Liens are a powerful tool for material suppliers. A materialman’s lien, also known as a mechanic’s lien or construction lien, provides the right to file a lien against the property to ensure payment of outstanding balances on materials or labor — whether you’re working with contractors, subcontractors, or suppliers/laborers. For the sake of this blog post, however, the team at Northwest Lien will explain how liens benefit materials suppliers specifically, including an overview of materials supplier lien rights.
If you’re a materials supplier, read on to determine if you should file a materialman’s lien to get paid for the work you completed. Though we think you’ll find it helpful, none of this blog post should be taken as legal advice; we recommend you consult with a lien attorney to determine the best next steps for your unique case.
In most states, a supplier of materials to a construction project has the right to file a materialman’s lien. Again, these liens go by a variety of names depending on the state and industry — most commonly, mechanics’ or construction liens — but they all function the same in practice; the lien attaches to the property and threatens the forced sale of the property if payment is not secured. Liens, and other documents filed and sent throughout the lien process, are the single-most effective legal tool for contractors and suppliers. A typical materialman’s lien protects suppliers of both labor and materials, though there are some variations from state to state.
Suppliers are only eligible to file a lien, however, if they filed a preliminary notice on time first. A preliminary notice is a document that notifies the property owner, contractor, and any other interested parties about the supply of the materials or services to the project; it also warns the property owner that, if payment is not received after work is completed, the supplier will intend to file a materialman’s lien against the property.
Nationwide, there are some very short deadlines for sending preliminary notice. In fact, in Oregon, notices must be sent within 8 days of first furnishing for the notice to be considered valid. For a Washington state preliminary notice, the deadline is within 60 days of first furnishing
There are several reasons why a supplier might choose to file a materialman’s lien. Some of the most common reasons include:
When a supplier provides materials or services, the contract must specify the payment period. If there is no time frame for payment, the property owner must pay within 30 days after receiving an invoice from your company.
If a contractor has already paid the property owner but fails to pay your company in time, you may still file a lien.
If the property owner attempts to reduce your payment by undervaluing the work performed, you may file a lien.
Some states will allow for this if there has been an attempt at mediation or arbitration, which failed. If attempting to reduce the payment was not agreed upon in the contract between contractor and property owner, you will need to file a lien.
If the contractor started work but has not yet paid for work or materials, you can file a lien on behalf of your company. This will ensure that the contractor pays for your services.
If the property has been sold and the new owner is unwilling to honor past contracts, you may file a mechanics’ lien. This will ensure that you are still paid for the work or materials provided.
If there are delays in getting your work or materials reimbursed, you may wish to file a mechanics’ lien. This will help ensure that the property owner pays for the debt.
If you agreed to start or complete work, and that work stopped or never began, then there may be a lien possible. This will ensure that you are paid for materials provided and labor performed.
Filing a lien can be a complex process. It can be challenging to know whether an unpaid supplier can file the lien. Below are the factors that determine if a supplier can file a lien:
A supplier can file a lien if there is a written contract between the supplier and either the property owner or their agent. If no agreement exists, then the supplier cannot file.
The following are examples of an agent for an owner:
To check if the owner is acting as an agent, check out the contract. If you’ve contracted with the property owner directly, filing a lien may be unnecessary as the contract itself may be enough legal coverage to ensure payment.
Suppliers can file mechanics liens on general contracts (but not specific projects) even if they are not named in the contract. However, the supplier must agree or have a direct contract with the property owner to file a lien on a specific project.
Suppliers must comply with all statutory notice requirements to preserve their right to file a mechanics lien. They must also provide the owner or agent with written notice within stipulated days of filing the claim for lien to preserve their right to file against multiple projects. We mentioned this twice because it’s very important!
If a supplier sells materials directly to the general contractor, they qualify as an unpaid seller. In this case, the supplier can file a lien against the property owner if the contractor fails to pay them for the materials.
To file a materialman’s lien, the supplier must have supplied goods or services valued at about $500 or more. Therefore, a supplier who has supplied goods or services valued at less than $500 cannot file a mechanics lien.
The supplier cannot file a mechanics lien if they have been paid in full, regardless of whether the payment was before or after progress payments or reimbursement for incurred costs. This one seems pretty straightforward, but sometimes payments get overlooked.
Suppliers can only file claims against public projects if they were specifically named as a subcontractor in the contract to build those public works. In this case, they can file a lien to claim unpaid work if the general contractor fails to pay them for their services as subcontractors.
Another thing to keep in mind: suppliers can’t file claims against projects that involve dedicated public works unless there is an acceleration clause in their contract. This is because the public project exemption protects owners and contractors from defending themselves against multiple claims from unpaid sellers.
A supplier can file a lien if they have supplied goods or services to a particular public project, even if there is no contract between them and the property owner. However, a supplier cannot file a claim against a government-owned entity for supplying materials on an individual private project.
Filing a lien can be a challenging process, but it is important to understand the eligibility requirements to ensure that your supplier has the right to file a claim.
If you’ve determined you’re eligible to file a lien, you must file said lien within a certain period after providing labor or services and before selling any materials. For liens in Washington state, the period for filing a lien is within 90 days of the last day you delivered labor or material. The deadline is not subject to change by contract or agreement.
Before filing a lien, it is important to consult an attorney. To clarify again, Northwest Lien is not an attorney’s office and none of our blog posts should be taken as legal advice — but we’ve been in the industry long enough to know a thing or two, including multiple specialized attorneys we can refer. An attorney can help you determine whether or not the property owner’s actions would violate your rights, and if so, how best to proceed with enforcing those rights.
You should also check state laws carefully before taking any action, as the specific rules that apply to mechanics’ liens vary from state to state.
Before filing a lien, you will have needed to send a preliminary notice to the property owner and contractor. This notice must have included the following information:
If you sent this notice properly and on time, you will have a limited time to file a lien. Be sure to speak with an attorney before taking any action, as there may be specific rules that apply in your state.
When a supplier files a materialman’s lien, it is crucial to be as accurate as possible. Inaccurate information can lead to the blacklisting of the supplier by the contractor or property owner.
In Washington, the lien document must include:
There is no set form to fill out in Washington, so there’s arguably a higher chance of completing your lien document incorrectly, especially if you’re working without an attorney. To ensure your lien document is filed correctly and on time, file your Washington or Oregon materialman’s lien with Northwest Lien, the regional lien experts.
From here, you can file your Washington materialman’s lien in person, by mail, or online. A lien must be recorded by the county auditor’s office where the project itself took place; if the project spanned across county lines, the lien must be filed in all associated county auditors’ offices.
Keep in mind that there are costs associated with filing a lien, so don’t forget to bring a form of payment if you file in person!
Once a lien has been recorded by the county auditor, it is the responsibility of the claimant to send a copy of the materialman’s lien to the property owner within 14 days of recording. The lien is not at risk of invalidation if the claimant fails to serve the property owner a copy, but failure to do so does disqualify you from recovering any legal fees you incurred during the lien process.
Filing a materialman’s lien can be a powerful tool for ensuring materials suppliers get paid for the work or materials they provide. Working with Northwest Lien will be the best move for you. We are a reliable and experienced lien filing service that supports suppliers. We can help you understand the lien process and ensure the correct filing of all your paperwork. Contact us today to learn more about our services!