After a Lien is Filed
What happens after a lien is filed depends on the customer and other factors. There are several situations that can potentially occur such as:
1. Your customer decides to pay the account and you can have the lien removed
In this case, the lien process is very straight forward. First you should wait until your customer's funds have cleared your bank account or you should request certified funds to make sure payment is final. Once you have confirmed payment you can request Lien-Pro to discharge your lien. In each province the time it takes to process a discharge and receive confirmation of its removal can vary. For additional information, visit our page on lien removal.
2. Your customer acknowledges the lien being in place but does not want to pay
If your customer has acknowledged that the lien is in place but still refuses to pay the probability of receiving payment from your lien is low. Each province has different rules about the time limit of a lien. In Alberta, for example, your lien is valid for 180 days from the date the lien was placed. In Ontario, liens are only valid for 90 days from the date of last on site working. If your customer refuses to pay within the first 30-60 days, legal action or collections may be an additional action you want to take to help enforce your lien.
3. You are ignored entirely
As stated in number 2, if your customer refuses to acknowledge your lien the likelihood of receiving payment from your lien is low. In this case, you will likely want to pursue alternative options in order to resolve your account – i.e. collections, legal action, small claims court, etc.
4. You are sent a "Notice to Prove Lien" or Notice to Lienholder to Take Action
In some situations your customer may dispute the validity of your lien. If this happens, your customer must send you via registered mail, a "Notice to Prove Lien" or Notice to Lienholder to take Action. This notice outlines your customer's request for you to prove your lien by beginning legal action. Generally you have 15 days from the date you receive the notice to respond. In other cases, the timeline to prove your lien may be longer. The timeline to begin legal action will be dictated in the notice you have received. If you go ahead and prove your lien, a lawyer will be required in order to begin legal action.
5. Money is paid into Court
Sometimes money can be paid into court in order to have your lien removed. In this case, your customer must pay the face value of the lien plus costs typically 10-15% into court in order to have the lien discharged. This generally happens when a large jobsite is liened and the presence of the lien is holding up work or the release or further funds.
For example, if you placed a lien against a large condominium project, the general contractor will not be able to receive money from the bank until your lien is dealt with. If money isn't released, work cannot continue. By paying money into court your client shows they have the funds available; however, they may still dispute your claim. If money is paid into court you must prove the validity of your lien in order to receive the funds. Money paid into court does not guarantee that you will receive it and can take time to be released.
6. Money is paid into a lawyer's trust account
Like paying money into court, your customer can pay the monies owed into their lawyer's trust account. This option is used when your customer would like to have the lien removed; however, they may not want to give you the funds directly prior to the lien being removed. In this case, Lien-Pro is generally in contact with your customer's lawyer and we provide "Discharge in Trust" services. When a "Discharge in Trust" is done, proof of the lien's removal must be given prior to the funds being released. This is a very easy option to use if your customer is hesitant about paying funds to you directly and not having the lien removed.
After you place a lien, the outcome can always vary. Some liens are paid out right away, while others simply sit on a property untouched. Prior to filing a lien it is difficult to determine which scenario will apply to you.
Regardless if your situation has a good or bad outcome we can assist you the whole way and our knowledgeable staff can help you find the best remedy.We offer a free introductory consultation and can answer any questions you may have on what to expect when a lien is filed.