Dale M. Maas, Attorney at Law
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Understanding labor liens

There are a number of different disputes that can occur as part of a contract and a number of different types of issues that can occur in the context of construction contracts. In general, a labor lien can be placed when a contractor, mechanic or other vendor wishes to ensure full payment for a contract for work on a customer's property. In circumstances when payment has not been received by the date noted on the invoice, the party can place a labor lien on the customer's property to ensure full payment of the contract.

A labor lien grants a security interest in the property to the party that has placed it. Once the contract payment is satisfied, the party that filed it, such as a contractor, releases a security interest. Labor lien enforcement terms are commonly included in construction contracts between a contractor and a customer, for instance. Labor liens must be enforced within a certain period of time following the completion of a project such as a construction project. The time period allowed to enforce a labor lien varies by state and is based on when the project is considered done.

Contract relationships can be delicate, yet extremely important, relationships. It is helpful for parties entering a contract, or enforcing a contract, to be familiar with the contract process, available remedies for breach of contract and how to enforce contract obligations when necessary. Remedies for breach of contract may vary based on the particular context of the situation.

Contract remedies are part of the contract process and contracts are common to most business relationships. Familiarity with the contract process is important to any party conducting business and entering contractual relationships in the course of their business.

Source: Smallbusiness.chron.com, "What Is a Labor Lien?" Accessed Nov. 28, 2015

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