Filing a mechanics lien can seem daunting, but know that it is very effective in helping you get paid.
A mechanics lien gets attached to a property’s public records, so it is accessible to potential investors. Buyers and financiers are less likely to be interested in a property with outstanding payment issues; therefore, property owners are keener on settling payment debts if a mechanics lien is in the picture.
When filing a mechanics lien, you need to follow the strict rules and requirements in your state. This guide will walk you through the process of filing a valid mechanics lien in Hawaii.
Who can file a mechanics lien in Hawaii?
The parties allowed to record a mechanics lien in Hawaii include, but are not limited to, general contractors, subcontractors, and material suppliers. Parties such as architects and design professionals may also record a Hawaii mechanics lien so long as their work is incorporated into the project.
Preliminary notice in Hawaii
Hawaii does not require its potential lien claimants to serve a preliminary notice. However, you may still serve a preliminary notice if you choose to do so.
Why serve a Hawaii preliminary notice?
Serving a preliminary notice allows you to inform a property owner that you are aware of your lien rights. By letting them know that you are willing to record a mechanics lien if you do not get paid for your services, they are more likely to ensure that you receive your compensation on time.
On top of that, serving a preliminary notice also lets you establish communication lines with the owners. This is particularly helpful for those who have no direct contract with the property owner of a project. Letting them know that you are taking part in the construction work can help them track who you are and can speed up the payment process.
When do you serve a preliminary notice?
There is no deadline for serving a preliminary notice in Hawaii. But if you choose to serve a preliminary notice, is it best practice to serve it within the first week of working on a project.
What must be included in your preliminary notice?
A Hawaii preliminary notice may include the following details:
- Your name and address
- The name of the party who hired you
- The name of the property owner
- A description of the property location that is sufficient for identification
- The contract amount or a reasonable estimate of the worth of your services
- A statement saying that a mechanics lien may be filed if you do not receive payment for your services as agreed upon
What happens if you do not serve a preliminary notice?
There are no lien-related drawbacks for failing to serve a preliminary notice in Hawaii. It is an optional step that can get you paid faster, but is otherwise not required.
When do you file a Hawaii mechanics lien?
The deadline for filing a Hawaii mechanics lien is within 45 days of the project completion. A project is considered complete when a Notice of Completion is filed. Without a Notice of Completion, the official completion date will be one year after the substantial completion of the project.
How to file a mechanics lien in Hawaii
1. Prepare your Hawaii mechanics lien form
A Hawaii mechanics lien must have the following details:
- the names of the parties who hired you
- the name of the general contractor
- the names of the owners of the property and any person with an interest in it
- the amount of the claim
- a description of the labor or materials furnished
- a description of the property sufficient for identifying it
- any other matter necessary to a clear understanding of the claim
Be sure that all pieces of information above are included in your Hawaii mechanics lien. You may also specify the name of the surety of the general contractor and the names of the mortgagees of the property, if any, but these details are not required.
Note that the Hawaii mechanics lien does not have to be notarized.
2. Record the Hawaii mechanics lien
After preparing your Hawaii mechanics lien form, record it in the circuit court where the property is located. The rules for recording vary in each court, so you should contact the court in the area of interest to ask about the fees and other additional requirements for recording a mechanics lien.
Note that filing a Hawaii mechanics lien is a legal action and is best done with the help of an attorney. You are not simply getting your documents recorded; you are filing a document in court and the court determines whether your lien should attach or not.
Also note that recording a Hawaii mechanics lien must be done within 45 days of project completion. If a Notice of Completion has been filed, a project is considered completed on the filing date of this notice. If there is no Notice of Completion, a project is considered completed in one year after substantial project completion.
Your Hawaii mechanics lien must be recorded with the circuit court within the 45-day filing period from either of those dates, whichever applies to your case.
3. Serve a copy of the mechanics lien on the owner and other parties
After recording your Hawaii mechanics lien, you are required to serve a copy of it on the property owner and other parties with an interest in the property. Service must be done in person, which means that you should personally deliver the copy of the recorded mechanics lien to the owners and other relevant parties.
After serving the mechanics lien on the property owner, the circuit court will hear your mechanics lien and determine if it must attach to the property’s records or not (i.e. if your mechanics lien has grounds and is valid). The hearing can happen at any time between 3 and 10 days after filing.
4. Enforce the mechanics lien
When the court determines that your mechanics lien must attach, all you need to do is wait for your payment. If you get paid, it is the lienee’s responsibility to file a lien release with the court’s clerk.
If, on the other hand, you do not get paid, you can enforce your mechanics lien by initiating a foreclosure lawsuit. This enforcement action is another legal process with which you can recover your payment through the foreclosure sale of the property, assuming you win the suit.
In Hawaii, the deadline for enforcing a mechanics lien is within 3 months of the date when the lien attached. There is no possibility of extension. Missing this 3-month deadline will cause your mechanics lien to expire and it will no longer be enforceable.
Prior to initiating a foreclosure action, you may want to serve a Notice of Intent to Foreclose on the property owner. Doing so may be enough to get their attention and get them to release your payment without having to go through a costly legal process.
Important deadlines to remember when filing a mechanics lien in Hawaii
Best practices when filing a mechanics lien in Hawaii
1. Serve a preliminary notice even if it’s not required
Hawaii does not obligate any of its potential lien claimants to serve a preliminary notice, but it does not mean that you should completely forego this step. Serving a preliminary notice opens communication lines between you and other higher-tier parties. If there is open communication between project stakeholders, you may even prevent payment disputes and delays altogether.
2. Seek legal help in filing a mechanics lien
The mechanics lien process in Hawaii is more complicated because it is a legal action done in court. When you record a mechanics lien, you get the court to hear your case and determine if your mechanics lien is valid. You also need to serve copies of the mechanics lien on parties with an interest in the property. It is best practice to gather all lien documents and authorize a legal representative to file them for you.
3. Serve a Notice of Intent to Foreclose before enforcing a mechanics lien
Before enforcing a mechanics lien, you may warn the property owner about the potential foreclosure lawsuit by serving on them a Notice of Intent to Foreclose. Serving this notice could catch their attention and urge them to finally pay up. This is a simple additional step that can help you get paid without going through the whole foreclosure process.
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