Top 5 Ways Mechanics Lien gets you paid during COVID-19

As the Coronavirus pandemic continues to spread, it is overwhelming all sorts of “stable” businesses. The reality is that if the present global virus has not affected your construction business yet, then it is only a matter of time before you start feeling its adverse impacts.

At first, you will start seeing jobs being delayed, leading to cancellation and payments reach to a halt. Within no time, you will run out of financial resources to help you keep afloat, resulting in a complete shutdown. In times like these filing, a mechanics lien can save your business from declaring bankruptcy.

How Does a Mechanics Lien Ensure Payment Amidst COVID-19 Outbreak?

These uncertain times of the pandemic have proved to be a challenge for all businesses regardless of their size. In the wake of the coronavirus outbreak, one of the major and biggest issues faced by construction companies is a delay in construction payment.

As the global economy has slowed down, which makes it difficult for companies to make payments on projects, so now is the perfect time to consult a quantum expert and prepare for filing lien before you miss your chance of payment in full.

Capital and Liquidity is essential during a recession. To ensure that you get your due payments, the following are some 5 different types of the ways a mechanics lien will be helpful.

• A Mechanics Lien Restricts the Property

When you file a lien, it becomes associated with the property in question. Anyone who wishes to buy that property after the lien is filed, he is subject to the claim. It means that property is put on hold and will not be sold or transferred to another before the lien amount is being paid for.

Imagine a property owner who just listed his newly constructed property up for sale and is getting a good rate on it. However, the real estate agents tell him that he cannot sell the property because of the lien, but he is getting a very handsome offer. What will the owner do? Yes, he will have to pay the lien amount before putting the home up for sale.

• It Gets Attention of the Construction Lender and Owner

A lot of construction projects are financed by a construction lender, i.e., banks or private third party lenders. These lenders loan huge amounts of money to the project and have a mortgage against property to secure their claim. However, when you file the lien, you get in the way of their security interest. This is a major risk for these lenders, and they step in to get non-payment issue resolved.

When you are file a lien, you also get the property owner’s attention to non-payment issues. Now he cannot sell or transfer the property. There are cases when he doesn’t know what is going on the property because he has hired a general contractor, so he gets informed through the lien. It is very expensive and hard for owners to legally remove lien claims, so they make due payments to the contractors.

• When you File a Lien More Parties Become Obligated to Your Debt

In case of non-payment, when you don’t file a lien, you can only file lawsuits against a single party, e.g., if you are a supplier, you only involve the subcontractor. However, if you file a lien, you include a lot of people to the table.

With a mechanics lien, you can file suit against property owners, contractors, and even the property itself. If you don’t file a lien, you would have to contact the contractor again and again for days, but with a lien, you get everyone’s attention. As there are more people involved, there are more accounts available to collect the money to pay you.

• By Filing a Lien, you Set a Deadline for Payment

Without the lien, chances are you would get paid, but no one knows when; in the next month or after the recession? Construction payment is naturally a very slow process, as research shows it takes more than 73 days on the average limit to get paid after invoicing!

However, the mechanics lien sets a firm deadline before which the owner has to resolve the payment issue with the claimant. There are legal consequences involved if the other party fails to meet the deadline, and everyone hates legislation, so it gets things moving.

• In Case of Non-Payment, you can Use Property for Payment

One danger in the construction industry is that when you are work, there is a chance that the debtor or the property owner will not pay or have any way to pay you for your services. As contractors always put their construction material before getting paid, they are working on promise of payment. But what if the owner cannot keep up with the promise of payment?

This is where a mechanics lien comes in handy because in case the owner files bankruptcy, you have the authority to collect the due payment from the property. The property can be sold to pay your claim.

What Are the Chances That You Lien Will Work?

Considering the current global pandemic, for people who are considering filing a lien on a project, this is the first question that comes to the mind: “Will the mechanic lien work?” Let’s get one fact straight, a mechanics lien works, and you will get paid for your services.

Mechanics Lien is the most powerful, useful and comprehensive tool when it comes to construction payment. It is one of the most effective and efficient ways to resolve a payment claim, especially if properly filed, so consult a quantum expert before filing the lien. Don’t pass on this opportunity by waiting for getting paid miraculously.