By Cody Thomas, Esq., Manager and Counsel, AIA Contract Documents
August 31, 2022
Below is an outline of the steps you should follow for filing a lien. These steps are presented generally, however, as each state has their own framework for filing and enforcing lien rights. You should consult your state’s specific statute to understand the mechanics of how to do so. Typically, the failure to satisfy the technical requirements of a state’s lien statutes will jeopardize the validity of your lien and may result in the loss of lien rights. If at any point in the process you are unsure of how to proceed, you should retain an attorney to guide you through the process.
From the outset, you should always be careful to avoid inadvertently waiving your lien rights. First, you should not make enter into any agreement, to the extent that such agreements are permitted by the law and public policy of your state, that you will not lien or otherwise encumber the property; only agree that you will waive your lien rights to the extent that you have been paid monies due and owing for work performed in accordance with the Agreement. Additionally, do not sign overly broad releases and waivers of all liens and claims in conjunction with your applications for payment; be sure to carve out exceptions for monies that have not been paid (e.g., pending change orders, outstanding retention, etc.).
Step 1: Locate and identify your state’s notice requirements
The first step you should take is to look up your state’s notice requirements for filing a lien. State law varies regarding whether you are obligated to provide notice and, if so, who you are required to notify and the time constraints of when the notification is required. It is important that you identify and follow your state’s requirements. The failure to do so can result in the loss of your lien rights.
Step 2: Locate and confirm your state’s deadlines
Each state’s statutory scheme contains specific deadlines which must be followed in order to maintain your lien rights. For example, in Texas, you must file a lien affidavit not later than the 15th day of the fourth month after the month in which your work was completed, terminated, or abandoned. On the other hand, in Louisiana, your lien must be filed within 60 days after the date the work was completed. You should make sure to locate these deadlines and confirm that you are in compliance with them.
Step 3: Research information related to the property
A mechanic’s lien is an encumbrance on the real property where the work was performed. Because the lien attaches to real property, typically, you will need to obtain the legal description of the property from the deed and verify the legal owner of the property. Note that if the property is the subject of a lease, the legal owner may be the tenant who contracts for the improvements and the lien may be on the tenancy interest only. This information can be obtained by performing a title search. At this point, it is often best to retain an attorney or title abstractor to perform the title search, as that individual will be able to identify other judgments or liens on the property which could take priority over your lien.
Step 4: Prepare the lien
Once you have the property information, either you or your attorney will prepare a lien to be filed. The required contents of the lien vary from state to state so you should confirm the precise information required by your state. Typically, however, the lien will need to state the following:
· Amount of the claim
· Name and address of the owner
· A general statement of the work you performed and the materials you furnished
· The identity of the party who hired you
· The legal description of the property
You can usually find forms prepared by the state that can easily be filled out with the required information.
Step 5: File the lien
You will need to identify the proper county to file the lien and the office in that county where the lien should be filed. Typically, the lien must be filed in the county’s property recorder’s office or with the clerk of the court in the county in which the property is located. However, unique situations can arise in the case of property that sits on the line between two counties. Some states also require that the lien be filed by an attorney. Finally, you should be aware that some states require you to file additional documents like affidavits and material papers bearing on the lien with the lien and/or take additional steps to perfect the lien.
Step 6: Notify parties as required by your state
After filing the lien, most states require you to notify all parties affected by the lien (such as the property owner and any other lien holders).
The AIA Contract Documents program has developed a limited number of Sworn Construction Statements, and Lien Waiver and Release forms that might be used in specific states. In addition, they have also developed generic versions of those documents that might be used in the remaining states. To learn more, visit Important Considerations for Sworn Construction Statements and Lien Waiver and Release Forms or watch a short video AIA Contract Documents New Sworn Construction Statement and Lien Waiver and Release Forms.
AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.