How To File A Lien

Filing a lien entails establishing a legal claim against an asset, often a property or a vehicle, which is commonly used as collateral for payment of a debt. With a lien, a lender has the security of knowing that if the borrower doesn’t follow through on satisfying a debt, the lender will have a legal claim to an asset.

Liens can be filed by an individual person or by an organization like a bank. The party who files the lien is called the lienholder. Liens can be filed by a creditor, or they can be ordered through legal action.

Steps to File a Lien

Filing a lien is a serious legal move and should only be done after exhausting all other options to be paid. It is first recommended that you reach out to the party who owes money to attempt to set up a payment plan or another way to collect payment. Hiring a debt collection agency is another way to avoid the formal legal process of a lien.

If all attempts to be paid fail and filing a lien against the other party is the final option, you can follow these steps to file a lien:

1. Secure a Preliminary Notice. Depending on your state laws, you may be required to notify the debtor that a lien will be filed if nonpayment persists. Some states have a form that must be filed to give notice that can usually be obtained from the clerk of courts. Other states may have time restraints to give notice. Many states require that preliminary notice of a lien must be given within 10 to 20 days of the date work began. It is common to inform parties from the outset that a lien will be filed in the event of non-payment. Due to the variations in state laws, if you are unsure about whether you need to file a notice or how many days you must notify the debtor, you should consult with an experienced lien lawyer to guide you through the lien filing process.
2. Review Deadlines. Each state imposes a deadline in which you must adhere to if you decide to file a lien. In some states, like Louisiana, you only have 60 days from the date the work was completed to file a lien. Other states provide debtors up to a year to file a lien which provides ample time to exhaust other collection methods.
3. Research the Property. If you plan on filing a lien on a property, you will have to complete some research prior to filing. You will need to complete a title search to verify the actual owner and acquire a legal description of the property from the deed. This process can cost a few hundred dollars and it is important to note that if there are other liens currently on the property, they will take priority over your lien which could prevent you from collecting on the debt.
4. Draft a Lien. Once you have decided to file a lien and have completed the research necessary, it is time to draft the lien document. A lien is usually a short one-page document that includes the following information:
   • Creditor details
   • Debtor details
   • Property details

Many states provide forms that can easily be filled out, but some states require additional documents like affidavits to be filed with the lien. To ensure you have all the documents necessary to file your lien in your state and that your lien document is complete, consult with a knowledgeable attorney first.

Filing a foreclosure lawsuit can be a very complicated and time-sensitive process. It is recommended that you consult with an attorney to ensure that all deadlines are met, the lawsuit is filed properly, and you are compensated for the debt owed.

Who Can File a Lien?

Generally, anyone who is owed money can file a lien against the debtor’s property to collect a debt. Liens are most commonly used by contractors who aren’t paid for their services, but anyone who obtains a legal judgment against another party for money owed is entitled to file a lien.