Payment issues often come up in construction projects. To deal with delinquent clients, construction participants are advised to record a mechanics lien.
Filing a mechanics lien increases your leverage during payment disputes. This document serves as a public record that informs potential investors of an outstanding payment debt related to the property they are interested in, so it can essentially limit its market value. Property owners are more willing to step in and pay up just so they can get rid of a mechanics lien.
Every state has its own rules on how a lien claimant must record a valid mechanics lien. This guide focuses on the rules and requirements for the state of Vermont and discusses the important deadlines as well as the best practices to keep in mind.
- Who can file a mechanics lien in Vermont?
- Preliminary notice in Vermont
- When do you file a Vermont mechanics lien?
- How to file a mechanics lien in Vermont?
- Best practices when filing a mechanics lien in Vermont
Who can file a mechanics lien in Vermont?
Parties who have lien rights in Vermont include general contractors, subcontractors, and material suppliers. Note that subcontractors of any tier in the contracting chain may file a mechanics lien in Vermont.
Preliminary notice in Vermont
Who is required to serve a preliminary notice?
No potential lien claimant is required to serve a preliminary notice to preserve their lien rights in Vermont. However, note that serving a preliminary notice allows a potential lien claimant to be “visible” to property owners and to possibly speed up the payment process.
When do you serve a preliminary notice?
Preliminary notices may be served at the beginning of a project.
What happens if you do not serve a preliminary notice?
There are no consequences directly related to your mechanics lien rights if you fail to serve a preliminary notice in Vermont. Serving a Vermont preliminary notice is not mandatory in recording a mechanics lien.
When do you file a Vermont mechanics lien?
The deadline for recording a Vermont mechanics lien is within 180 days of the date when the payment for your last furnished services becomes due.
Say, for instance, your work on a project is complete and the payment is due on October 1. If your client fails to pay up by October 1, you should record a mechanics lien within 180 days of this date.
Note that deadlines are strictly enforced in Vermont, so be sure to record a mechanics lien on time.
How to file a mechanics lien in Vermont?
1. Prepare your Vermont mechanics lien form
Vermont requires mechanics lien to have two important pieces of information: 1) the date the payment is due, and 2) the signature of the lien claimant. You may include other details to support your claim, but make sure that these two important bits of information are included in your mechanics lien form.
The other details that you may include are the following:
- Your name and address
- The name and address of the general contractor
- The name and address of the party who hired you
- A description of the property that is sufficient for identification
- A description of the services you provided
- The amount due
The Vermont mechanics lien must be notarized prior to filing, so be sure to sign your form only when in the presence of an authorized notary officer.
2. Record the Vermont mechanics lien
The Vermont mechanics lien must be recorded in the clerk’s office in the same town where the project is located. You can file a mechanics lien in Vermont either by mail or in person.
When filing your mechanics lien through mail, you should include your payment for the filing costs. To know the exact cost for filing a mechanics lien, it is best to first phone the town clerk’s office and verify how much the filing fees are.
Also note the deadline for filing a mechanics lien in Vermont. You have 180 days from the date the final payment becomes due – failing to record a mechanics lien within this date erases your lien rights over the project. This means that you may no longer record a mechanics lien to recover your payment for this work.
In Vermont, you are not obligated to notify a property owner that a mechanics lien has been filed. However, it is best practice to still serve a copy of the recorded mechanics lien or to at least let the property owners know that you have recorded a lien claim. Property owners do not like having mechanics liens attached to their properties, and they are highly likely to pay up once they are made aware that you have filed a mechanics lien.
3. Enforce/release the Vermont mechanics lien
The next step depends on whether you recover your payment or not. If the mechanics lien is successful and you get paid for your services, you may release a mechanics lien. If the mechanics lien does not work and your services remain unpaid for, you should enforce your lien claim.
Releasing a Vermont mechanics lien
You are technically not obligated by law to cancel or release a mechanics lien once it has been satisfied. However, most property owners might ask that you release your mechanics lien as a condition for payment. Releasing a mechanics lien in Vermont is as simple as filing a release document in the same town clerk’s office where the original mechanics lien was recorded.
Enforcing a Vermont mechanics lien
Enforcing a mechanics lien is done by initiating a foreclosure lawsuit against the property. If the property owners do not seem to be willing to pay up, winning the foreclosure lawsuit can allow you to recover your payment from the foreclosure auction of the property. You have 180 days from the recordation date to enforce a mechanics lien.
Within the same applicable 180-day time frame, you should also obtain and record a prejudgment Writ of Attachment of the property. The judgment must contain a brief statement of the contract on which the claim is founded.
Before initiating a foreclosure lawsuit, consider serving a Notice of Intent to Foreclose first. The Notice of Intent to Foreclose warns a property owner that you are about to file a lawsuit against them, which could potentially get their property foreclosed. This may catch their attention and urge them to pay up without your filing a full-blown lawsuit.
Best practices when filing a mechanics lien in Vermont
1. Include significant details in the mechanics lien
Vermont does not prescribe a specific mechanics lien template, and it only requires two pieces of information to be on the mechanics lien form: the claimant’s signature and the date the payment is due. However, it is best practice to add more context to the claim by adding other details, including the property owner’s name and address and a description of the services provided, among other pieces of information.
2. File the mechanics lien with the clerk of the town where the project is located
One of the more common mistakes in recording a mechanics lien in Vermont is filing in the wrong town clerk office. Keep in mind that you must file a mechanics lien in the clerk’s office in the same town where the project is located. You should not record the mechanics lien in the town where your office is based; the correct place for filing a Vermont mechanics lien always depends on the project location.
3. Serve a Notice of Intent to Foreclose prior to enforcing the mechanics lien
A foreclosure action will use up your time and resources because it is a full-on lawsuit. If you serve a Notice of Intent to Foreclose before filing the lawsuit, you may be able to recover your payment quicker. No property owner would want their property foreclosed, so serving a Notice of Intent to Foreclose may encourage them to pay up, especially if they know that you are about to initiate a foreclosure action.