Make It a Priority to Protect Your Mechanic’s Lien and Bond Rights

Mechanic's liens are one of the strongest tools that construction credit professionals can use to mitigate the risk of nonpayment. But filing a mechanic's lien correctly and on time can be a challenge as each state has its own laws governing the steps it takes to file the lien—and those laws can change quickly.

Failing to properly file a mechanic's lien can cost your company hundreds of thousands of dollars if your customer does not pay. But credit professionals do not always have the spare time to comb through the laws in every state or keep up with any changes on their own. That's where NACM's Lien Navigator comes to the rescue.

"Since I decided to subscribe to the Lien Navigator, it has saved me so much time in the long run," said Theresa Lightfoot, credit assistant at Clopay Corporation (Mason, OH). "I feel more empowered having the information on the laws of each state of the project at my fingertips. It helps from the onset to know if it is necessary to send the 'notice to owner' (NTO) right away, or if it can wait."

Although the internet is a useful tool for researching about state statutes, it is not always accurate. "Many times, when you're looking at this information on the internet, it'll only focus on the mechanic's lien statute of that state but our Lien Navigator is all inclusive," said Chris Ring of NACM's Secured Transaction Services. "It helps you understand what you have to do and when you have to do it to make sure that your lien and bond rights are maintained."

Stay organized with statute information in all 50 states, the Canadian provinces and U.S. territories—especially when selling to customers in multiple areas. If you don't stay organized, you run the risk of losing lien or bond rights. "Google is a great tool but are you looking at the most recent statute or are you looking at an older one from 2013?" Ring asked. "Once you select the state and project type, you are given detailed steps to take next, from the notification in order to preserve the right to file a mechanic's lien and when it has to be served."

The Lien Navigator is a multi-purpose tool that can elevate your credit department and ease the worry of missing a mechanic's lien filing deadline, said Ed Buchanan, corporate credit manager at Chatham Steel Corporation (Savannah, GA). "We take advantage of the states tab to stay updated on statutes and the quick links section for training and updating our team members," he said.

The "States Requirements at a Glance" link in the "Quick Links" section of the Lien Navigator is so helpful, Ring said. Among other things it details those states that require preliminary notices quickly after first furnishing, states that allow you to file a lien when selling to a sub-sub-contractor and our "Construction Credit Academy" has unique state webinars, webinars on waivers, a webinar on bankruptcy considerations, and so much more.

NACM's Secured Transaction Services acts as an extension of your credit team with superb customer service. Anybody who subscribes to the Lien Navigator has 24/7 access to the Construction Credit Academy, which offers a selection of free webinars on a variety of construction topics. "The most important aspect of our Lien Navigator really is our customer support because we provide a lot of information which is extremely helpful to our members," Ring said.