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Here’s why: Missing deadlines have the potential to erode your leverage in your construction claim. When you quickly build your case and hit all the deadlines like clockwork, you maximize your leverage. I have always seen leverage as a combination of risk of loss and the proximity of that potential loss – lien and bond claims are some of the best leverages in that equation.
2. Understanding the Mechanic’s Lien and the Surety Bond
We sometimes forget that a mechanic’s lien is a lien on a property — it can result in the sale of property at auction to pay you what you are owed. It gives contractors special leverage when working on a project, but its enforcement is severely limited in time. The contractor may foreclose on the lien should they need to recover payment related to a project, but if the contractor does not file a lawsuit within a certain timeframe, they lose all of their lien leverage. Surety bonds are a protective insurance product guaranteed by an insurance company (the surety). The big upside to surety bonds is that Insurance companies are required to hold billions of dollars in liquid or semi-liquid assets to pay out yours and other claims against their bond. But a surety bond also has the power defines who is eligible to make a claim against it, and often sets strict and deadly deadlines for any contractor who waits too long.
hours every month to do a deadline audit . All upcoming deadlines should be clearly marked on a calendar for easy reference. Routinely check these deadlines to make sure you’re not too close to crossing the threshold and that proper paperwork has been filed with the correct authorities.
3. Missing Deadlines Drastically Reduces Your Ability to Recover
In short: Keep tabs on everything.
After you pass a deadline, whatever it may be, your leverage begins to evaporate. When the owner of the property fails to pay their bill, it has a trickle effect. The owner cannot pay the general contractor, who then cannot pay the trade contractors or subcontractors. If you missed crucial deadlines related to a mechanic’s lien or surety bond, your options are limited. Here’s another factor to consider: coronavirus (COVID-19). The COVID-19 pandemic has slowed everything down, including payment to general contractors from owners. It also has slowed payments to trade and subcontractors. The end result is a ripple effect. I am seeing an increase in the number of clients missing deadlines due to the delayed payments. It puts everything on a very tight schedule, and people are running up against deadlines through no fault of their own. They are left asking, “What can I do?”
This is paramount if you are currently unpaid and deadlines are looming. Due to interplay contract clauses, the general contractor may be under no obligation to pay their subcontractors unless the owner pays the general contractor. It puts subcontractors at a disadvantage if they are unaware of their deadlines. File a mechanic’s lien (and hit the appropriate deadlines) and you may be able to overcome this challenge. If you have any questions about mechanic’s liens, surety bonds, and their associated deadlines, please email me at jwyatt@harrisonlawgroup.com. Don’t let tight deadlines
or slow payment processes get in the way of your rights as a trade or subcontractor. File the appropriate claim and keep deadlines top of mind.
4. Pay Close Attention to Deadlines
-Jeremy Wyatt
I cannot stress this enough. One of the simplest steps you can take to avoid missing deadlines is to take a few
jwyatt@harrisonlawgroup.com
www.HarrisonLawGroup.com
(410) 832-0000
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