Worker’s Liens: How to Get Your Unpaid Builder’s Account Paid

Posted by - - Debt Recovery.

As a builder or tradesman you likely have experience with difficult clients who refuse to pay. They may be disputing the quality of your work or the reasonableness of your account. They may claim that they are unable to pay or that they are only able to pay in dribs and drabs. They may claim that payment is forthcoming and then never make good on their promises. They may be completely ignoring you. As a famous newspaper editor once said, some people use half their ingenuity getting into debt and the other half avoiding payment.

Non-payment of accounts can have serious consequences for the health of your business and even for your personal financial position. Recovering debts often requires immediate and decisive action, particularly if the debt is significant and you have your own liabilities to meet. You cannot simply wait and hope that the debtor will eventually do the right thing and make payment. Swift action is often the only language that chronic debtors seem to understand.

One powerful tool that is available to you is a lien under the Worker’s Liens Act 1893 (SA).

What is a Lien?

If you have performed work on a property (or have provided materials for use in such work) and have not been paid, you can lodge a lien over that property with the Lands Titles Office. The placing of a lien on a property prevents the registration of dealings with that property. For example, the owner of the property will not be able to register a sale, mortgage or lease of the property unless such transactions are subject to your rights.

The value of a lien is that it prevents the owner of the property from dealing freely with their property as they see fit. The owner may have a great deal of money tied up in the property. The inability to deal freely with it may put them in a very difficult position. In short, lodging a lien may bring considerable pressure to bear on the property owner and make it more likely that your account will be paid quickly.

Who Can Place a Lien?

A lien can be placed by a person or company who contracts to perform work or to provide materials with regard to a property or a fixture on the property. The work must be done with the assent of the owner or occupier of the land.

A lien can be placed by either a head-contractor or sub-contractor. In cases where a head-contractor has been paid but a dispute arises between the head-contractor and the sub-contractor, and the sub-contractor places a lien on the property, the owner of the property will generally put pressure on the head-contractor to pay the sub-contractor so that the lien can be removed.

A lien can also be placed by an employee of the property owner or an employee of a head-contractor or sub-contractor, although such liens are somewhat less useful. If you are an employee who has been underpaid or not paid at all, we suggest you seek legal advice about the options available to you.

How is a Lien Placed? What Happens Next?

A lien is placed by filing a form with the Lands Titles Office and paying a lodgement fee (currently $121). It is important to act quickly because there are time limits for lodging liens, particularly if the time for payment has passed and you have already demanded payment. You should seek urgent legal advice as soon as possible after default by the debtor.

After placing a lien, the Lands Titles Office will send a notice to the owner of the property informing them of the lien.

After the lien is placed, you will need to take legal action to enforce it within 14 days. Otherwise the lien will lapse. You will need to prove the debt. Hopefully, however, the legal proceedings will not be long and drawn out and a compromise or settlement will be reached. In some cases legal proceedings will be completely unnecessary and merely placing the lien will be enough to prompt a quick resolution.

In the event that a hearing is necessary and you are successful, the debtor must pay the debt. Alternatively, the Court may issue a warrant of sale with regard to the property. The proceeds of sale can then be used to discharge the debt (although your rights will be subject to previously registered interests in the land – such as a bank mortgage).

The placing of a lien is a powerful tool that can be used to assist you to recover amounts owing to you. However, the placing of a lien is complex and may not be suitable in your situation. It is important to note that a lien is just one of the options available to you. There are a variety of other options that may be more appropriate in your circumstances. We suggest you seek legal advice regarding whether a lien is appropriate in your case.

We are, of course, happy to assist you with such advice, with the process of placing a lien if appropriate, and with recovery of debts generally.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>