Just because it is relatively easy to record a construction lien, doesn’t mean you should. And, it doesn’t mean you should do so without consulting counsel. Why? Because of the fraudulent lien scenario that will not only deprive you of lien rights, but expose you to liability for recording a fraudulent lien.
A fraudulent lien is a lien that:
- willfully exaggerates the amount;
- willfully includes work not performed or materials not furnished; or
- is compiled with willful and gross negligence.
A fraudulent lien can exist if the lien was recorded by an improper / invalid lienor or if the lien includes amounts that are not lienable under the law.
If your lien is declared to be a fraudulent lien, it can expose you to losing your lien, attorney’s fees, costs, any lien transfer bond premium, and, potentially, punitive damages in an amount not exceeding the difference between the amount claimed by the lienor to be due and the amount actually due.
Check out this article for more information on fraudulent liens. The moral is do not be careless when preparing a construction lien as it will give the owner the argument that the lien is a fraudulent lien. The best approach is to consult with counsel to ensure your rights are properly preserved and the lien is properly prepared.
Please contact David Adelstein at firstname.lastname@example.org or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.