More often than not, filing a mechanic’s lien is enough to persuade a property owner to settle their debts. On the rare occasion when a general contractor or property owner does not cooperate, however, lienholders find themselves stuck between a rock and a hard place. While you’re fully entitled to the payment you earned (and that payment is certainly worth pursuing), having to file a lawsuit to foreclose on the property can be costly and time-consuming.
Luckily, there are other, more cost-effective steps you can take to enforce a mechanic’s lien before going to court. The team at Northwest Lien, in partnership with Sage Linn from Fifth Avenue Law Group LLC in Seattle, offers suggestions on how to enforce a Washington mechanic’s lien in this detailed guide, as well as a few important considerations you should make before moving forward with a foreclosure lawsuit. Continue reading to learn more, or contact our team if you have any questions about your unique situation. We look forward to hearing from you!
Foreclosure lawsuits as a result of an unanswered lien claim are no different than any other kind of lawsuit: you file suit with the Superior Court in the applicable county, which manages payment claims for breach of contract. For lien foreclosure lawsuits specifically, you file with the Superior Court in the county where the construction project is located, typically suing for “breach of contract” or “payment enforcement,” depending on your unique situation.
What really sets foreclosure lawsuits apart from other lawsuits is actually the final result; if the lien claim is upheld in the lienholder’s favor, the lienholder has the right to foreclose on the property and potentially collect their lien amount from the foreclosure sale proceeds.
Because enforcing a mechanic’s lien can involve a lawsuit, it’s important to consider the strength of your case before moving forward with the enforcement — i.e., how likely you are to win in court. Here are a few considerations to make before you enforce a mechanic’s lien:
If we’ve said it once, we’ve said it a thousand times: know your lien deadlines! A Washington mechanic’s lien must be recorded within 90 days of your last date of furnishing labor, equipment or materials, and whether you’ve followed deadlines throughout the lien process will impact the strength of your foreclosure case. It’s also important to note that mechanics’ liens expire after 8 months of lien recording if no foreclosure lawsuit is filed within that time; because it’s difficult to put together a lawsuit on short notice, we recommend conferring with an attorney at least one month before your lien expires (so, 7 months after filing the lien).
How much your lien is worth can impact how aggressive you should be while enforcing it. For example, if the lien is worth a couple thousand dollars or less, you and your legal counsel may choose to take a more passive approach, opting for a demand letter or formal conversation, rather than a lawsuit.
The attitude of the property owner is also an important consideration. If the property owner has been resistant since you initially filed the lien and/or has made active efforts to avoid payment, your legal team may advise you to take a more aggressive approach, quickly resorting to a lawsuit to avoid beating around the bush. Alternatively, if the property owner has been polite and communicative, offering a reasonable explanation for the delay in payment, the lienholder may be more patient and understanding.
The lienholder’s relationship to the property owner is a consideration that comes up often throughout the lien process. Deadlines and requirements, for example, differ depending on whether or not the lien claimant has a direct contractual relationship with the property owner — i.e., if the lien claimant played the role of prime contractor, subcontractor, or laborer on the project in question.
If you were hired by a stakeholder who does not own the property, the actual property owner may not even know a lien has been placed on their property. This lack of communication not only makes it near impossible for the property owner to satisfy the lien claim, but it could also damage the strength of your case if you chose to file a foreclosure lawsuit without giving the owner an opportunity to resolve the lien.
Because no two lien claims are the same, there are a number of other factors that can complicate a lien’s recommended enforcement strategy. For example, a lienholder’s adherence to deadlines and requirements throughout the lien filing process can add to the complexity of the case; if the lienholder potentially missed a deadline or requirement along the way, their lien claim may not hold up as well in court, and their legal team may recommend other measures outside of a lawsuit.
Another factor that complicates cases in court is if the property owner questions the lienholder’s quality of work on the project or if the project wasn’t completed — two situations that can open a whole new legal can of worms. Have a thorough discussion with your attorney before filing suit to ensure you’ve accounted for all of the factors that make your situation unique.
If you’ve decided to move forward with enforcing your mechanic’s lien after considering all of the above factors, we recommend hiring an attorney toward the beginning of the process. Doing so will often save you money in the long run. Once you have professional legal counsel, the best lien enforcement strategy for you may differ from the steps we’ve outlined in this blog post.
Communication is key! We mentioned an example scenario above in which the lienholder — likely a subcontractor or laborer — did not make the property owner aware of their lien claim. If the property owner doesn’t know there’s been a lien placed on the property, it’s more difficult to hold them responsible for paying it. In cases where the property owner is not the person responsible for payment, sometimes having the property owner on your side is helpful in enforcing the lien; a prime contractor’s boss, in effect, is often the property owner themselves, so they can be pretty effective in bringing the hammer down.
Because of situations like these, we recommend sending a copy of your mechanic’s lien to all interested parties by registered mail to ensure everyone’s in the loop. More often than not, if all parties are aware of the lien, someone will step up to pay the claim at some point in the process — be it the property owner, bank, or another related stakeholder. Identify the person most likely to pay, and send that lien off!
For those who filed their lien with Northwest Lien, our team will send copies of the recorded lien via certified mail to the property owner, general contractor, and any other requested party.
Though not legally required, a demand letter (i.e., Notice of Intent to Foreclose) is an extremely effective tool in the mechanic’s lien enforcement process — especially if it comes from your attorney. Demand letters act as final warnings, informing stakeholders once again the lien was filed and you will move to foreclose if necessary. If you choose to send a demand letter, we recommend sending it within 60 days of the lien expiring to ensure the recipient has adequate time to respond.
Depending on the recipient, you may choose to use a more aggressive or less aggressive tone while writing your demand letter. For the party who owes you money, for example, the “demand” letter should stay true to its name, acting as a firm demand rather than a courtesy. On the other hand, if you’re sending a demand letter to someone who does not owe you money directly but has an interest in protecting the property from liens, a polite and informational tone may be more appropriate.
Work with your attorney to determine which approach will work best in your unique situation.
If after multiple attempts you have still not received payment, you reserve the right to file a lawsuit against the person or organization who owes you money and to enforce your lien against the property through lien foreclosure. The result of a successful foreclosure (from the lienholder/plaintiff’s perspective) is the sale of the property as overseen by the county sheriff where the project took place; from there, as outlined in Washington RCW 60.11.070, the lienholder can render the amount they’re owed from the property sale proceeds. The fundamental philosophy behind lien foreclosure lawsuits is simple: you put capital and/or labor into improving a property, so now you’re entitled to collect from the value of the property you worked to improve.
At this point in the process, the best advice we can give is to consult with a trusted attorney. Your lien situation will be different than others, so it’s critical to speak with a legal professional familiar with lien law in Washington state.
Without going too far into specifics, here a couple of other steps you can expect as part of the foreclosure lawsuit process:
All of the steps mentioned above must be completed before the lien expires (within 8 months of lien recording). Once you’ve filed your foreclosure lawsuit, you and your legal team will have plenty of time to “perfect” your lien claim, i.e., develop the case and prove your claim in court.
Finally, once you’ve perfected your lien claim, you’ll serve it to the defendant party. This process, known as serving complaint or completing service of complaint, involves hiring an unbiased legal messenger to deliver the lawsuit to the appropriate persons.
While we hope this guide was helpful, we more so hope you never have to use it! Having to file a mechanic’s lien can be a stressful experience in itself, and going to court to enforce the lien can be a good option but only as a final resort.
It’s important to note that every step listed in this guide (up to perfecting your lien claim) must be completed within 8 months of filing the mechanic’s lien. When it comes to enforcing your mechanic’s lien – know your deadlines, understand your options, and consult with a legal professional early in the process. When it comes to initially filing notices and mechanics’ liens, contact Northwest Lien by submitting the form below. We look forward to hearing from you!