Missed That Lien Deadline – What Are Your Options?

by | Jan 29, 2020 | Liens

You believe you’ve missed a lien deadline, and as a result might have missed your chance to get paid. Don’t give up! There are still options to exhaust.

You may think you know the basic notice and lien rules, but do you also know there are exceptions:

  • You must send any notice to owner within 45 days of your first work or delivery of materials to the site. Exception: If you have a direct contract with a bonded contractor, you don’t need to send a notice to owner/contractor to maintain your rights. (That said, it’s a sound practice to always send a notice to owner, regardless of what’s required.)
  • Another exception: On a bonded project, the 45-day notice to owner requirement doesn’t start until you have actual or constructive knowledge of the bond. If a contractor doesn’t file/record the bond properly, you can’t know there is one. Keep digging and you might breathe new life into your claim.
  • You must file any claim of lien or notice of nonpayment on a job within 90 days of your last work or delivery of materials to the site. Exception: If the job is public, you don’t have to send a notice of nonpayment to still have rights. (Again, it’s sound practice to always send timely notices, regardless of requirements.)
  • You must file any suit to enforce the lien within one year of lien recording, or, for a bonded job, one year from last work on bond claims. Note the lien gives you a little more time.

Calculating dates correctly can be less of a burden with the Calc-U-Lien. Downloadable on IOS or Android devices, this app does the counting and remembering for you.

Once you confirm whether deadlines and exceptions apply to you, also make sure there isn’t another bond you could pursue. If you are a sub-subcontractor or a material supplier to a sub or sub-sub, you may have rights against the subcontractor’s bond. The catch is the bond doesn’t exist in the public record. Since you can’t do a search for this bond, you’ll have to ask the contractor for a copy. Often the contractor is happy to oblige and hopes this will keep you from filing against him. The subcontractor might not be as forthcoming, but you can ask. You can even send a written demand.

On occasion, a subcontractor will lie and say he doesn’t have a bond. We were involved in such a situation and kept digging, eventually discovering there was indeed a bond in play. Our client got paid.

With no applicable exceptions and no other bond to pursue, there are two more options: suing for breach of contract and suing for unjust enrichment. For breach, you just need an agreement with another person or entity. Having that agreement in writing is preferable, but not required. A proposal, a quote, an invoice – even a handshake can work if you provided labor or materials and did not get paid. However, the more proof in writing you have supporting your claim, the more likely you will get paid. See your construction lawyer to review your options.

Beware of pay-when-paid and pay-if-paid provisions. They will cut against your efforts to get paid. Sometimes these provisions are unenforceable, but it’s better to be aware of their potential to derail payment before you sign a contract.

Suing for unjust enrichment is typically used for parties further up the payment chain, including owners. You conferred a benefit (that’s enrichment) and you haven’t been paid (that’s unjust). It’s possible the owner has paid the contractor and the money never got to you. If that’s the case, then you have no claim. These cases can often be more effective prior to the end of a job, when an owner is holding back money from a contractor.

You may be absolutely certain you have missed a deadline that will cost you payment. But are you that certain you have exhausted any available exceptions, pursued other bonds and fully considered lawsuits?  Sometimes if a door seems shut, a window remains open. With additional knowledge and the advise of a construction lawyer, you may still have options for getting paid.

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