Mechanic and Materialmen’s Lien Statements
In an ideal world, you’d always be paid timely for all work your construction company completed. In reality, many construction projects stall because the funding runs dry, which means that many subcontractors and suppliers have to be proactive to get paid. Luckily, the Oklahoma legislature has given construction companies a superpower to collect outstanding payments for work they complete on real property in the state through mechanic and materialmen’s liens.
Creating and implementing a simple mechanic lien system sets construction companies up to file liens successfully, should they need to. This article explains the culmination of your lien system: filing lien statements.
What is a lien statement?
The lien statement contains all of the information about the project that you should have been diligently collecting by using your simple lien system. In essence, it names the property that your company worked on, who owns that property, and the amount of money you’re owed for material, services, labor, or equipment.
Preparing the lien statement
The first step is to evaluate your lien time limits, which is simple. If you have a contract with the landowner, then you are considered a general or original contractor, and you have four months after your last date of work on the job to file a lien. If you do not have a contract with the landowner, then you are a subcontractor or sub-materialman, and you have 90 days from your last date of work on the job to file a lien.
You will file the lien with the mechanic lien department of the county clerk’s office in the county where the project is located. It’s important to note that you only have one year after filing the lien to file a lawsuit to foreclose the lien.
If you performed work or supplied materials to a tenant, you should consult your legal counsel before filing a lien, as there are special rules that may affect your right to file.
An important caveat is that, in some circumstances, you must have filed a pre-lien notice before the mandatory deadline (75 days past the last day of work) to be entitled to file a lien. If you have not done so, you may have inadvertently forfeited your right to file a mechanic lien.
Accompanying your lien statement should be a Notice of Filing Mechanic and Materialmen’s Lien. Oklahoma statute requires that notice be sent to the landowner when a lien is filed against his or her property. The county clerk where you file the lien should mail out the notice. Make sure that you pay a fee for service of the notice and keep the receipt just in case the county clerk fails to send the notice. In that event, you will have recourse against the county clerk.
Releasing the lien
In many cases, you will not need to move forward with a lawsuit to foreclose on the lien. Simply filing the lien is often enough to prompt the landowner or original contractor to pay your outstanding balance. Once you resolve your dispute, you’ll need to file a Release of Mechanic and Materialmen’s Lien. This step involves filing a simple release form with the county clerk in the county where you filed the mechanic and materialmen’s lien.
The benefits of a lien system
A lien system standardizes your information collection and filing so that you achieve consistent results over and over. However, each company is unique, and there’s no single system that will work perfectly for everyone.
Once you create a preliminary system, it’s important to reassess and refine it over time. The purpose of this written system is to help you make more money and achieve your business goals. I encourage you to get in touch to discuss your mechanic lien system and be sure that you’re taking the right steps to reduce your risk of getting sued and increase your chances of getting paid.
