How to File a Lien

Filing a Mechanics Lien

Exhaust all other options. Filing a lien is a public declaration that someone hasn't paid for contract work, and is a strong legal move to make. Before you jump straight to the decision that you want to file a lien, talk to the property owner and attempt to set up another plan. Be clear from the beginning of a job that you'll file a lien if debts remain unpaid. Some states such as Washington have forms you can use to notify property owners of your right to file a lien if you aren't paid. You also can advise a property owner of your right to file a lien in your contract for the work. If the property owner agrees to a payment plan, make sure it has a reasonable due date and get the plan in writing. For example, if you completed some work on your client's garage for $2,000, you may work out a payment plan in which your client agrees to pay you $500 a month for the next four months. You may want to hire a lawyer at this point to help you draw up an agreement. You also might consider using alternative dispute resolution. With ADR, you and your client share the cost of hiring a neutral mediator who helps you work out a mutually agreeable outcome. The process often is less adversarial, more efficient and less expensive than filing a lien. Your local courthouse or your state court's website may have a list of ADR resources available in your area. Hiring a debt collection agency is another way to avoid the time and expense of engaging in formal legal processes by filing a mechanic's lien. Debt collections agencies specialize in recovering debts and can put the pressure on your client without you having to take legal action. If you decide to go this route, research and find a collection agency that has a good reputation and specializes in working with people who do the same kind of work you do.

Make sure you've given preliminary notice. Most states require you to notify the debtor that you will file a lien if he doesn't pay you. Typically you would give this notice within the first few weeks of work, before payment even becomes a problem. If you fail to give preliminary notice, you may lose your right to file a lien if your client doesn't pay. Some states require that you use a specific form to provide notice. Check with your local clerk of court's office to find out if your state has any specific requirements. In most states, preliminary notice must be given within 10 to 20 days of the date you began work.

Check your state's deadlines for filing a lien. You only have a brief period of time after you've completed the work to file for a lien, and in some states this period is as short as 60 days. Depending on where you live, you may not have time to exhaust all other options before you file a lien if you want to preserve this option. For example, in Louisiana you only have 60 days from the day you finish the work to file a lien for non-payment. This doesn't give you much time to pursue alternative methods of collection. However, in neighboring Mississippi, you have a whole year from the date the debt became due. That gives you plenty of time to explore other payment options with your client.

Research the property. To file a lien on property, you must conduct a title search on the property to ensure your client owns it and get the full legal description from the deed. This process could cost several hundred dollars to complete. In some states such as Illinois, general contractors who file a lien before the deadline have priority over any other encumbrances on the property, even if another mortgage or a competing lien came first. Other liens on property that would take priority over yours could mean that even if you filed suit and had the property sold, you wouldn't recover any money and the debt would remain unpaid. If there are other creditors who have liens on the property, you should consider consulting an attorney to advise you on how those loans are prioritized legally and whether you should pursue alternative means of collection.

Draw up your lien. A lien typically is a one-page document with information about the creditor, the debtor, and the property. Most states have specific court forms to fill out. For example, California requires a Claim of Lien form as well as a notice and an affidavit. You can learn your state's requirements by contacting your local clerk of court. Check the formatting requirements of the county where you're filing the lien, because many counties have strict rules governing the paper size, margins, and font of the text. If you don't follow these rules, the office will reject your lien. The type of information required on the lien also varies from state to state, but typically includes your name and address, the name and address of your client, the amount of money you are owed, a description of the type of work or services you performed, and the location of the property. Make sure you've included all necessary information or your lien won't be any good. For example, if you're placing a lien on real property, most states require a legal property description such as the one on the deed, not just a street address.

File your lien. Your lien must be filed with either the property recorder's office or the clerk of court. Each state designates a specific office to accept filings of mechanic's liens, so make sure you've got the right office. If you're claiming a lien on real property, it must be filed in the recorder's office of the county where the property is located. Expect to pay a filing fee between $25 and $50 depending on the location where you file. Although you often can file your lien by mailing it to the office, you may want to deliver it in person. Many offices have a backlog on mailed filings, so this is particularly important if you're filing close to the deadline. Additionally, filing in person means if there's something wrong with your lien you can find that out and correct it immediately.

Notify all necessary parties. In most states you must notify the property owner immediately after you file the lien. Some states require additional parties, such as other lien holders, to be notified as well. You can find out who must be notified when you file the lien. In many cases, the property owner will make arrangements to pay the debt soon after receiving notice that you filed a lien.

Enforce your lien. If the debtor still doesn't pay after you've filed the lien, you must enforce the lien by filing a foreclosure lawsuit within a certain amount of time, usually a year. The foreclosure suit causes the property to be sold. The proceeds of the sale are used to satisfy any liens on the property. Make sure you check your state law to see what your enforcement period is. After the enforcement period runs out your lien is expired and has no value. Some states have extremely short enforcement periods. For example, in California you have just 90 days to file a lawsuit after filing your lien. Because filing a foreclosure suit involves filing a formal complaint in court and following the court's rules, you should consider hiring an attorney who specializes in foreclosures or in enforcing mechanic's liens.

Filing a Judgment Lien

Understand whether you're eligible to file a judgment lien. You can only file a judgment lien after you've won a court judgment in a case in civil court. The judgment lien allows you to sell the real or personal property subject to the lien and use that money to satisfy the debt owed to you. A judgment lien does not ensure payment of a judgment. The lien attaches to the debtor's real or personal property, informing potential buyers that the title of the property is not clear. If you place a judgment lien on someone's property, there's a chance you won't receive your money until that person decides to sell that property.

Learn the rules for judgment liens in your state. Different states have different procedures for getting judgment liens and for maintaining them. If you aren't familiar with those rules you could cause your lien to expire. Generally, you can only place a lien on personal property located in the state where the judgment was obtained. The lien is only good for a certain period of time. For example, in states such as California and Arizona, your lien is good for five years, but may be renewed if you haven't been paid within that time. If the debtor sells or transfers the property while the lien is in effect, the judgment lien remains on the property until the creditor has been paid in full.

Draft the relevant documents. If you're eligible to file a judgment lien, find out what documents you need to file, where you need to file them, and what fees will be charged. Some states have a form you can fill out. For example, if you want to file a lien in California on personal property such as a car or a boat, you would fill out a "Notice of Judgment Lien, Form JL-1" and file it with the California secretary of state. If you wanted to place a lien on real property, on the other hand, you would fill out and record an "Abstract of Judgment for Civil and Small Claims" form at the county recorder's office. In some states, such as Arizona, your lien must be accompanied by a certified copy of your court judgment. You can get a certified copy for a fee from the clerk's office in the court where you were awarded the judgment.

File your documents. Where you file your documents depends on where the property is located and whether you're attaching your lien to real or personal property. Each state has different filing rules, and the same state may have separate offices and procedures for real and personal property. Typically you can mail your documents to the correct office along with the fee to file them, but as with the mechanic's lien it may be in your best interest to file them in person so you know the lien is recorded and you can correct any defects in your forms immediately.

Wait for the debtor to satisfy the judgment. A judgement lien does not guarantee payment of the debt. Rather, you have to wait until the debtor sells the property. If the buyer wants a clear title, she will insist the debtor satisfy the judgment before she completes her purchase. While there's no law that requires liens to be cleared before property is sold, in most cases potential buyers want a clear title, not a property that's encumbered with someone else's debts. In some states such as California, if the debtor pays the judgment, you must remove the lien by filing a form with the court that acknowledges satisfaction of the judgment.

Pursue other options to recover the debt. If the debtor still doesn't pay, there are other legal options at your disposal to collect the debt, such as wage garnishments or bank levies. Speak to a collections attorney to get a better idea of the options available in your state.