Mechanics lien


ericepv
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I've been down the small claims route before (and yes, I already have the paperwork) but my main concern is collecting even after a judgement in my favor. As I am out of town (NY vs AZ), I may need to hire a Marshall if the defendant still refuses to pay even after a judgement in my favor. Based on what I know so far, a lien provides much more incentive to pay up.

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To mature a Lien, you foreclose on the property. If you don't do this, the lien dies. (at least in California). The incentive of the Lien is when the owner wants to sell or refinance a property since Liens must be cleared before either of those.

 

Did you look into hiring a collection agency? If the relationship with the client is dead, bring in the closers.

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Something else I've heard of is "theft of professional services".  You don't have the same burden of restricted lein filing time, and may be able to file a lein after successful judgement.  Less burdensome than small claims, but more bite.  However, I have not actually gone through with this process yet, its something my accountant's other clients have used successfully.

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1 hour ago, Gawdzira said:

To mature a Lien, you foreclose on the property. If you don't do this, the lien dies. (at least in California). The incentive of the Lien is when the owner wants to sell or refinance a property since Liens must be cleared before either of those.

 

Did you look into hiring a collection agency? If the relationship with the client is dead, bring in the closers.

 

Was going to be my next suggestion too, as I think you'd need to goto AZ to represent yourself in Court or have someone do it for you = $$$$

 

M.

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4 hours ago, ericepv said:

I've been down the small claims route before (and yes, I already have the paperwork) but my main concern is collecting even after a judgement in my favor. As I am out of town (NY vs AZ), I may need to hire a Marshall if the defendant still refuses to pay even after a judgement in my favor. Based on what I know so far, a lien provides much more incentive to pay up.

And you believe foreclosing a lien on their house will be cheaper and easier???

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8 minutes ago, Kbird1 said:

 

Was going to be my next suggestion too, as I think you'd need to goto AZ to represent yourself in Court or have someone do it for you = $$$$

 

M.

Check the court you will be filing the claim in and see if they do teleconference or zoom meetings.  Since the scamdemic, this is a new option to “going to court”

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2 minutes ago, parkwest said:

Check the court you will be filing the claim in and see if they do teleconference or zoom meetings.  Since the scamdemic, this is a new option to “going to court”

 

Good point , luckily I have not been involved in a SC Case since well before Covid.

 

M.

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1 minute ago, Hammer7 said:

In summary, don't spend 20k to get back 5, just sayin...

 

 

 

Good point ...made that mistake myself ....once.... since I knew I was 'in the Right' so was a matter of principal.

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And at the very least document the bejeezus out of everything including your time posting here. You can write it off as a bad debt including all efforts to collect. Collected or not a lien and a judgement will show up as "high impact" on their credit report. As Alan said - collection agency. They'll have fun screwing with them for a contingency. 

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I have a side business in collecting civil judgments on a contingency basis. You have some good advice already:

 

1) Unless you know the lien laws for the state you're filing in, you may not be able to enforce it ultimately, and then you will be on the hook financially for removing the unenforceable "cloud" on the title. It could end up costing YOU. It will also be very expensive to enforce, assuming that a foreclosure is even possible in your client's state.

 

2) Small claims court is likely the best bet, assuming that the claim limitations are acceptable. Depending on how your agreement is written, you MIGHT be able to file the suit in your OWN jurisdiction. (I'd check with an attorney.) Then, you can "domesticate" the judgment to your client's state and do the garnishment there. A judgment is very powerful. You might be able to just levy a bank account, file a wage garnishment, have the sheriff levy property for an auction, and other fun stuff. A collection agency probably will just make annoying phone calls or write letters. This is something you can do yourself.

 

3) Change your business practices so you don't find yourself in this position again. 

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3 hours ago, parkwest said:

And you believe foreclosing a lien on their house will be cheaper and easier???

I really don't know, that's why I'm asking for advice.

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4 hours ago, madcowscarnival said:

Something else I've heard of is "theft of professional services".  You don't have the same burden of restricted lein filing time, and may be able to file a lein after successful judgement.  Less burdensome than small claims, but more bite.  However, I have not actually gone through with this process yet, its something my accountant's other clients have used successfully.

Worth looking into but it sounds like I'd need to hire an attorney $$$.

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5 hours ago, Gawdzira said:

To mature a Lien, you foreclose on the property. If you don't do this, the lien dies. (at least in California). The incentive of the Lien is when the owner wants to sell or refinance a property since Liens must be cleared before either of those.

 

Did you look into hiring a collection agency? If the relationship with the client is dead, bring in the closers.

I'm looking into that now.

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I believe (I am not an attorney obviously and I recommend you consult one to be sure) that Arizona is like Washington that unless you provided a written right to lien property which they signed or sent a certified mail within 90 days of commencement of work that you no longer have lien rights.  Again that is the case in Washington state and I did live and work in Arizona for a short while and I believe it was the same case there.

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1. Did you have a contract?

2. Does the contract state what to do? (arbitration clause?)

3. How much money are we talking about?

 

A Stanford MBA costs about 150k right now. If you have not accumulated losses of $150k in your business yet, then you have saved the difference by not getting that MBA. Just another way to look at it?

 

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5 hours ago, Gawdzira said:

To mature a Lien, you foreclose on the property. If you don't do this, the lien dies. (at least in California). The incentive of the Lien is when the owner wants to sell or refinance a property since Liens must be cleared before either of those.

This is not exactly correct. If you don't initiate foreclosure proceedings within the statutory time period, then the lien becomes an unenforceable cloud on the title, which the holder statutorily can sue you to remove. If you want to be paid when/if the house is sold, then you need to file an abstract of judgment, after you get a judgment, of course.

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11 minutes ago, Gawdzira said:

1. Did you have a contract?

2. Does the contract state what to do? (arbitration clause?)

3. How much money are we talking about?

 

A Stanford MBA costs about 150k right now. If you have not accumulated losses of $150k in your business yet, then you have saved the difference by not getting that MBA. Just another way to look at it?

 

I do have a contract that holds the client responsible for debt collection and legal fees. It's not a large amount (less than $500.00) but something is better than nothing. I'm not about to let him get away with skipping out on his bill.

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6 minutes ago, ericepv said:

I'm not about to let him get away with skipping out on his bill.

 

That was my thinking too a few years ago and it cost me more than the loss of earnings to chase it.....  Let the Debt Collectors handle it and it's a bonus if they get something in the mean-time the rest is a Bad Debt and can be written off.

 

M.

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