Dore Law - November 2019

THE D or É R eport

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A MINERAL LIEN CAN ‘TRAP’ FUNDS, EFFECTIVELY PREVENTING MONEY FLOW TO THE PROJECT Getting paid can be a challenge because money must trickle down from the top and is exchanged between multiple parties. Money can even be misused before it ever gets to you. However, when you file a mineral lien, it can force this flow of money to stop, and the owner will stop paying its contractor until it gets assurance the claim is paid. In some states, the law requires that the owner withhold funds. The law provides that subcontractors can “trap” funds payable to the contractor in the owner’s hands. The basic principal is that a subcontractor who files a mineral lien is entitled to all amounts due from the owner to the contractor until the claim is paid. When you file a mineral lien in the property records of the county where the property is located, the document will appear on a title search. Anyone who might buy or receive the property after your mineral lien is recorded (and in some states even before the recording) accepts it burdened with your claim. Under most circumstances, this means the property will not be sold, refinanced, or transferred without the mineral lien being paid. A MINERAL LIEN CLOUDS TITLE ON THE PROPERTY

Mineral liens are a valuable and reliable way to assist oilfield service companies in getting paid for services they perform and the materials they furnish on oil and gas properties (including wells and pipelines). Let me give you just a few basics on why you might use this collection tool. MINERAL LIENS INTENSIFY THE SITUATION AND PRIORITIZE YOUR DEBT In some situations, getting an owner or contractor to pay your debt means letting them know you are serious. Filing a mineral lien (or even just sending a notice of intent to file) intensifies your collection efforts and shows the other party involved you are determined. This prioritizes your debt, and you get paid. Oftentimes when working on a project, the owner or contractor is slow to pay simply because they have too many parties to pay, or they do not have the money at that time. It is also common to go unpaid on a project because of a dispute concerning only one invoice. In these cases, the owner or contractor may come up with stories on why they won’t pay, but often, they cave when a mineral lien is filed. That’s because dealing with a mineral lien is expensive and requires lawyers. It can also garner unwanted attention from others involved in the project. PARTIES WILL PAY TO GET RID OF YOU


One reason property owners and contractors pay when faced with a mineral lien is because of how difficult they are to challenge if all the technical procedures are met. Thus, if you file your lien properly, it is very difficult to get a judge to invalidate the claim. Additionally, lien laws are typically construed liberally to protect lien claimants. In conclusion, when negotiating a debt, leverage is everything. A valid and timely mineral lien on the property gives your debt security, gets more parties involved, stops the flow of money, and is difficult to dispute. By filing a mineral lien, you are going to significantly increase the chances of your company getting paid because you are creating leverage. Doré Rothberg McKay files more mineral liens than any law firm in the U.S., and we file nationwide. We offer an affordable, fixed-fee service to file most liens. Call if we can help you. -Lisa Rothberg

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