Construction Lien: How It Works, Filing a Contractor’s Lien & Using Lien Waivers

When working in construction, few topics cause more confusion and stress than the construction lien. Whether you’re a contractor trying to get paid or a property owner trying to protect your investment, understanding how liens work is essential.

In this guide, we’ll break down what a construction lien is, how a contractor’s lien works, how to file a contractor’s lien, and why construction lien waivers are so important.

What is a Construction Lien?

A construction lien (also called a mechanic’s lien or contractor’s lien) is a legal claim against a property that ensures contractors, subcontractors, or suppliers get paid for work performed or materials provided.

If a property owner doesn’t pay for a construction project, the lien allows the unpaid party to pursue payment by placing an official claim on the property itself. This can stop a sale or refinancing until the debt is resolved.

Who can file a construction lien?

General contractors

Subcontractors

Material suppliers

Even equipment rental companies in some states

How Does a Contractor’s Lien Work?

So how does a contractor’s lien work in practice? Here’s a simple breakdown:

1. The work or supply: A contractor or subcontractor completes work on a property or delivers materials.

2. No payment received: The property owner fails to pay on time, or at all.

3. Lien is filed: The contractor files a lien with the local recorder’s office (or county clerk), legally claiming an interest in the property.

4. Property encumbered: The lien shows up on the property title. The owner typically cannot sell or refinance until it’s resolved.

5. Possible foreclosure: If the debt remains unpaid, the contractor can enforce the lien through a foreclosure lawsuit, potentially forcing the sale of the property to pay the debt.

That’s why it’s such a powerful tool to ensure fair payment in construction.

How to File a Contractor’s Lien

If you’re unpaid for your work, knowing how to file a contractor’s lien is crucial. The process varies by state, but generally involves these steps:

Typical steps to file a contractor’s lien

1. Send preliminary notice (if required): Many states require you to notify the property owner that you’re working on their project and may file a lien if unpaid.

2. Prepare the lien form: This includes details about the work done, property address, amount owed, and parties involved.

3. File the lien: Submit it to the county recorder’s office where the property is located.

4. Serve the lien: Notify the property owner officially (often via certified mail).

5. Enforce or release: If still unpaid, you may have to file a lawsuit to enforce the lien within a strict timeframe.

Important: Deadlines for sending notices and filing liens are strict. Missing them can void your lien rights. Always check your local state laws or consult an attorney.

What is a Construction Lien Waiver?

A construction lien waiver is a document that contractors, subcontractors, or suppliers sign to waive (give up) their right to file a lien against a property.

These waivers are commonly used when payments are made during a project. They protect property owners and general contractors from “double payment” claims.

Types of construction lien waivers:

Partial lien waiver: Given after receiving a partial payment.

Final lien waiver: Used once full payment is made.

Conditional lien waiver: Only takes effect when payment clears.

Unconditional lien waiver: Effective immediately, regardless of payment status.

Lien waivers are a normal part of managing construction risk - just make sure you never sign an unconditional waiver before you actually get paid.

Tips to Avoid Construction Lien Problems

Get everything in writing: Use clear contracts that specify work, payment amounts, and timelines.
Track payments and deliveries: Keep invoices, receipts, and delivery slips organized.
Send notices on time: If your state requires a preliminary notice, don’t delay.
Use lien waivers carefully: Never sign an unconditional lien waiver before receiving your check.
Communicate: Stay in touch with owners and contractors to clear up issues before they become disputes.

Final Thoughts: Protecting Your Rights

Whether you’re a contractor trying to secure payment or a property owner safeguarding your investment, understanding construction liens, how a contractor’s lien works, how to file a contractor’s lien, and the role of construction lien waivers can save you serious headaches - and money.

If you’re ever unsure about the lien process or your rights, consult a construction attorney familiar with your state’s laws. It’s worth it to protect your hard work and financial future.

Short FAQs

Who can file a construction lien?
Contractors, subcontractors, suppliers, and sometimes equipment lessors.

Can a lien be removed without paying?
Generally, no - but it can be contested in court if improperly filed.

How long does a construction lien last?
Typically 6 months to 1 year, depending on state law, unless enforced by a lawsuit.