Getting Paid for Unpaid Construction Work: Understanding When To Pursue a Mechanic’s Lien and Other Options You May Have

You’re a contractor who renovated a bathroom, given a home’s exterior a facelift, or perhaps you’ve constructed an addition that adds square footage to a residence. Or, you may have performed work on a commercial building like re-mortaring its brick exterior, framing its interior, or putting up drywall to divide up an open space. No matter the job, the expectation is that you’d get paid for the work you performed. What happens if you don’t, though?

If you find yourself in a dilemma where you’ve unsuccessfully tried to get a customer to pay for unpaid construction work, you have options. Below, we’ll help you understand when to pursue a mechanic’s lien and also discuss other options you may have to recover what you are owed.

Understanding What a Mechanic’s Lien Is

A mechanic’s lien serves as a vital safeguard, guaranteeing payment to contractors, subcontractors, and laborers who have contributed their expertise and effort to a construction project or property improvement. This legal tool effectively secures compensation for these individuals in the event of a sale of the property.

Once in place, the owner of that property would not be able to derive any proceeds from the sale of their property without first addressing any outstanding liens placed against it. Every debt against property has its own priority status, and a mechanic’s lien ranks pretty high on the list, meaning mechanic’s liens are one of the first security interests to be satisfied when placed on a property. 

Alternatives To Mechanic’s Liens

Mechanic’s liens need to be filed within tight deadlines. If placing a mechanic’s lien on a property doesn’t seem like the right fit for your situation, or you missed the filing deadline, some of these other options might be your solution towards getting paid:

Getting a Debt Collector or Collections Attorney Involved

A collection agent or lawyer who takes on delinquent debt cases will have expertise and access to the appropriate technology necessary to put forth their best effort to collect what you’re due. This option may be particularly ideal if your customer’s outstanding balance is low or your in-house team has so far been unsuccessful in collecting the money you’re owed.

Filing a Case in Small Claims Court

If your customer owes you less than $10,000, you might want to consider suing them in small claims court for their account balance. 

The biggest downside in cases like these is there’s generally not enough of an outstanding balance due to warrant getting a lawyer involved, which means that you’ll need to build and present the case in court on your own in hopes of recovering any compensation you’re due. The good news, though, is that cases like these tend to pass more quickly through the legal system since they’re not decided on by a jury, which means that you have a strong potential of getting what you are owed faster than filing a claim in district or superior court..

Filing a North Carolina Prompt Pay Act Lawsuit

This state law, codified as N.C.G.S. §22C, requires timely payments for both private and public construction projects. Any customer who fails to make timely payments for your services may be assessed 1% interest on any amount they owe you until you are fully paid for your work. 

Filing a Breach of Contract Lawsuit

This option may be most appropriate if there’s a significant balance you are owed and you have a written contract with your customer that outlines the scope of the job you were hired to perform, payment terms, and other details that you can prove they violated. The financial settlement that you may be entitled to recover in a case like this may not only be the outstanding balance you are due for the work you completed but also additional damages.

What To Know When Deciding Between Different Debt Recovery Options as a Contractor

Filing a mechanic’s lien might not be as straightforward as simply pulling together your invoices, proving you paid for materials, producing a contract for your work, or showing pictures of work you completed. There are specific noticing requirements and deadlines that you must adhere to as outlined in North Carolina General Statutes, § 44A:-7 et. seq., which is our state’s lien statute and perhaps other obligations you may have, depending on your unique situation.

Some of the other options listed above may be ideal for your situation if you are looking to get paid for unpaid construction work. However, deciding between the options available to you can prove challenging without the help of a lawyer who is experienced in handling construction law cases like this.

At Anderson Jones, PLLC, our attorneys are accustomed to working with building contractors like yourself on a wide range of contractual and debt collection issues, such as mechanic’s liens cases. Let’s discuss the debt your customer owes you and the best options for collecting it once and for all. Give our office a call or email us to schedule an initial consultation with a member of our legal team.