When payment delays and disputes arise in construction, the best course of action is to file a mechanics lien.
Filing a mechanics lien is the most effective method of recovering payment from non-paying clients. When a mechanics lien is filed, a record of the outstanding debt gets attached to the property’s public books, effectively limiting the property’s market value. This is why property owners are wary of dealing with a mechanics lien and they usually choose to pay up just so they can get rid of it.
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However, filing a mechanics lien is not exactly an easy process. It can be simple, yes, but you have to know the rules and regulations concerning mechanics liens in your state. This guide talks about all the basic information you need to know if you want to file a mechanics lien in Idaho.
- Who can file a mechanics lien in Idaho?
- Preliminary notices in Idaho
- How to file a mechanics lien in Idaho
- Important deadlines to remember when filing a mechanics lien in Idaho
- Best practices when filing a mechanics lien in Idaho
Who can file a mechanics lien in Idaho?
Parties who perform labor or furnish materials to a construction project can file a mechanics lien in Idaho. They include general contractors, subcontractors, material suppliers, and equipment lessors, among others.
An exhaustive list of which type of projects may be subject to a mechanics lien can be found in Section 45-501 of the Idaho Statutes.
Preliminary notices in Idaho
In Idaho, preliminary notices are generally not required for all parties. This rule is unlike in most other states, where preliminary notices must be served in order to preserve a potential claimant’s lien rights.
However, there is one pre-lien document that must be served by all general contractors working on a residential project worth over $2,000. If you are a general contractor in such a project, you have to serve a Residential Disclosure Notice.
The Residential Disclosure Notice must be served before a contract is executed. It lists the rights of the homeowner or the residential real property purchaser, and it shall include the following statements, as per Idaho Statutes Section 45-525:
(a) The homeowner or residential real property purchaser shall have the right at the reasonable expense of the homeowner or residential real property purchaser to require that the general contractor obtain lien waivers from any subcontractors providing services or materials to the general contractor;
(b) The homeowner or residential real property purchaser shall have the right to receive from the general contractor proof that the general contractor has a general liability insurance policy including completed operations in effect and proof that the general contractor has worker’s compensation insurance for his employees as required by Idaho law;
(c) The homeowner or residential real property purchaser shall be informed of the opportunity to purchase an extended policy of title insurance covering certain unfiled or unrecorded liens; and
(d) The homeowner or residential real property purchaser shall have the right to require, at the homeowner’s or residential real property purchaser’s expense, a surety bond in an amount up to the value of the construction project.
Additionally, the Residential Disclosure Notice must also include a list of subcontractors and suppliers working for the general contractor for services worth over $500.
Note that the general contractor must keep a “proof of receipt” of the Residential Disclosure Notice. This receipt can be a copy of the notice signed by the property owner.
What happens if you fail to serve a preliminary notice in Idaho?
Failure to serve a Residential Disclosure Notice when required is considered an unlawful and deceptive practice under Idaho’s Consumer Protection Act. You may be penalized if you do not serve a Residential Disclosure Notice as mandated by Idaho’s laws.
How to file a mechanics lien in Idaho
1. Prepare your Idaho mechanics lien form
When preparing the Idaho mechanics lien form, you need to put together the following information:
1. A statement of your demand after deducting all just credits and offsets
This is the amount of the payment that you are claiming. You must not overstate your payment demand, which means that you should stick to the unpaid amount that is related to the services that you furnished to the property.
2. The name of the owner or reputed owner, if known
This is the name of the property owner. Make sure that you have the correct name. You may also write multiple names if there are multiple owners.
3. The name of the person by whom you are employed or to whom you furnished the materials
This is the name of the party who directly hired you for the project. Write their complete business name, including the suffixes (e.g. Ltd. or Inc.).
4. A description of the property to be charged with the lien, sufficient for identification.
This can be the legal property description, or the street address with other details that should make the description sufficient for identification.
You may also include relevant dates in your Idaho mechanics lien form, such as the date when you first and last furnished services to the property.
Lastly, the Idaho mechanics lien form must be notarized before it is filed. Sign your document only when you are in the presence of an authorized notary officer.
2. Record the Idaho mechanics lien
Once your Idaho mechanics lien form is all signed and notarized, you may now file it in the clerk’s office in the county where the property is located. Note that you have 90 days after completing your work on the project to file your mechanics lien. Failure to file a mechanics lien within this 90-day time frame will nullify your lien rights on the project.
Filing the mechanics lien may be done by mail or by walking into the office and having it recorded in person. Your mechanics lien form mailed to the clerk’s office address must include the exact recording fees, so be sure to call ahead and ask how much it costs to file a mechanics lien in your specific county.
The same applies when you walk into the county clerk’s office to file the Idaho mechanics lien in person. Make sure that you have the money to have your mechanics lien recorded.
3. Serve a copy of the Idaho mechanics lien on the property owner
After filing the Idaho mechanics lien, the next step is to have a copy of it sent to the property owner. This is a legal requirement in Idaho: you have 5 days after the filing date to serve a copy of the mechanics lien to the property owner.
Serving a copy of the mechanics lien may be done via personal delivery or via certified mail with return receipt requested. Always get a “proof of receipt” when you serve your documents.
If you deliver the copy of the Idaho mechanics lien directly to the owner, ask them to sign an acknowledgement of receipt form. If you are mailing the mechanics lien via certified mail, choose the return receipt option and make sure that you keep a copy of the return receipt.
4. Enforce or release the mechanics lien
After the mechanics lien has been filed and you have served a copy of it on the property owner, you are basically done with the process. Two things can happen from this point: you will either receive your payment, or you won’t.
If you receive your payment, which is usually the case, the property owner will most likely ask you to release or cancel the mechanics lien. Releasing the mechanics lien means acknowledging the debt has been settled, and you can do this by filing a release of lien form in the same county clerk’s office where you filed the mechanics lien.
Note that there are no official rules on when and how to release a mechanics lien in Idaho after the lien has been satisfied. However, it is still best practice to cancel an Idaho mechanics lien once the debt has been paid.
If, on the other hand, you do not receive any payment from the owner, you have to enforce the mechanics lien. Enforcing a mechanics lien means initiating a foreclosure lawsuit against the property. If you win the suit, you will recover your payment through the foreclosure sale of the property.
In Idaho, you have 6 months within the day of filing to enforce the mechanics lien. If you do not get paid within this 6-month period and you do not initiate a lawsuit either, your mechanics lien will expire and it will no longer hold any power over the property. Make sure that you negotiate the payment terms within this 6-month deadline so you do not waste all your efforts in filing an Idaho mechanics lien.
Important deadlines to remember when filing a mechanics lien in Idaho
Best practices when filing a mechanics lien in Idaho
1. Serve an Idaho preliminary notice even if not required
Idaho does not have preliminary notice requirements for most construction participants. However, serving a preliminary notice on the property owner still has benefits. It opens communication lines between a lower-tier contractor and the property owner.
Those small things could help you get paid faster, so consider serving a preliminary notice in Idaho even if you are not obligated to do so.
2. Deliver a copy of the Idaho mechanics lien on the same day of filing
In Idaho, all lien claimants are required to furnish a copy of the mechanics lien to the property owner within 5 days of filing. The 5-day period is a short time, so to make sure that you do not miss this deadline. It is best practice to deliver a copy of the mechanics lien to the property owner on the same day that you file it in the clerk’s office.
Remember that Idaho laws take deadlines seriously, so you should not risk missing this 5-day deadline and invalidate your mechanics lien altogether.
3. Serve a Notice of Intent to Foreclose before enforcing the mechanics lien
While mechanics liens are highly effective in getting you paid, there are also times when they do not work. Before you enforce your mechanics lien via a foreclosure lawsuit, you should first send a Notice of Intent to Foreclose to the property owner. This notice acts as an ultimatum that might convince the property owner to finally pay up.
A foreclosure lawsuit can be costly for both you and the owners, and sometimes notifying the property owner of your intention to file a lawsuit is good enough to get you paid.