Anyone involved in construction knows it can be tricky. Contractors and subcontractors must collaborate to get the job done. In a typical scenario, you’re dealing with developers and owners, who delegate the work to a general contractor, who then filters more work to the subcontractors. Subcontractors, in turn, work with their own vendors and buyers. As you can see, even small-scale construction jobs can lead to a complex network of interdependent relationships.
What Is a Construction Lien?
One of the main issues the founding fathers (and many early settlers) had with the crown was its form of land ownership. The crown doled out land to people, and no one could take it away. After settling in America, lawmakers developed a system that would allow workers to gain security rights. In other words, these documents–liens–allowed laborers to sell property if they didn’t receive compensation for their time. In other words, we can define construction liens as safety nets that protect workers from the risk of nonpayment for their services.
For an example, say that a worker completes his work but doesn’t receive his agreed-upon payment. If he puts a lien in place, he can force a sale of the property to collect his fee. It doesn’t matter if it’s a $10,000 fee for a $100,000 property or a $2,000 fee for a $2 million property. Either way, a worker could force the sale of this property, even to collect a nominal fee.
Who Can File a Construction Lien?
This is an oversimplified example–construction liens are a niche branch of law and involve highly technical and specialized legal processes. You wouldn’t generally, for example, be able to walk into your real estate lawyer’s office and request a construction lien. Contract disputes and construction liens are very complicated, and many attorneys won’t deal with them. It takes a lawyer with specific experience and in-depth state-specific knowledge to file and defend a lien successfully.
How Can a Lien Help?
It’s a familiar scenario for many contractors and subcontractors–you complete a project, such as a home build or renovation, and the owner withholds all or part of your payment. The owner may say it’s because there were too many unexpected expenses or because the job didn’t meet expectations. Either way, you have your own vendors to pay and no way to pay them. You’ve fulfilled your end of the bargain (or at least so you claim), and now you’re (seemingly) stuck without leverage to force a positive resolution. It’s a David vs. Goliath situation, but you have no stones to hurl at the giant… or even threaten him with.
In such a situation, a contractor may turn to a construction lien to incentivize speedy and complete payment. The lien is in some sense a metaphorical stone you can sling at the more powerful party. An owner who might otherwise ignore a request for a (to them) trivial amount of money must suddenly confront an existential threat to the project: Pay you fairly and soon, or risk a forced sale of the property.
Filing a lien does not mean you will go through with this whole process and actually compel this sale. Most contract disputes, fortunately, don’t go that far. The lien is a useful tool to negotiate a fair outcome—it’s not generally intended to blow up projects or relationships. And that’s a good thing, obviously, because you generally want to do business with people again and avoid a reputation for being pushy or unnecessarily litigious.
It should go without saying that navigating the construction lien process requires a delicate, experienced touch. Our Louisiana construction lien attorneys are here to help with the whole process and make sure you and your team get treated fairly. Please contact us for a private consultation.Please contact us for a private consultation.