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Last Restorts for Debt Collections--Option 2

Residential home
A lien is a claim against a property as security for a debt.
Photo © iStockphoto/Mark Rasmussen

Mechanic's Liens

A lien is a charge, claim, or incumbrance upon the property (usually a building or vehicle) of another as security for a debt. If the debtor attempts to sell or refinance or apply for credit, the lien will cloud the transaction, and the debtor will have to get the lien released by paying off the debt. A lien holder can sometimes force the sale of an asset (foreclosure) to pay the claim.

A mechanic's lien is a special type of lien originally designed for building contractors, tradesmen, and others who provide improvements to real estate. Mechanic's liens usually have priority over other liens and are easy to file. In many states, mechanic's liens are not limited to those performing services that improve property, but are available to other contractors as well, including pest control contractors. At least one state we are aware of, Florida, has a special pest control lien.

Liens only work when your contract or agreement is with the property owner. They are mostly limited to residential accounts where the residents own their homes. Mechanic's liens cannot be used against renters, and are difficult to use in commercial accounts because businesses usually lease or rent their property, and businesses may go out of business before you can collect.

Laws on liens vary greatly from state to state so be sure to consult with an attorney the first time you plan to use a mechanic's lien.

Typical Filing Procedure

Where pest control companies are permitted to use the mechanic's lien process, it will usually be quite simple. Typically, you send a certified letter to the debtor informing him of your intentions to file a mechanic's lien. Often, simply notifying a debtor that you are filing a lien will generate payment. If not, you fill out a mechanic's lien form and file it in a county court (with a fee) within a specified time.

A lien is valid for a specified time, ranging from 90 days to two years, after which it expires unless you have filed a lawsuit to enforce it. Up to this point, a mechanic's lien is a simple process. Now attorneys come into the picture, as well as the risk of a counter suit. Obviously, your decision to continue will depend on the size of the debt.

Other last resort collection options:

Back to main article, Last Resorts for Debt Collections

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