Dispute logo

Products

Learn

Legal

How to Decide it's Time to File a Lien

Updated October 31st 2022

4 min read

When do you file a lien?

How to Decide it's Time to File a Lien

How to Decide it's Time to File a Lien

author

Trey Salm

Author


Dispute is the easiest & most accurate small claims platform with affordable ways to resolve every dispute.

If you are owed money and believe you have not been paid fully for your services, a lien can help you collect that past-due payment. For example, let's say you are a contractor, subcontractor, or supplier. There will be times when you encounter a client who refuses to pay.

That client might have:

  • Spent past their budget
  • Abandoned the project
  • Intentionally withheld payment to negotiate a better price

But if you file a lien against this client, it can prevent them from selling or refinancing until your claim is satisfied.

Liens can be very effective, so you might be wondering, "How do I know when it's time to file one instead of sending another demand letter?"

Here are some good indicators:

1. The Client Ignores Your Invoices

Picture this scenario: You have sent your client a 30-day, 60-day, and 90-day invoice but have yet to receive a response. You follow up with calls, texts, and emails but these are left on "read". The client's silence is deafening. It's obvious they have decided that they can't or won't pay, and are hoping you will give up.

2. The Client Acknowledges but Refuses to Pay

In this situation, your client has spoken with you about the outstanding payment but stated that they aren't going to pay. Maybe it's because they claim you did something wrong such as:

  • Poor Workmanship
  • Inferior Materials or Services Supplied
  • Provided Services past the Deadline

If this seems like an unreasonable or illegitimate claim, then starting the lien process can help you reclaim your funds.

3. Your Notice of Intent to Lien is Ignored

Before filing a lien, you may be required by law to give your client one last chance to pay up. This letter is called a "Notice of Intent to Lien," and it can communicate to the other party your intent to get paid for your services. So, let's say you took the time to notify them, and haven't heard back in the stated timeline. That can also mean it's time to file your lien.

Questions to Consider:

Are there time limits on when I can file a lien?

  • There are laws in every state that limit the period of time when a lien can be filed. Typically, it's the project's location that determines the jurisdiction of the lien filing. The general rule of thumb is that you can file a lien as early as you'd like, so long as the services that have prompted the lien have been completed. You don't have to complete the project to file a lien, so much as your lien needs to request an amount that reflects however much has been completed at the time of the filing.

Should I include other types of claims in my lien?

  • Some folks include claims for additional compensation and unapproved change orders in their lien filings. You will want to have an argument prepared that explains why these costs are included, as sometimes there are penalties for liens found to be excessive.

I'm a sub-contractor. Can I file a lien?

  • Those contractors who have a direct contract with the project's primary contractor (the one who has a contract with the owner) can file a lien. Service providers or contractors with a contract with the first wave of subcontractors can also file a lien. However, any contractors from another wave down (third-tier) do not have lien rights.

Do I have other options other than a lien?

  • There are many different options to seek out payment for services owed. You may consider filing a small claims case against the other party, or your contract may stipulate you'll have to use arbitration. Either way, it's important to research all your options.

Have multiple liens you want to be filed? Learn more about our high-volume discounts, or our self-managed enterprise product by scheduling a call with us.

Get Dispute to file your small claims case online today.
Win back the money you deserve.

Related articles

Can I Get a Refund for my Subscription?

Dispute charges $10 monthly to access our software services.

· 1 min read