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Can Contractors File a Lien for Unpaid Work?

Posted by Cliff on from the taking-steps-to-insure-you-get-paid dept.

How About This asks: "Typically contractors are considered unsecured creditors, and if a company is having financial problems it is the unsecured creditors that usually lose out the most, or at least that's my understanding. Is it possible for a contractor that did software design and programming work to file a lien against a company for not paying for work performed? My searches have revealed references to mechanic's liens against land and property, but nothing directly with technology/computer related areas. Anyone have any links to sites or pages with this information? Or references to good (CA) lawyers in this field that can explain things (and has a reasonable initial consultation fee since obviously money is in short supply)."

11 of 42 comments (clear)

  1. Mechanic's lien? by lynx_user_abroad · · Score: 3, Informative
    I suspect any rights you have would be under a construction similar to a mechanic's lien.

    See also: http://www.fullertonlaw.com/chapt1.htm#mechlien

    --

    The thing about things we don't know is we often don't know we don't know them.

  2. Interesting by 4of12 · · Score: 4, Interesting

    <ianal>

    IIRC, mechanics liens are not "active" devices for securing payment, but "passive" devices that prevent the property owner from getting a mortgage or otherwise transferring his asset by sale. A good title search puts the brakes on any kind of transfer, so they have to settle with you before selling assets with recorded titles and deeds like real property.

    I dunno if you need a contractor's licences to file a mechanics lien, but I think there may also be liens designed for suppliers of materials that are left unjustly unpaid.

    </ianal>
    --
    "Provided by the management for your protection."
  3. mechanic's leins by ender's_shadow · · Score: 3, Interesting

    you say you've checked out mechanic's leins.

    but you say you want $$$. mech's leins are only on the property that the mech is working on (ie your care, etc). if you're trying to get compensation, i don't think mech's leins are the way to go.

    1. Re:mechanic's leins by MrResistor · · Score: 3, Insightful

      A mechanics lein prevents (more or less) the leined property from being sold. If it was purely an internal project then this wouldn't be the way to go. If the project was intended to be marketed, though, the company would have to settle with him before they would be able to sell it.

      I don't know if a lein allows one to take posession of the affected property at any point, but that would certainly up the ante!

      --
      Under capitalism man exploits man. Under communism it's the other way around.
  4. Check your contract by bwt · · Score: 5, Informative


    By default, independent software contractors own the copyright on work they produce. Unless you specifically signed over the rights, you probably still own it. Normally if they pay you, then they can use it (that's what they are buying). If they haven't paid you they may be commiting copyright infringement by using your code after you inform them that you have not authorized them to use it unless they pay. If they have revenue flow tied to the software, you might be able to threaten them with an injunction (but see below).

    Even if you have signed over the rights, if they breach the contract that transfers the rights by not paying you, then the whole contract might be thrown out.

    Unfortunately, if they are in bankruptcy, you usually can't sue them until they come out of it. However, if you send them a C&D letter informing them that you own the copyright and want them to stop using it and they blow you off, then they will be notching it up to "willful" violation which has hefty penalties. It is very rare for a company to completely liquidate, so eventually you have some leverage.

    You absolutely need a lawyer (IANAL). Look up the names of some on some of the filings in the DVD-CCA case -- that was in California.

    1. Re:Check your contract by glenstar · · Score: 4, Informative

      Also check to see if there is an AAA (American Arbitrator Association) clause in the contract. If that is the case, then you *must* use AAA for any disputes.

    2. Re:Check your contract by ScuzzMonkey · · Score: 4, Informative

      But if you plumb more deeply, you'll find that a work made for hire is not defined so simply as you think. In essence, work for hire is not defined at all by who is paying for it, but by the status of the person producing it and any agreements they've reached with the person paying for it. Works for hire are primarily produced by employees; a work produced by a contractor, except under narrow and mutually agreed upon circumstances, is the intellectual property of the contractor, and he or she can resell it as often as they'd like.

      IANAL either, but I make sure to check the definitions because I know how sneaky they can be. :)

      --
      No relation to Happy Monkey
  5. You may be out of luck by azadrozny · · Score: 3, Interesting
    I am assuming you are asking this question because you are currently in the situation of being owed money by a company that is unable or unwilling to pay you for work that you have completed. What you need is a good lawyer. There may be State or local laws that help protect you. If the company is in bankruptcy you will want to make it know early in the process that they owe you money. You may not get everything you are owed, but perhaps a good chunk of it.

    If you are just getting into the business you will still want to seek advice from a lawyer. Ask about ways you can structure your contracts so that you get what you are owed. I would ask for a downpayment if you think the company may be short on cash. You can also bill them as you go, once or twice a month.

  6. Go down to the courthouse and read the form.... by HotNeedleOfInquiry · · Score: 3, Informative

    Go down to the courthouse (I know, it's harder than posting your question on slashdot) and ask the cleck to show you the lien form. Read it over, determine whether or not signing it would constitute perjury, and do the right thing.

    --
    "Eve of Destruction", it's not just for old hippies anymore...
  7. "mechanic's leins" aren't liens by auto mechanics! by Tintivilus · · Score: 3, Informative

    You've fallen prey to the suggestion that legal terminology has any bearing to legal practice. The legal term "Mechanic's Lien" comes from before the era of the automotive mechanic. According to tort law, a Mechanic's Lien is that which is filed against property in posession of the debtor in which the creditor has some stake. It involves titles, etc, as explained by other posters, and is commonly called a "Construction Lien" since it's usually used by contractors.

    You're thinking of an Artisan's Lien, which applies to property of the debtor that is physically in posession of the creditor. This commonly the case with auto mechanics.

    So yes, it's odd -- my business law professor had a field day with this one on the exam :)

  8. what your friend did was stupid...try a UCC... by teambpsi · · Score: 3, Insightful

    if the company has serial numbers they can show up on your doorstep with a cop and reclaim it, as well as file theft charges against you

    your best bet so far is to send via certified mail a C&D -- assert your copyrights, and threaten and then absolutely try and file a UCC against them

    it can and will prevent them from obtaining any kind of financing from a bank since it will stick out like a sore thumb

    --

    Old age and treachery almost always overcome youth and skill.