This is a guest post written by construction attorney Patrick Barthet, founder and principal of The Barthet Firm in Miami. We here at Trekker Group would like to extend our appreciation to him for sharing his expertise with us and our readers. Thank you very much!
When prepared properly and filed correctly and in a timely manner, liens are effective payment tools. But what happens when a lien isn’t accurate—or worse—considered fraudulent? The result is never very good. Here we look briefly at how you can avoid filing a fraudulent lien.
Minor Errors Don’t Invalidate a Lien
First, let’s clarify what does not make for a fraudulent lien. A lien with minor mistakes or errors—especially when the miscalculations have not adversely affected the property being liened—is not considered fraudulent. Neither is a lien in which the incorrect amount is the result of a good-faith dispute. An innocent mistake within an otherwise valid lien for legally lienable materials or services will normally not invalidate that lien.
What Does Invalidate a Lien?
If, however, there is a willful exaggeration of amounts due, or a claim for work not performed or materials not furnished, the lien will be considered fraudulent. Also, if a document is prepared so negligently as to amount to an intentional overstatement, the lien will be considered fraudulent.
Don’t lien for more work than you actually performed, and don’t lien for the additional costs incurred for corrective work.
Interestingly, some courts have gone so far as to extract amounts from a lien which were not proper, such as overhead and profit, and then allowed the remainder of the lien to stand. But this is unusual, and you should not count on such a result.
Liens, being creatures of statute, are almost always interpreted strictly. There is rarely any wiggle room if a non-lienable item, such as restocking charges or office overhead, is included in a lien. Worse, courts are especially unhappy if it is shown that work specifically not authorized by the applicable contract is included in a lien.
The repercussions of filing a fraudulent lien can be quite harsh. Not only would the lien be thrown out, but the filer can be exposed to damages and fees for having filed such a lien.
About the Author
Patrick Barthet is founder and principal of The Barthet Firm, a 12-lawyer construction practice serving South Florida’s construction industry for over 25 years. Publisher of the award-winning blog thelienzone.com, he provides weekly advice for construction professionals. Also instructive is thelienzonepodcast.com, regularly presented by fellow principal Alex Barthet.
Alex Barthet previously wrote Read that Lien Release Before You Sign It for the Trekker blog.