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The basics of mechanic’s liens for construction contracts

On Behalf of | Aug 8, 2018 | Construction Litigation |

There are many new construction projects starting in Florida almost all the time. These construction projects could include just improvements to existing structures and dwellings or could involve construction of completely new buildings. These construction projects generally begin with the owner of the property signing a contract with a contractor in which the contractor agrees to complete the construction and the owner agrees to pay the contractor for their work.

However, in most instances the contractor is not paid in full up front. There may be a down payment, but usually contractors are not paid in full until all the work is complete. This means that the contractor must simply rely on the owner’s word that they will in fact be paid. Unfortunately, sometimes this does not occur, and the contractor can lose a lot of money as a result. So, to help protect these people, the law allows the contractor to place construction liens — or mechanic’s liens as they are commonly referred.

These liens can be placed on the property by any contractor or subcontractor who worked on the property whether they have privity of contract with the owner or not. Subcontractors who were not paid by the contractor, even if the owner paid the contractor in full, may place construction liens on the property as well. These liens are in the amount that the contractor or subcontractor is owed for the services they provided. They work like any other lien as well, so when the property sells, the liens will be paid before the owners receive any proceeds from the sale.

Most of the time contractors and construction companies are paid for the work they perform, but sometimes owners run out of money during a project or decide not to pay in full for other reasons. These contractors may be allowed to place construction or mechanics liens on the property to help ensure they get paid. These liens can also lead to other disputes, so it is important to understand one’s rights under the contract.