Liens are statutory rights to secure payment for work done on personal and real property.
Now, this kind of security interest is automatically available to certain individuals who perform the statutory mandated requirements as they provide labor and/or materials as the result of a contract to do work on either real or personal property, if those individuals are:
- construction or material suppliers
- licensed contractors
- licensed subcontractors
- licensed design professionals
It is generally called a mechanic’s lien, or in Nevada a “Notice of Lien,” and it requires a detailed process in order to secure mechanic’s lien rights or prohibit them from causing problems to the owner of the property. A good Mechanic’s Lien or Notice of Lien attorney can help you protect yourself, whether you are the owner, contractor, subcontractor, material supplier or design professional.
Improving a property requires quality workers and suppliers who must be paid no matter what happens between the property owner and contractor.
Basically, a mechanic’s lien is a form of statutory payment warranty set up to benefit those who make improvements to property. But whatever you do, all parties to a construction project have a vested interest to insure their own interests are considered in dealing with payments and mechanic’s lien claims.
Let’s go through four of the issues you might encounter with this particular kind of construction claim as a property owner.
1. Paying Twice for a Project
For a mechanic lien’s attorney, it is a priority to make sure there are proper procedures in place throughout the entire construction process, which include a convenient and well documented payment schedule for all parties involved.
After signing the contract, both owners and contractors must keep track of the conditional and final lien releases that must be provided as part of the ongoing payment process. Only through following these procedures will the owners and contractors have a chance of being able to avoid unexpected issues with unpaid subcontractors and suppliers that have mechanic’s lien rights to enforce against a property if they were not paid.
2. A Mechanic Liens Attorney Prevents Property Selling
Poor paperwork management can lead to:
- a general contractor failing to fulfill their contractual requirements.
- a contractor improperly recording mechanic’s liens without following preliminary notice requirements.
Preliminary notices serve as a warning to the owner and general contractor of a supplier or subcontractor’s intention of pursuing a lien claim in the future if they are not paid for their labor or materials provided to the project.
A legal professional can help set up policies and procedures to ensure that all preliminary notices and lien releases are systematically maintained and accounted for by those who pay for services.
3. Paying for a General Contractor’s Irresponsibility
As a property owner on whose land a construction project is carried out, the most frustrating scenario is being placed on notice that a lien has or will be recorded against his/her property when the owner has paid the contractor, in full, for its services, which includes the amounts the lien claimant is seeking payment for due to the general contractor’s failure to pay.
If you have a well drafted contract, property owners can take legal action against a general contractor if it fails to hold up their contractual obligations to pay all parties that were hired to work on the Project.
But while a mechanic liens lawyer helps you carry a lawsuit against contractors, it takes time and resources. Also, if proper documentation and procedures are not in place and the contract goes bankrupt without paying its subcontractors and suppliers, the owner may be required, by law, to pay twice for the work done on his/her property.
If you have a mechanic’s lien attorney before the contract is signed – good for you. They’ll be able to look over the contract and general contractor’s license status, as well as the subcontractors’ license status.
4. Losing the Interest on Your Own Property
Once a mechanic lien is recorded against your property interests, if the mechanic’s lien is not removed it could cause a cloud on your title to the property and if left unchecked, could cause the owner of the property to lose his/her ownership interest in the property.
What this means is that a lien claimant can pursue its lien rights through the Courts and take away a property owner’s interest in his/her Property and then make the property owner pay for all of the attorneys’ fees the contractor spent in seeking this judgment against the property owner.
As any mechanic liens attorney can confirm, mechanic’s lien requirements can be one of the most misunderstood in issues in construction law. The misunderstandings originate from the lack of expertise on both contractors’ and owners’ parts.
So, to better understand the Mechanic’s Lien process in Nevada, consider hiring a lawyer. You’ll need reliable legal advice for all of your business and construction operations, especially if you’re in the real estate /construction field in the Las Vegas metropolitan area.