A wrongful lien can freeze your commercial property and stall your business. It stops you from selling or getting new loans, which puts your finances and reputation at risk.
Arizona law allows you to fight back against these invalid claims. You can remove a wrongful lien by following the right steps to protect your investment and your company.
What is a construction lien?
A construction lien is a legal claim for services or materials that contractors file against a property. This action secures their financial interest and can complicate a property sale or refinancing until you settle the debt.
For example, if a contractor installs a new roof but the owner refuses payment, the contractor might file a claim for the unpaid labor to recover costs. This claim remains on the property record until the owner pays or a court removes the lien.
Challenging a construction lien
You must act quickly to resolve these issues before they cause long-term damage to your business reputation. To remove an invalid lien from your title, you should follow these specific steps:
- Identify grounds: You can look at the filing for errors. A lien can be wrongful if it is groundless, contains false information or is recorded by someone who is not legally entitled to it. It is also invalid if it is missing a 20-day preliminary notice or has a recording date that falls more than 120 days after the work ended.
- Demand to remove the wrongful lien: Another option you have is to send a certified letter saying that the lienholder remove the lien. In Arizona, claimants who record a groundless or fraudulent lien could pay fines up to $5,000.
- File a lawsuit: Request a court order to declare the lien void and clear your property title if the claimant refuses to remove the document voluntarily.
By following this structured approach, you ensure that you address the lien through the proper legal channels.
Protect your business and your property
Understanding how to challenge an unlawful construction lien is vital for any commercial property owner. An invalid lien can tie up your capital and stall your business growth for months if you do not address it immediately. By knowing these pointers, you will have a clear title necessary for your business to thrive.