If you're a contractor, you know paying bills can be stressful, especially when you don't get paid for your services. You need to take specific steps to ensure you're protected in case your client never pays.
Sending a notice of intent to lien can help protect your company from unpaid bills. What do you need to know about notices of intent to lien and how to complete them?
This guide details what you need to know to help you protect your company. Let's get started!
What Is a Notice of Intent to Lien?
A Notice of Intent to Lien is a legal document that informs a borrower of a creditor's intention to file for a lien against the borrower or their property. The notice serves as a warning to the borrower of the consequences of non-payment on time; the creditor will go forward with filing the lien.
This means the creditor will have a legal claim to the assets used as collateral for the debt. Liens are usually filed against real estate property and essentially give a creditor the right to collect the value of the debt from the assets or property.
A Notice of Intent to Lien essentially allows the borrower to resolve the situation honourably and outside the court system.
Different Types of Notices of Intent to Lien
There are two main types of Notices of Intent to Lien: Preliminary Notices and Claims of Liens. Preliminary notices are sent to owners before a project begins, increasing the chances of getting paid.
On the other hand, a Claim of Liens is only filed when a contractor or supplier is owed money and needs to recover the funds. Notices of Intent to Lien can also pressure a property owner to pay.
Both types of Notices of Intent to Lien should be used with caution, and it is essential to understand the meaning of both to ensure the lien rights are protected.
Complying with State Laws During the Notice of Intent to Lien Process
Understanding and complying with all applicable laws is essential when issuing a Notice of Intent to Lien. It should be within the required timeframe, and submitting all the necessary paperwork for filing a lien.
The name of any people or entities associated with the project must be adequately documented, and letters of lien must follow lien laws. From start to finish, each state's laws must be followed to have the lien properly accepted and enforced.
Communication between parties must also be maintained to ensure that all parties in the Notice of Intent to Lien process know their rights and responsibilities.
For more info, check these lien services to get you started.
This Guide Will Help You Protect Your Investments
A Notice of Intent to Lien is a powerful tool that allows contractors and suppliers to be paid without legal action. To ensure lien rights are protected, it is essential to understand the requirements and timelines of the state where the project is located.
Now is the time to fully educate yourself and take action if someone still needs to pay you for services performed. Contact an expert today to discuss how a lien may help.
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