Whenever I write about the effectiveness of mechanic liens, I use the tag “Why Lien.” It’s been said a lot on this blog: mechanic liens are the most effective collection tool available to your construction business.
Why are mechanic liens so effective? Because when done correctly, they can legally obligate parties (like property owners) to pay the lien amount even when they haven’t breached their contract with the other party.
Let me explain this with specifics. A window supplier supplies windows to a prime contractor for use on a project. The property owner pays the prime contractor for the windows, but the prime contractor doesn’t pay the window supplier. If the window supplier properly files a mechanics lien, the property owner may be obligated to pay the window supplier for the windows, even though s/he already paid the prime contractor for the same windows!
This precise scenario happened in Oklahoma City on a residential construction project, and a news program sympathized with the homeowner producing the below news story. While it’s unfortunate what happened to these property owners, this news report does a good job of demonstrating how effective a mechanics lien can be: