Construction Law
Why Abusing Liens is a Bad Idea Part 2
Filing fraudulent liens in the construction industry can have serious consequences on contractors, subcontractors, and materials suppliers. When you signed your contract, you agreed to be paid a certain amount of money for the work you completed, but sometimes, projects don’t go exactly how you anticipated. Whether you’re angry about the way things transpired on the project site or believe you didn’t receive what you deserve, filing a fraudulent lien can have severe consequences.
In part one, a Charlotte contractor license defense attorney discussed the purpose of mechanics liens and how they can affect contractors. Now, we will discuss the dangers of abusing your power to file a lien.
Common Arguments for Fraudulent Liens
Typically, fraudulent liens are not an accident. Contractors commonly feel like their power has been stripped by owners who weaponize money to influence projects, and in many cases, this leads to long-standing animosity between contractors and owners. Fittingly, the most common arguments for fraudulent liens include:
- The fraudulent claim is a result of a contractor who is owed money because they failed to file a lien on a different project funded by the same owner before time expired.
- The fraudulent claim is a result of personal reasons related to a specific property owner, typically one the contractor has a spotty past with.
As a contractor, a strong, combative response to an owner you don’t necessarily trust can create more issues rather than solving the problem at hand. When communication fails and you feel left in the dark, the mechanics lien is generally your best tool for reconnecting with an owner; however, you have to ensure that your filing is justified and not a byproduct of emotions. If you plan to file a lien, make sure it doesn’t meet one of the following descriptions:
- Exaggerating the amount due
- False date of last work
- False claim of required notice
Consequences of Fraudulent Liens
The statutes governing the use of mechanics liens have established specific consequences for filing or neglecting to release a lien that is deemed fraudulent. In circumstances where this isn’t the case, state laws may outline the consequences for abusing liens. These consequences can be either monetary or criminal in nature, but typically, the lien will be voided and the lien claimant will be responsible for paying damages to the owner, or contractor in the case of a filing from a subcontractor or materials supplier. These damages can include the costs of bonds, attorney fees, and more. In U.S. ex. rel Roberts v. Ternullo, the filing of fraudulent liens lead to criminal charges and jail time.
Abusing your power to file a lien against an owner is both irresponsible and unadvised. If you’re worried about getting paid for your work or your license is under attack because you allegedly filed a fraudulent lien, consult a Charlotte contractor license defense lawyer.
If you would like to speak with a Charlotte contractor license defense lawyer, 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.