Construction liens protect parties to a construction project

Construction projects in Nashville are complex affairs with many parties working together to complete the project. Contractors, subcontractors, laborers, machinists and suppliers all make essential contributions to the project, and their roles and responsibilities are generally defined in construction contracts.

Sometimes, however, projects do not go as anticipated. If one party does not fulfill the obligations under their contract, specifically, the duty to pay other parties for work done, this can cause the unpaid party to suffer financially. Construction liens exist to protect unpaid parties to a construction project.

Construction liens protect parties

Tennessee allows unpaid parties to a construction project to obtain a construction lien. A construction lien compensates unpaid parties by giving them an ownership interest in the project until they are paid what they are owed.

Property with a construction lien on it cannot have a clean title until the injured party is paid and the lien is lifted. In extreme cases, the property is forced to be sold in order to pay what is owed under the lien.

Construction liens are generally only an available remedy if there is a written contract between the parties. Construction liens are only good for a specified time period. In Tennessee, this is one year.

Construction liens vs. mechanic’s liens

A construction lien is a bit different from a mechanic’s lien. A mechanic’s lien is taken out by all parties to the project and remains effective until the project is completed, and all parties have been paid what they are owed.

Mechanic’s liens are important should the property be foreclosed upon or repossessed. Mechanic’s liens have priority under such circumstances, meaning that they will be paid before other claims and debts against the property will be paid.

Construction liens are important

Construction liens are important because they help ensure all parties to a construction project will be paid what they are owed. Not all aspects of a project go as planned, but all parties still deserve to be compensated for work done. Construction liens can help an unpaid party receive what they agreed to under their contract.

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