Any construction professionals operating in the State of Indiana need to have a firm understanding of Indiana’s construction lien laws in order to ensure that their right to payment is protected and that they have a proper method of collecting compensation for work performed or materials provided in place. This is essential as all construction professionals, whether you’re a contractor, subcontractor, or developer, know the domino effect that frequently occurs when an owner fails to pay a contractor on time. For those that fail to take heed of the necessary time limits and notice requirements, there’s a wide variety of errors that can end up having a significant effect on a lienor’s right to file a construction lien.
Below, we’ve outlined just a few of the most common construction lien mistakes made by contractors within the Hoosier State, including exaggeration of lien claim and notice mistakes. If you wish to avoid these types of mistakes when filing a mechanic’s lien, we highly recommend that you get in touch with an Indianapolis contractor lawyer who can help you comply with the appropriate lien requirements and deadlines.
Exaggeration of Lien Claim
Perhaps one of the easiest mistakes to make during the process of filing a mechanic’s lien is exaggerating the lien amount. It may seem pretty straightforward that the lien amount should be the amount of money you’re owed; however, there’s a good deal of legal nuances associated with what project expenses should and shouldn’t be included in the lien amount. What can and cannot be included in the lien amount actually varies from state to state. Indiana, fortunately, is fairly generous in what can be included in the lien claim total, allowing for expenses to the extent of the value of the labor or materials provided to the project. Attorneys fees, however, should not be included in the lien amount. If you are currently facing sanctions or criminal charges as a result of exaggerating the amount of your mechanic’s lien, contact an Indianapolis construction litigation attorney as soon as possible to protect your reputation and your bottom line.
Failure to Serve a Notice
In Indiana, prime contractors are not required to provide a preliminary notice at the beginning of each construction project. However, sending a preliminary notice is considered best practice, and subcontractors are still required to provide preliminary notices on residential owner-occupied projects. Given the fact that most liens will cause a ripple effect across the entire construction project and bring progress to a screeching halt, your best option is to send a preliminary notice, regardless of legal requirements. If nothing else, it gives the other party one final opportunity to provide the owed payment before you resort to legal action and file a mechanic’s lien. Most project owners are more likely to respond to the lien and provide payment rather than deal with a lien being filed on their property. If you need assistance with sending a preliminary notice, just reach out to one of the Indianapolis construction attorneys with Cotney Construction Law.
Related: Avoiding Construction Lien Mistake
Missing the Deadline
This may be the last mistake in this list, but this common occurrence is actually one of the biggest errors that a potential claimant can make. For prime contractors, subcontractors, suppliers, and others, the deadline to file a mechanic’s lien in the State of Indiana is 60 days on residential projects and 90 days on non-residential programs. Once the lien has been filed, you have 1 year from the date on which the lien was received for recording to enforce the mechanic’s lien. The only time this enforcement deadline can be shortened is in the event that a property owner sends a 30-day Notice to Foreclose to the claimant. Should you fail to file suit within these 30 days, the lien is rendered null and void.
If you think this sounds confusing or even overwhelming, you’re not alone. These complicated deadlines are the very reason that an alarming number of contractors fail to file or enforce their lien with the required time period. Fortunately, help is available. When you partner with an Indianapolis construction dispute attorney from Cotney Construction Law, we’ll be with you every step of the way in filing, recording, and enforcing your mechanic’s lien. You won’t have to worry for even a single second about navigating the process of figuring out what forms to file or when to provide the necessary documents because a highly-experienced attorney will be right by your side.
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.