Foreclose the Lien
If the recording of the lien does not result in payment to you, the lien will have no force or effect unless you file a legal action to foreclose on the lien. It is best to retain an attorney to do this if one has not been retained previously. The foreclosure action must be filed within 90 days of the date of recording of the lien. If it is not, you forfeit your lien rights. At that point, the owner can petition the court to have your lien removed and you may be held responsible for the owner's legal fees and costs.
Word to the Wary
While a mechanic's lien is a valuable tool to securing payment, missing deadlines, failing to give timely notice to the proper parties and improper preparation of the necessary documents are all common mistakes which compromise the effectiveness of the lien. Thus, it is wise to consult with a construction attorney to make certain all of the necessary requirements have been met prior to recording your lien.