If you are a contractor, subcontractor or a person who supplies labor or material on a construction job whether residential or commercial, you need to protect yourselves in this market. We are now getting more inquiries about problems with contractors and owners not paying their subcontractors and suppliers than I recall. There are ways to protect yourself and some of the old thinking about not wanting to risk alienating the owners, lenders or general contractors should not concern you in today’s economy. While these steps do not guarantee payment, it improves your position. Your livelihood is at stake and you can take steps to protect that.
In the two states where I practice, Alabama and Mississippi, and I feel certain in probably every state, there are laws on the books that allow an entity who supplies labor or material to for use in a construction project to place the owner or general contractor and the ‘world’ on notice that you are about to supply that material. This practice has largely been ignored probably because historically most owners and contractors are honorable and have paid. The latter, getting paid, may not be as likely now. Also, I think laborers and materialmen have been relieved and glad to have been awarded a job and thus hesitant to turn around and tell the owner or general- oh by the way here is my notice to the world that I am going to work for you and I am claiming a priority if you do not pay as you promised. That concern in this economy should not override your need to be protected.
If you did not file that notice and payment is not made, you can still takes steps to protect yourself as much as possible by filing a similar notice with the appropriate court of your claimed lien. You will not have the priority (i.e. those who file first are first in line when payment time comes) as those who filed before actually working or supplying. There are limitations in ‘perfecting’ that lien- time limits to file a suit to prove the amount of the labor or materials.
There may be provisions in your contract for attorney’s fees and other costs. Otherwise, you will likely have to work out an arrangement with an attorney to pay him. Just because you had to hire an attorney will not mean the party who owes you money has to pay your attorney. The cost of litigation will be an economic factor in your decision to pursue lien in court. It is less expensive to do it before you supply the labor or materials.
Protect yourselves up front. Contact an attorney and learn about ways to protect yourself. Being one of the first to perfect a lien for labor and material is important. Being prepared for the possibility of litigation from the outset will increase your chances of success. While working your way through these lien statutes may be cumbersome it is not as bad as Alice said in Alice in Aonderland : It’s the most curious thing I ever saw in all my life!"
Civil litigation attorney Billy Cunningham practice concentrates on personal injury, wrongful death, nursing home abuse, business litigation, environmental law and insurance matters. He is licensed to practice in the state and federal courts of Alabama and Mississippi, as well as in the U.S. Court of Military Appeals, U.S. Court of Appeals for the Fifth Circuit and the Supreme Court of the United States.