Instances where a contractor is not paid for his work are few but they do happen and this is when the poor chap does not know what he should do to claim his money. Construction companies give contracts of their projects to various contractors. The number of contractors involved in a project is completely dependent upon the size of the project. If the project is big and it requires several men to work on it, then the construction company will involve more than one contractor or else he will simply go with just one. The construction company pays the contractor on the basis of the work that has been completed. The pay to the contractor is dependent on which phase the work is on. So as and when the contractor completes each phase, he is paid for his work and simultaneously he in turn pays to the sub-contractors.
There are some construction companies who faces severe monetary crunch and are unable to pay the contractors on time. However, the contractors do not stop the work with the hope that he will be paid after the completion of the next phase and will also receive the amount in arrears. Now suppose he completes the entire project and keeps calling the construction company to pay him but see nothing coming out of their pocket. This is when he needs to take the legal course. All that he can do is place a lien on the project which means that as long as you are not paid for your work, no banks can mortgage the property. So for instance, if you are engaged in building a condominium for residential purpose and you are not paid in full by the company, you can place a lien on the entire project which will prevent the buyers to avail mortgage from banks.
This means that the construction company has to first clear all your dues and only once the lien is removed that he will be able to sell the apartments. Such types of instances are rarely seen but they do happen and whenever it happens, the best way to tackle it is taking the legal course and places a lien on the property. The construction companies are also aware of this phenomenon and therefore they ensure that they pay their contractors their full due. They also make sure that the contractors in turn clear the dues of other sub-contractors who were engaged in the project.
In case you need to place a lien on the project, the best way to do so is by talking to an attorney who will advice you on how you can proceed with it. Remember that placing a lien should be the last option and you should not do this if you do not find the company paying you. By doing this, it can also tarnish the relationship and hence it is suggested to be taken only after you have taken every possible option to claim your money.
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There are few construction companies who think that they can get away for not paying their contractors for their work but they can be absolutely wrong and can fall flat on their faces if they ever intend to do it that way. Contractors or any sub-contractors who have worked on a project can place a lien on the property if they are not paid their dues in full. They only need to submit the invoices to the court and then the court will give a ruling in their favor. So there is nothing known as getting away so easily from the strong clutches of the law of the land. However, every state in the US has some variance in their laws and the contractor who is placing the lien must be aware of these laws or else he might invite trouble for himself.
There are different types of liens that a person who has done work can place on the person who is not willing to pay him. But as far as the work of a contractor is concerned, the lien that he can place is known as “Mechanic Lien”. Other than this lien he can’t place any other kind of liens on the property and if at all he does try to place any other lien, it will go against him. Therefore, before he does anything with the lien, he needs to update himself with the process on how a lien works and how he can go ahead with placing it.
He may not know everything about it but some very basic details which ideally every contractor is expected to know. For instance, within how many days he can place a lien on the property and if at all he exceeds those number of days, will he be able to place any lien or have to follow a different process altogether. These small details are important to be known. Other than this, the detailed knowledge about the matter is to be known by the attorney. So if a contractor has to place a lien on a property, he has to first consult his attorney about it and on his advice he may take further action.
In a mechanic lien, a contractor or a sub-contractor or anybody who has worked on a given property and is not paid his dues can place a lien on the assets of the property. Once the lien is placed, you have to send the notice to the project owner and have to keep the notice in public so that no one later can say that they did not know about any such lien on the property. Especially the banks or any financial institutions have to specifically know about any liens on the property. If there is any lien then they will not refinance the property or will not give any loan keeping that as mortgage.
So before you place a lien, it is important for you to know the kind of lien to be placed and not haphazardly place any lien.
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There may have been few instances where you are not paid for the work done on a project. You have been given some or the other reasons by the construction company that you found to be absolutely vague and got the hint that you will not be paid for your work. Situations like these are nothing but a nightmare for small contractors. Firstly, the small contractors do not have sufficient money to pay the workers and if at all they manage to secure the money from any of their sources, they experience a hard time to meet the other operational expenses of their business. On top of that if they see the construction company to be defaulting on them, they can’t imagine anything worse than that. In such a situation, the only thing that they can do is place a lien on the property that will disallow the company to get any loans or any sort of finance on the property.
You can’t place a lien on any property just because you want to. For that, you have to approach the court and put forth your matter to them. Take help of a competent attorney who will guide you with the legal proceedings and also will fight the case for you. Once the court acknowledges and sees that you owe money on the property that will allow you to place a lien on the place. Now once you get the lien, you also get the legal right to sell the property and claim the due amount.
Now the kind of evidences that you can submit to the court is the invoices of the materials that were bought for the construction of the building in the property. Additionally, you can also show the bills that were incurred for the wages you paid to the workers. These evidences will certainly make your case strong and you can hope that the court will rule in your favor. However, there is a timeframe for placing liens. You need to place the lien within a stipulated period of time or else the court will not entertain your plea.
Once you get the ruling in your favor, you have to inform your debtors about it and send a copy of the notice to them. This will give a strong message to your debtors that you are just not letting them go and placing a lien can bring trouble to them. They might then intend to pay you in full and once you are paid in full, you should drop the lien by informing the court that you have received the money in full.
Though placing a lien can work as a tool in recovering your dues, this should not be misused by you in any manner. In case, you approach to the court stating that you have not received the money whereas you have been already paid, it can backfire hard on you. The court may direct the authorities to put you behind the bars. Hence any such intention should be strictly avoided.