First, what are the down sides to filing a lien beside ending the relationship with the client and potential attorney fee expenses?
Second, of those who have filed liens or know of some that have, how many actually paid, how much, how quickly?
I have filed 2 lien notices and was paid both times before going to court to perfect the lien. In NC it is a 2 step process.
I've had a similar experience in NC. Easy to file. Just did my third one two weeks ago on an individual who won't pay, reply to emails or answer calls.
I got paid on the first two. Funny thing is that on those first two the call came from attorneys who were in the middle of a closing and asked "what do we need to do to clear this lien"? My reply in both cases..."what does 3 years of law school tell you"?
Not real estate lawyers obviously.
For me, the Corporate Treasurer, there were only benefits once we instituted the policy of filing liens on all past due invoices after a certain date. Each state is different in the paperwork and requirements. You have to know the requirements and dates so that you don’t mess up. We found that when the client received the “Notice of Intent to Lien”, they knew we were serious about collecting our receivables. I would say that about 70% paid upon receipt of the Notice of Intent to Lien. Another 25% paid within 30 days of the Lien being effective. I can only remember two clients who never paid. Who knows, the lien may still be on the property?
The unexpected benefits came about as we structured our collection process around the Liens. The clients got statements at 30 days and 60 days. Our collection person called at 45 days. Our collection person contacted the client manager for their suggestion on a day 70 phone call. Either the client manager could call or allow the collection person to make the day 70 call. On this call they were informed that at day 78 we would have to mail the “Notice of Intent to Lien” to protect our position. That call at day 78 would also let them know that if it was an ongoing project, we would have to withhold our services until the invoice was paid. I would say that this process cut our over 90 by 22% within 4 months. We tried to make these calls be friendly and as one of the team. Of course a few of them will turn ugly, but that is business and it was not very many. Day 80 the Notice was sent out and at day 90 the Lien was filed. Who would like to have the receivables over 90 be less than 10%? We pretty much had that for three years running that I knew of.
Maybe later I will write up one classic example.
I had success filing liens when I worked in Florida, and we did lot surveys. My favorite was the clown who received the survey drawings, then told me over the phone he thought the fee (agreed upon in advance) was too high and he wasn't paying. I had the lien filed within the hour, told the title company what I had just done and why, and they paid me the survey fee and the lien fee out of closing. I bet the clown had a fit.
We have generally had good results with filing liens.
We have only had to file maybe a half dozen in the last 30 years, and of that half dozen, one delayed bankruptcy, but the buyer paid for the survey; we had to sue two to perfect the lien and won in both cases in magistrate court acting as our own lawyers; and two paid at closing to be able to consumate the deal.
I have heard anecdotal stories of surveyors being sued for "slander of title" for filing a lien against a property but have not been able to confirm that this has happened.
Does anyone know of a surveyor being sued for slander of title either over a lien or any other reason?
Don't mean to highjack the discussion.
In Arizona you can't just file a lien if you are not paid for the work you performed after any length of time. Doing so could cost you more in a suit brought against you by the client than what your invoice was for. An attorney gave us a presentation about 20 years ago at one of our APLS Chapter meetings, informing us that you have to put the client on notice in writing before you ever start the project with a document of the intent to file a lien. This needs to go along with your work order or contract. It's been too long ago now and I don't remember all the particulars regarding filing liens.
You could get sued for clouding the title.
The client still has to release the money through the
title company. If the title company wants, they can
put the money for the survey in an escrow account.
> First, what are the down sides to filing a lien beside ending the relationship with the client and potential attorney fee expenses?
>
> Second, of those who have filed liens or know of some that have, how many actually paid, how much, how quickly?
Personally I have never filed one... but a few years ago (as I was beginning research on a new job) I emailed a California "20-Day Preliminary Notice" form to a client asking for some additional info so I could complete and file the form. I immediately got a check for payment in full together with a note saying he was sorry I had any extra paperwork and then asked if I could handle another project.
Your mileage will vary...
Filing Liens in Texas is pretty easy.
I use the Mechanic & Workman’s Lien because all you have to do is leave an “improvement” on the property. This can be flagging, paint, nails, rebar, wood stakes & pin flags… you get the idea; plus the labor to install them. Usually just the “Lien Notice” sent by Certified Mail is enough to get their attention and pay up but there are always those who don’t. Here in Texas I can add interest up 18%, which I always do. A couple of years ago one my outstanding liens was involved in a ROW widening project and I received the principal amount plus the 18% for the 2 years it was outstanding. My lien collection rate is 100% … I’m preparing a Lien Notice as we speak.
WA state, 1980's, filed lien for fees due. Did not follow up within the term to effect the lien, so the lien became legally invalid. A coupla years later, they tried to sell a parcel. No lien release so showed on title as cloud.
Got threated with slander of title. I told them to contact the local process server who knows me well and pursue that if you wish. Or pay my claim and costs of filing a lien release. Just told them to kiss my what?!!
Got all my fees and costs with interest. Well over a grand more than if he had just paid the balance.
The only lien I filed in some 30 years practice.
This is correct - in Arizona we are required to submit a Preliminary Lien Notice within 20 days of BEGINNING work on the project. Consequently, we have to identify our deadbeat clients early in the game. requiring a large retainer is one way to deal with this, but not often practiced.
I have had mixed success in cases where I have sent the preliminary notice. One client owed ±$7,000 for over 6 months. We took him to small claims court and he lost and was ordered to pay. He didn't, and our attorney told us that we had to sue again for payment! We declined, and left the lien in place. Several months later a potential buyer came to us and asked us what it would take for us to release the lien. We said "$7,000". He laughed and said "I can bond over the lien for $500". He did, and we never saw a penny, but we did have to pay our attorney's fees...
I file about 3/yr., all have worked except for two. Mechanics lien is your greatest weapon in getting paid on past due accounts. Don't even bother with a collection agency.
