February 25, 2024

The 5 Importance of Filing a Small Construction Lien for Payment Protection

Are you a small contractor or a subcontractor who often works with other businesses in the construction industry?

Then you may have encountered problems with getting paid for the services you have rendered. Fortunately, there are ways to protect yourself from payment disputes.

In this blog post, we will discuss the five reasons why filing a small construction lien can be crucial to payment protection.

  1. Establishing Your Rights to Payment

Filing a small construction lien can help establish your rights to payment for the services you have rendered. The lien serves as a legal claim on the property where you have completed the work. This means that if the property owner or the general contractor refuses to pay you, you will have the right to enforce the lien and force the sale of the property to get payment.

  1. Encouraging Prompt Payment

Filing a small construction lien can help encourage property owners to pay contractors and subcontractors promptly. Property owners understand the implications of liens and will do everything they can to ensure that their property is free of liens. If you file a small construction lien, the owner of the property will become aware of the lien, and he/she will be encouraged to pay you promptly.

This is because a lien on their property can make it difficult for them to sell or refinance their property. Lienser notices are another reason why filing a small construction lien is essential.

Lien waivers state that the contractor has been paid, and they waive their right to a lien on the property. However, liens waivers can have negative consequences.

  1. Protecting Your Right to Payment

A small construction lien can be your safety net to protect your right to payment. It protects your right to be paid for the value of the work you have completed.

Without a lien, the property owner or general contractor could refuse to pay or even go bankrupt before they can pay you. By filing a lien, you are securing your right to payment, even if the worst happens.

  1. Providing Legal Protection

Filing a small construction lien offers legal protection to your business. It is an official document that can be recognized by courts of law and can be included in legal proceedings. This means that if the payment dispute escalates and ends up in court, a small construction lien can serve as evidence that the work has been completed and that you have the right to payment.

  1. Allowing for Collection of Interest, Fees, and Attorney’s Costs

Finally, filing a small construction lien can allow you to collect interest, fees, and attorney’s costs in addition to your unpaid fees. This can be important since legal proceedings can be expensive. With a small construction lien, you can recover not only your unpaid fees but also any interest, fees, and attorney’s costs associated with enforcing your lien.

File a Small Construction Lien to Safeguard Your Payment Rights

Filing a small construction lien provides an essential layer of protection for contractors and suppliers. It ensures that they are paid for their work and if payment is not forthcoming, it provides a legal recourse to pursue payment.

Filing a lien is not always an easy process, so it’s always recommended that contractors work with experienced professionals to guide them through necessary documentation. That being said, given the importance of payment protection, it can be seen that filing a construction lien is an essential part of the building process.

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