Lien Laws by State - What are the Key Differences Between States?

As your construction business grows, you may find yourself working in many different locations. Often, especially when you cross state lines, you'll find that changes in construction laws and, in particular, lien laws in the different states, will require you to change your business processes. Managing multiple jurisdictions is a great time to stop and re-visit your business processes from reviewing your contract to the way you collect and track job information. Taking the time to set it up right in the beginning can save you a world of headache in the future.

Timelines

The most important difference to pay attention to is that different state lien laws have different timelines. These timelines can affect when you need to let the owner know you're working on a project. They also affect when in your invoicing and collections process you need to file a notice of intent to lien and the mechanics lien itself.

Finally, the length of time a lien lasts varies from state to state. In some states, you'll need to start a formal collections action within a few months whereas, in other states, you may be able to sit on it for a few years. In all cases, you'll want to know how long mechanics liens last so you can release the liens you decide not to pursue.

Required Notices

The notices required in lien laws by state varies, with some states requiring an initial notice that a contractor or subcontractor is working on a particular site. Other states require you to send out a notice of intent to lien to let the owner, contractor, and mortgage holder know that you haven't been paid in a timely fashion for an invoice. You may also be required to send out a notice when you've released the mechanics lien, either because you've collected on the unpaid invoice or because the lien statute has lapsed.

Who to Send Liens To

Another important detail to pay attention to when crossing state lines is that there may be a change in which parties need to receive your notices and a copy of the lien. This also changes as you move up the contracting chain, with general contractors having different notice requirements than subcontractors, suppliers, and laborers.

How to File Liens

Filing a mechanics lien, as well as the release of lien, is handled differently in different counties as well as across state lines. If you're unsure about the requirements for a particular county, a quick call to the Registrar of Deeds office in the county where the project is located will give you the particulars you need. Whether they prefer e-filing or a certain number of copies, they'll be happy to fill you in ahead of time to make their job of accepting the lien that much easier.

Thankfully, you don't need to figure all these details out by yourself. The experienced team at National Lien & Bond is ready to help you discover the process that will work best for your business and be available to answer questions when the unexpected occurs. To learn more, reach out and arrange one of our lien seminars, where we talk to your managers about mechanics lien law as it applies to your projects.