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Mechanics Lien Filings Reach an All-Time High Due to COVID-19

The coronavirus disease 2019 (COVID-19) outbreak has wreaked devastating havoc on the construction industry from mounting delays and missed deadlines to layoffs and a sick workforce. Among these trends, U.S. mechanics lien filings have reached an all-time high. Now, more than ever, contractors are choosing to take advantage of the legal tools at their disposal to secure payment. 

Below, a Houston construction lien attorney with Cotney Law discusses the various reasons speculated to be contributing to this increase as well as what you can do to take advantage of your legal rights during these unprecedented times. If you want to ensure your construction business will survive an economic downturn caused by COVID-19, now is the time to take quick action to receive money owed to you on jobs you have performed. 

Related: An Overview of Texas Mechanic’s Lien Law

Why Are More Contractors Choosing to File a Mechanics Lien?

In order to understand why more contractors are choosing to file a mechanics lien in the wake of COVID-19, it’s important to review the state of the construction market before COVID-19. Prior to the pandemic, the construction market faced an optimistic economic outlook with a record high industry confidence index. It’s entirely possible, given the availability of projects and projected growth of the market, that contractors neglected handling missed or delayed payments. 

When the global recession, also known as the Great Lockdown, happened, construction businesses became desperate for any payment they could get. Between sick workers and shipping delays on materials, many contractors were struggling just to keep their doors open. When even a single missed or delayed payment could lead to total bankruptcy, it’s easy to see why contractors are choosing to protect their cash flow via a mechanics lien. 

Related: The Intricacies of Filing a Mechanic’s Lien in Texas

Why Should You File a Mechanics Lien?

If you’re awaiting payment on any job, it’s time to consider filing a mechanics lien. As the world faces one of the largest economic downturns, you need to take a hard look at the money owed to you on projects you have completed and take action to secure your payment. Rather than focusing on the negative consequences of the outbreak, such as disruptions in supply chains or project delays, you should focus on what you can currently do to secure the future of your construction business. 

The first step you should take to protect your business is to file your lien as quickly as possible. If your state does not require a notice of intent to lien before you can file, then forego the process of sending a warning. Since many counties are still closing their doors to the public, file your lien remotely via electronic recording. Then, once the other parties have received an electronic notice, monitor the situation closely. 

If you would like to speak with one of our Houston construction lien attorneys, 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.