Miller, Ross & Goldman
Global Commercial Debt Collection & Legal Services
Global Commercial Debt Collection & Legal Services
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Construction projects often involve multiple contractors, subcontractors, and suppliers, all working together to bring a development to life. With so many parties providing labor and materials, it is common for multiple construction liens, also known as mechanics’ liens, to be filed against the same property.
When several liens exist, lien priority determines who gets paid first if the property is sold, refinanced, or foreclosed. For contractors, subcontractors, and property owners, understanding how lien priority works is essential to protect financial interests and avoid costly disputes.
In most cases, lien priority follows the principle of “first in time, first in right.” The lien filed earliest will usually take precedence over those recorded later. However, construction liens often operate under special rules that set them apart from other liens, making filing dates only part of the story.
Lien priority is heavily influenced by state statutes. Some states base priority on the date a lien is filed, while others use the date construction work began as the deciding factor. This variation means contractors must be aware of local rules to secure their position.
Although all construction liens serve the purpose of securing payment, they can arise from different roles within a project:
Each of these lien types may compete for priority, creating complex disputes when payment is delayed.
Construction liens often gain special priority by statute. For example, in some states, a subcontractor’s lien may relate back to the date the first work or delivery of materials occurred on the project, even if the lien is recorded later. This can place contractors and suppliers ahead of lenders who record mortgages after the project begins.
Lien priority can also be affected by contractual agreements. Lenders may require subordination clauses or lien waivers to ensure their financing maintains a higher position. Contractors and subcontractors must review these agreements carefully to avoid unintentionally giving up rights.
In many jurisdictions, construction lien priority relates back to the date visible work began on the property. This can give contractors and subcontractors priority over mortgages or other liens recorded after the project’s start.
Key Rules to Know:
This system can create challenges for owners and lenders. Lenders often require lien waivers before releasing funds, and owners must carefully track payments to avoid disputes. Failure to manage lien rights properly can lead to costly delays or foreclosure issues.
Even though this blog focuses on construction liens, it is important to note that tax liens and government claims often outrank construction liens. Federal and state tax liens usually move to the front of the line, which means contractors may lose priority if taxes are unpaid. Contractors should always confirm whether outstanding tax obligations exist before starting work.
When multiple construction liens are filed, courts or foreclosure proceedings determine the order in which claims are satisfied. The highest-priority lienholders are paid first from available proceeds. Lower-priority claimants may receive partial payment or nothing at all if the funds are insufficient.
If a property faces foreclosure, the distribution might proceed as follows: unpaid property taxes first, then construction liens, followed by mortgages or judgment liens. For contractors, being in the correct priority position often determines whether payment is secured.
Timing is one of the most important factors in lien priority. Every state has strict deadlines that dictate when a lien must be filed after work is completed or materials are delivered. In some states, contractors may only have 60 to 90 days to file, while others allow a longer period. Missing this window can completely eliminate lien rights, no matter how much money is owed.
Filing promptly, also helps secure a stronger priority position. If multiple contractors or suppliers are working on the same project, those who record their liens earlier may gain priority over those who delay.
Even a short lag in filing could mean falling behind another creditor when payment is distributed. Contractors should track project dates carefully and prepare lien paperwork in advance to avoid costly oversights.
A lien must be filed correctly to be enforceable. Courts take a strict view of lien accuracy, and small mistakes can have major consequences. Errors in the property description, the legal name of the debtor, or the amount claimed may result in dismissal of the lien. Deadlines must also be followed precisely, as late or incomplete filings are often rejected.
Accuracy extends beyond paperwork. Contractors should maintain clear, detailed records of contracts, invoices, payment demands, and communication with the property owner. These documents serve as critical evidence if the lien is challenged in court.
By ensuring that every detail is accurate and complete, contractors protect themselves from disputes that could otherwise invalidate their claim.
Construction lien law is highly technical and varies significantly from state to state. Rules governing deadlines, notice requirements, and lien validity can differ even between neighboring jurisdictions. For this reason, many contractors and suppliers choose to work with attorneys or commercial collection agencies that specialize in lien enforcement.
Professional guidance provides two key advantages. First, it ensures compliance with complex statutes so that the lien is not lost on a technicality. Second, it strengthens the creditor’s position by pairing legal expertise with collection strategies that increase the likelihood of recovery.
A knowledgeable partner can track deadlines, prepare accurate documentation, and, if needed, escalate the lien into litigation or judgment enforcement.
Priority is not always based on filing date alone. State laws, statutory rules, and contractual agreements all shape the outcome. Contractors, subcontractors, and suppliers who understand these rules, act quickly, and file accurately are in the best position to protect their payment rights.
At Miller, Ross & Goldman, we offer construction lien services to help construction professionals navigate lien disputes, secure priority, and recover what they are owed.
If you are dealing with multiple lien claims or need help protecting your rights, our team is here to provide expert guidance and proven results. Contact us today to get started.
