When unpaid on a construction project, filing a mechanics lien or bond claim will put your company in the best position to get paid. Those contemplating a mechanics lien filing, however, almost always wonder whether to send a notice of intent to lien first. Here are some points that may help you decide whether a notice of intent to lien is right for the situation.
Are You Required to Send A Notice of Intent?
In most states, deciding whether to send a notice of intent to lien is a luxury, leaving the choice completely up to you and your feelings about your payment situation. In a minority of states, however, the laws require that you deliver a notice of intent to lien before filing any mechanics lien claims (list of states that require notice of intent to lien deliveries).
Obviously, it’s important to know whether the construction project is located in one of these states. If the state’s laws require you deliver a notice of intent to lien, there isn’t much of a choice for you to make. The notice must be sent.
Do You Have Time to Send A Notice of Intent to Lien?
[pullquote style=”right” quote=”dark”]There’s only a limited time period to file your mechanics lien, and a notice of intent to lien delivery will not extend your deadline.[/pullquote] There’s only a limited time period to file your mechanics lien, and a notice of intent to lien delivery will not extend your deadline. It’s a huge, huge mistake to send off a notice of intent to lien right before your mechanic’s lien is due. If your mechanics lien filing is due, you really have to go ahead and file the mechanics lien, because the time you commit to the notice of intent to lien filing may cause you to blow through the lien deadline.
If you’re in a state that does not require a notice of intent to lien delivery, make certain you understand when your mechanics lien deadline expires and that there’s enough time before the deadline to send the notice of intent to lien. If you’re in a state that does require notice of intent to lien deliveries, you still need to know the mechanics lien deadline, because then it’s mandatory that you get the notice of intent sent off before the deadline.
Will A Notice of Intent To Lien Make Any Difference?
Notices of intent to lien deliveries can be very, very effective, or they can have no effect whatsoever. Unfortunately, the effectiveness of the notice of intent to lien document depends on a project’s circumstances. Most of the time, companies have a pretty good feeling about whether the notice of intent to lien delivery is going to make any difference.
If your workmanship or something substantial about the furnishing is in dispute (yes, you probably still can file a lien), then you may not get much response from a notice of intent to lien document, because the other party may be committed to their dispute with you. Further, if you’re going to send the notice of intent to lien to the same party who is refusing to pay you, there may not be much utility in the notice.
On the other hand, if you contracted with a subcontractor (as an example), and you send a notice of intent to lien to the property owner who probably doesn’t know much about your dispute with the sub, the notice of intent to lien document may get the owner’s attention and put pressure on your client. In this event, the notice of intent to lien may bear fruit and allow you to get paid without a formal mechanics lien filing.
Using the Notice of Intent To Lien As A Bluff
I’ll make a quick final note about the Notice of Intent to Lien document. Sometimes, a contractor or supplier may have lost their rights to file a mechanics lien or bond claim. Perhaps the filing deadline had passed, or a required preliminary notice wasn’t ever sent. In this case, the notice of intent to lien document may be used as a “bluff.”
There are legal consequences to filing a mechanics lien when you’re without lien rights. However, there isn’t really any consequence to sending a “Notice of Intent to Lien,” even if you’re without lien rights. It’s an empty threat, but perhaps the recipients won’t realize that you are without lien rights or bluffing. As a result, the document is sometimes surprisingly effective even when you’re without rights.
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