Construction projects can be complex endeavors involving multiple parties, timelines, and financial commitments.
A construction lien is a powerful tool for safeguarding construction companies’ investments in a construction project.
Understanding Construction Liens
In December 2023, construction spending reached $2,096.0 billion, which is a lot of tied-up investment. A construction lien, also known as a mechanic’s lien, is a legal claim that a contractor, subcontractor, or supplier can place on a property if they have not received payment for work or materials provided for that property. This lien acts as a security interest in the property, ensuring that the party who performed the work or provided the materials has recourse to seek payment.
Preserving Your Rights
By filing a construction lien, contractors and suppliers can protect their right to payment for the services or materials they contributed to a project. This action puts the property owner on notice that there is a debt owed, which can prompt them to address payment issues promptly. Moreover, a construction lien motivates property owners to resolve payment disputes without legal action.
Ensuring Payment
One of the key benefits of construction liens is their effectiveness in compelling payment. Property owners are often unwilling to jeopardize their ownership stake by allowing a lien to remain on their property, making them more likely to settle payment disputes to remove the lien and clear the title of the property.
Securing Your Investment
In the event of non-payment, a construction lien ensures that they have a legal avenue to pursue compensation. This added layer of protection can give contractors and suppliers peace of mind when taking on projects, knowing that they have recourse if payment issues arise.
Construction liens are valuable assets for contractors, subcontractors, and suppliers because they make sure these individuals get payment before any property liquidation.
