The general parties to a lien are as follows:
Customer: The person or business entity whom you supply with your labor, materials or services that generate a lien liability on the property of the owner, or money or bond lien on the public entity or payment bond company.
General (or Original or Prime) Contractor: The person or business entity which has a direct contract with the owner or public entity.
Lender: The person or business entity who provides financing for the project, be it an bank, mortgage company, individual, etc. Not all projects have lenders, and public projects almost never have lenders.
Owner: The person or business entity that hold title to the property, and who is ultimately responsible for work performed on the property. Some states allow liens on land that is owned outright (a fee interest) and also on land that is rented long term (a leasehold interest).
Project: Also know as the Job. The present location or site where your materials will be delivered or your labor or services performed.
Public Entity: The Federal Government, state governments and local governments.
Subcontractor: A person or business entity who has a contract with the general contractor, and generally does not have a contract directly with the owner or public entity, to supply labor or labor and materials.
Supplier (or Materialman): A person or business entity who supplies materials solely to a job, and who does not perform any labor on-site. A supplier usually sells to a subcontractor, but can also sell directly to the general contractor or owner.
Surety (or Bonding Company): A person or business entity (generally an insurance company) who provides bonds to guarantee the performance or completion of a job. Types of bonds include contractors bonds, performance bonds, completions bonds, etc. IMPORTANT: You should always notify a surety of your lien claim at all stages of the process, from preliminary notice through the claim filing itself.
The rights available to a contractor, subcontractor or supplier vary. Most states require that a person who claims a lien to follow certain procedures, within certain time limits, in order to enforce the lien. Some of these are:
Attested Copy: This is a copy of a document which was filed with a Clerk of the Court’s office (also called the County Recorder’s office, Registry of Deeds, etc.) and stamped by that office to verfiy the filing. It is often used as proof of the filing. Always get an attested copy of anything you file with the courts.
Claim on Bond: A notice given to a surety that the person giving the notice has not been paid, and will look to the surety (and the bond he posted) to satisfy the debt.
Claim of Lien: A written document, recorded in the county where land is located, which gives notice to the owner and all other persons, that the person filing the notice claims a lien on the land. A claim of lien must be filed within a certain time after the work was completed, or the person ceased performing the work. The time to file varies from state to state, and can be as little as 30 days or less.
Commencement of Action: The filing of a complaint in the proper court to enforce your lien, bond or stop notice rights if the owner or general contractor does not pay. The action must be commenced within a certain time after you file a claim of lien, claim on bond or stop notice. Some states count the time from the last day you could have filed such a claim, rather than the date you actually filed a claim.
WARNING: You should contact an attorney to commence the action, and to advise you of the relevant time limits.
Lien: A charge upon the property of another as security for a debt. The holder of a lien has the right to have the property sold to pay the debt. Most states provide that a person who performs labor or furnishes materials for a work of construction on private property has a right to place a lien on the property if not paid. When a public entity owns the property, contractors and suppliers do not have lien rights against the property, but they may seize moneys held in trust by the public entity, or bond moneys posted by a surety, for the contractor.
Notice, in general: Information concerning a fact which is communicated to a person. Most notices require a person’s name. Most notices required to enforce lien rights must be in writing, and delivered personally, or by registered or certified mail.
Notice of Intention to File a Lien: A notice, required by some states, to the owner, after work has been performed, stating that the person performing the work has not been paid, and intends to file a lien. Federal jobs and some states do not require a notice of intent. The Notice of Intent has similarities to a Preliminary Notice, but the main difference is that a Notice of Intent flatly states your intention to file a lien for non-payment.
Payment Bond: A written instrument, executed by persons or companies called "sureties", which guarantees payment. Public entities usually require general contractors to post a payment bond to guarantee payment to subcontractors and suppliers. On private works, the owner can post a payment bond to guarantee payment to lien claimants to release the lien from the property.
Preliminary Notice: Sometimes called a Notice of Furnishing or a Notice of Intent to Furnish, a notice given by a contractor, subcontractor or supplier to the owner of the property, and sometimes to the lender and the general contractor, stating that the person giving the notice will be performing labor, or furnishing materials, on a job. This notice must usually be given before beginning the work, or within some time (generally 5 to 30 days) after beginning the work. Federal jobs and some states do not require preliminary liens for private or public works. If you have not filed a preliminary notice within the statutory time, this does not mean you should give up your lien- some states provide that you can still lien that portion of your money held less the days from the statutory filing date (i.e., you file on the 21 day of a 20 day requirement, you only lose the lien rights on the first day’s labor or materials). A Preliminary Notice is similar to a Notice of Intention to File a Lien, but the difference is that a Preliminary Notice merely advises of your right to seek a lien the event of non-payment.
Proof of Service: Evidence that written notice was actually served upon (or mailed to or delivered to) as required. The proof may be made by an affidavit, a written declaration signed under penalty of perjury, stating how and when the notice was served. For our purposes, proof of service is generally provide by the green card return of a Certified Mailing with Proof of Service Return Request (available at your local post office or with Pettit and Walz Forms). Personal delivery is another option for most forms.
Recording: The filing of a document in official public records, usually the Office of the County Recorder (also called the County Clerk, Clerk of the Court or Clerk of the Borough in some states). A document which is recorded is notice to the entire world of the matters stated in the notice. In other words, everyone in the world is presumed to know those facts which are recorded, including the identity of the owner of the land. In order to be recorded, most documents must be notarized, which means signed by an official who can administer oaths and attest to the identity of the person who signed the document with a jurist. Lien Writer® can add a notary to most of your documents, and will automatically do so where required by law.
Release or Waiver of Rights: An act, usually by written document, by which the holder of a claim gives up his right to enforce his lien rights against an owner or public entity. Before you give up any of your rights, you should be certain that you have actually been paid. If you sign a release, you may be barred from taking any action to enforce your rights, even if you were not actually paid, although this does not in most cases effect your rights to collection recovery actions from your customer.
Stop Notice: A notice given to an owner, public entity, or lender directing that person to withhold payment from a general contractor, and to set the money aside to satisfy a claim. If the general contractor is not owed any money, then the stop notice will have little or no effect.
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