There are at least six potential legal methods that you can use to enforce payment on a privately owned Project: (1) send a Pre-Lien Payment Demand Letter to the Property Owner, General Contractor, and the contractor who hired you; (2) file a Lien Affidavit against the Property; (3) serve the Property Owner, General Contractor, and contractor who hired you with a Notice of Lien Filing Payment Demand Cover Letter; (4) send a Pre-Foreclosure Payment Demand Letter; (5) send a Payment Demand Letter to the debtor only; and/or (6) file a Lawsuit to foreclose on the Mechanics Lien and/or for breach of contract. Each one of these methods can be used independently or in conjunction with one another. Read below to learn more.
Serve a Pre-Lien Payment Demand Letter By General Contractor: If you were hired by the Property Owner, or the Property Owner’s agent, then you are not required to serve any preliminary Notices before filing a Lien. However, if you believe that filing a Lien may negatively affect your business relationship or if you believe that sending one last stern Notice may prompt payment, then you should consider sending a Pre-Lien Payment Demand Letter before filing a Lien. The Lien Professor’s Mechanics Lien Kit contains a stern, yet non-adversarial Payment Demand Letter drafted specifically for this purpose.
Serve a Mandatory Pre-Lien Notice Payment Demand Letter: If you were not hired by the Property Owner or the Owner’s Agent, then you must serve a “Pre-Lien Notice” on the Property Owner and the General Contractor before filing a Lien. When properly prepared and timely served, the Property Owner is required to withhold from the General Contractor the amount you claim is owed (referred to as “trapped funds”) upon receipt of a Pre-Lien Notice. If the Property Owner pays the General Contractor after receiving the Notice, then the Property Owner may become personally liable for the debt. Moreover, if the General Contractor does not timely dispute the amount owed in writing, then the Property Owner is obligated to pay the amount of your claim directly to you. Additionally, when the Pre-Lien Notice is prepared and served as a strong Payment Demand Letter, it can be a very effective tool to enforcing payment without even filing a Lien. Keep in mind, you can always serve a Pre-Lien Notice without later filing a Lien. The Lien Professor’s Mechanics Lien Kit includes two versions of this mandatory Notice: one version drafted in a noncontroversial tone (to preserve the business relationship) and another version drafted in the form of a strong Payment Demand Letter. To learn more about the Pre-Lien Notice requirements, see “Pre-Lien Notice Requirements” herein. any Pre-Lien Notice question.
File a Lien against the Property: Almost everyone who provides labor, materials and/or equipment to a Property has the right to file a Lien against the Property if they have not been timely paid and have properly completed all Pre-Lien requirements. A Mechanics Lien is a powerful tool that can be used to potentially secure payment of the debt and gain leverage in negotiating a settlement. To learn more about the Mechanics Lien, see the “What is a Mechanics Lien?” question herein.
Serve a Notice of Lien Filing Payment Demand Cover Letter: After you file the Lien, you must serve it on the Property Owner and the General Contractor within five days of filing. This is one of the best opportunities to inform the Property Owner, the General Contractor, and all other interested parties that a Mechanics Lien has been filed and the legal action you intend to take if the debt is not immediately paid. The Lien Professor’s Mechanics Lien Kit includes a very stern Cover Letter to Notice of Lien Filing drafted in the form of a Payment Demand Letter.
Serve a Pre-Foreclosure Payment Demand Letter: If you have still not been paid after filing and serving the Mechanics Lien, you may need to file a Lawsuit to foreclose on the Mechanics Lien. However, before you do so, you should consider sending one last stern Payment Demand Letter to all parties who will be affected by the Lawsuit. In addition to our standard Payment Demand Letter (described below), The Lien Professor’s Mechanics Lien Kit contains a Pre-Foreclosure Payment Demand Letter specifically designed to be sent just before filing a Lawsuit to foreclose.
Serve a Payment Demand Letter: If you failed to timely serve any of the Pre-Lien Notices or file a Lien, then your remaining two options are to serve a strong Payment Demand Letter to the debtor who hired you and/or file a Lawsuit. Before filing a Lawsuit, you should consider sending a strong Payment Demand Letter to the company/individual who hired you before incurring the cost of litigation. To learn more about what information should be included in a Payment Demand Letter and how to effectively use it, see “What is a Payment Demand Letter?”
File a Lawsuit: If your deadline has passed to file a Lien, then other than serving a Payment Demand Letter, your remaining option is to file a Lawsuit. Additionally, if you have filed a Lien and have still not been paid, then your next step is to file a Lawsuit to foreclose on the Mechanics Lien. Click here to learn more about retaining Lovein | Ribman, P.C. to file a Lawsuit.