Making the decision to file a mechanic’s lien isn’t an easy decision to make. Usually, your company has a relationship with others on the project, and there may very well be some good faith reasons why payment is getting held up on the job. The implication of this difficulty is that many wait until the very last moment to file their mechanics lien.
While a mechanics lien is timely and valid even if filed the day before a deadline, there’s a lot of good reasons why you should error on the side of caution and file your mechanics lien claim as early as possible.
Mechanics Lien Claims Filed Early Safeguard Against Errors
If your mechanics lien claim contains some type of typographical or substantive error, it could render your claim a nullity. If you discover the error and still have time before the mechanics lien deadline, you’ll likely be able to file some type of amendment and clean up the issue. However, if your deadline has passed, there may be a state policy prohibiting any amendments. Filing your mechanics lien early insures you have a little bit of cushion time to correct any errors that may pop up.
Also, remember that one error that could arise is an error in calculating the lien deadline itself. You may have forgotten about a court holiday, or you may have started to count on the last day you furnished when you should have started on the day after or before. In any event, counting days is a mind-numbing experience and it’s easy to make a mistake. Filing early avoids letting these errors affect your claim.
The Earlier Your Mechanics Lien Filed, The More Priority It Has
If a property is actually foreclosed upon, the proceeds from the sale will be distributed to lien claimants, first to the claimant with the most priority and then down the priority line until the least prioritized claim. While every state is different in how lien priority is handled, states typically follow a “first to file” rule, which gives top billing to the earliest filed claims.
It goes without saying that the earlier you file your lien claim, therefore, the more priority it will have against other lien claimants and creditors.
You Avoid Rush Charges When Filing Your Mechanics Lien
Rushing anything increases the headaches and the possibility of mistake (see above), but it also increases expenses because people charge for these extra issues. Attorneys and lien filing services included.
Zlien, for example, charges $95 to rush a mechanics lien claim. You’ll encounter even more expensive rush expenses from law firms and others. The earlier you send your mechanics lien for filing, the less you’ll pay, because you’ll let your attorney or lien service get the lien filed within a reasonable and relaxed period.
There Will Be More Money Available To Pay Your Mechanics Lien Claim
As a rule of thumb when collecting debts, the early you begin to collect, the sooner and more likely you’ll be to get paid. This is especially the case with respect to construction debts, and even those construction debts secured by mechanic’s lien claims.
Everyone in the construction industry knows what retainage is. While you may not have retainage withheld from your contract (i.e. a material supplier), there is still retainage withheld on the project. When lien claims start getting filed, the property owner and/or prime contractor sometimes look to retainage as a pool of money from which “back charges” may be claimed, and thus, paid onto you.
The earlier you have your mechanics lien claim filed, the more likely there will be retainage left laying around (and enough to pay your claim).
Filing Your Mechanics Lien Early Avoids Problems With The Recorder
I’ve said it before: county recorders can be an absolute nightmare to work with. While you may have the 100% right to get your mechanics lien claim filed, the county recorder may find some bizzarre or completely irrelevant problem with the document. It doesn’t matter if the county is right or wrong in their assessment. If they refuse to record it, you’ll lose your filing date, and that can be fatal to your claim.
Recording your mechanics lien early helps you avoid this problem if it arises by giving you a little more time to get the recording issue resolved.