Importance of Lien Documents for Contractors

Lien-Document

Lien documents are a legally binding legislation that garners great importance among contractors as well as property owners. As such, they should be carefully written and vigilantly used according to the situation. 

What are Lien Documents?

In a very general sense, a lien is a notification of interest, a passive right of one party to retain a property until all debt or financial obligations associated with that particular party are paid in full. This essentially makes the property unsellable.

What Does It Do For Contractors?

Liens were created to secure the financial interests of the contractors working on specific projects. It is very commonly used in the construction industry to protect them from getting cheated out of their hard earn money. Putting a lien on property makes essentially makes it unsellable and the ownership cannot be transferred until all debts associated with that property are paid in full.

Why Is It Needed?

Oftentimes construction projects are started and finished with the assumption that once all work is done, the contractor will be paid in full. However if the owner is not satisfied for whatever reasons or simply doesn’t feel like paying, the contractor is left with no options since he can’t just remove the property and sell it somewhere else. Liens, in particular a mechanic’s lien provide contractors with that sense of security.

It should be noted that form of legal protection is usually used as a last resort by contactors. In addition to completing their project on time, they want to establish a good working relationship with the clients and owners. Lien documents ensure that both parties are kept in check and the entire project goes smoothly from start to finish.

Source: Lien Documents Southern California