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Can Liens Be Issued for Government-Owned Property?

A changing economy is pushing more construction companies to do work for governments. There is nothing wrong with this as the government always has work that needs to be done. However, working for the government is not like working for a private entity. The same rules and protections still apply for most of the work, but the mechanisms to handle problems are different. Where construction companies file liens against private projects, doing the same thing against a government project is complicated. In this article, a Nashville contractor attorney discusses your options for filing a lien against a government-owned project. 

You Can With a Caveat

The simple answer is that it is complicated, you can file a lien-like claim against a government-owned property. There are claims that function similarly to a lien that work against government projects. They offer the same protection as a lien in that the project owner has to pay you or otherwise resolve your lien before doing anything with the property. 

However, the answer is also no, you cannot file a lien against a government project. Liens cannot apply to government projects because of how they work. This is because of some subtle differences in how government projects are handled. Since you cannot file a lien, you’ll have to rely on a lien-like process that the government already has in place. 

The Problem in Detail

Liens give you a stake in the project as collateral. If the property is sold, you have to be paid. In some cases, the lien might be enough to force the property to be sold so that you will be paid. Government-projects are immune to liens since the government does not let any private citizen gain a stake in their projects. Because of this, liens cannot be filed against government projects.

The government recognizes the problem here since not being able to file a lien means that your work is less protected. The government created other options besides a lien that can be used and essentially function the same way. All you have to do is file a claim instead of the lien and you can get the same result.  

Payment Bond Claims

One of the most-used methods is a payment bond claim. Payment bonds are like payment insurance for a government project, and most governments are legally required to have a payment bond for every project. You can file a payment bond claim, which functions just like a lien, and the payment bond company will handle it.

 This may be a better option for you than a lien. Payment bond companies almost always have the resources to cover any claims made against a project. If you are diligent about filing your payment bond claim in an appropriate time frame, you won’t have to worry about being paid. One of the downsides to this process is that it is more complicated than filing a lien. You may want to work with a Nashville construction lien lawyer to make sure that you get the process right. 

The Bond Company

If you need to file a bond claim, then you must do so with the bond company directly. You can find the bond company’s information in the documentation that you received at the beginning of the project. The bidding documents often have it listed so that companies can take it into consideration while they bid on the project. 

Not Everyone Can File a Claim

There are limits to who can file a bond claim in a project. It is generally limited to the top tier of contractors that support the project. The main contractor and first and second-tier subcontractors can file claims. First and second-tier suppliers can as well. They can only file claims directly related to the work done on-site as well as some related costs. This is to protect the government from overinflated claims. 

The Process

There is a process for filing claims with the bond company. Every government agency and the attached bond company should have a detailed process for filing claims. It begins by sending a notice to the company outlining the details of the claim. This is called a Miller Act Notice. There are several different types of Miller Act Notices that you can file depending on the type of contractor you are. 

Time Limit for Filing the Claim

Regardless of what type of Miller Act Notice you need to file, there is a time limit for how long you have to file it. In general, you have 90 days to file for your claim to be considered. However, the sooner you can file, the better. This gives the company more time to address the claim and make sure that you will be paid. 

Collecting Information About the Project

When you develop your Miller Act Notice, some companies find it helpful to have more information about the project. All of the documentation that you have about a project, including the bidding packet and contract documents, may not tell you everything that you want to know about the project. Fortunately, there is another way to get the information that you want. 

All government projects are subject to the Freedom of Information Act (FOIA) requests. If you have a Nashville mechanics lien law attorney file one, the agency responsible for the project is required to provide the information that you asked for. It is an effective way to get information from the government. If you need that information to file a notice and the government refuses to provide it, you have grounds for a lawsuit. 

Whether you are filing a lien or taking another type of legal action, the process can be very complicated. This is especially true if you are filing against the government. There are Nashville construction attorneys that specialize in this type of law that can walk you through the legal process. If you have questions about filling Miller Act Notices or claims against a government project, contact Nashville construction attorneys from Cotney Construction Law.

If you would like to speak with Nashville construction attorneys, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.