Lien Laws and Regulations
Expert-defined terms from the Professional Certificate in Construction Liens and Bonds course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
**Bond #
** A bond is a type of insurance that guarantees the performance of a contract or obligation. In construction, a bond is often required by the owner of a project to ensure that the contractor will complete the project according to the terms of the contract. There are two main types of construction bonds: payment bonds and performance bonds. A payment bond guarantees that the contractor will pay all of the subcontractors, laborers, and material suppliers for their work on the project. A performance bond guarantees that the contractor will complete the project according to the specifications and terms of the contract.
**Claim #
** A claim is a demand for payment or performance under a contract or bond. In construction lien laws, a claim of lien is a legal document that a contractor, subcontractor, or supplier records with the county recorder's office to assert a right to be paid for work or materials provided on a construction project. A claimant must strictly comply with the requirements of the lien laws in order to preserve their lien rights.
**Contract #
** A contract is a legally binding agreement between two or more parties that creates a legal obligation to perform a specific task or provide a specific product or service. In construction, a contract is typically a written agreement between the owner of a project and the contractor that outlines the scope of work, the price, the payment schedule, and the terms and conditions of the project.
**Lien #
** A lien is a legal claim or hold on property for the payment of a debt or obligation. In construction, a lien is a legal right that a contractor, subcontractor, or supplier has to assert a claim against the property for which they provided labor, materials, or equipment. A lien allows the claimant to force the sale of the property in order to satisfy the debt.
**Lien Waiver #
** A lien waiver is a document that a contractor, subcontractor, or supplier signs to relinquish their lien rights in exchange for payment. A lien waiver typically states that the claimant has been paid in full for the work or materials provided and waives their right to file a lien against the property.
**Mechanic's Lien #
** A mechanic's lien is a type of construction lien that allows a contractor, subcontractor, or supplier to assert a claim against the property for which they provided labor, materials, or equipment. A mechanic's lien is a powerful tool that can force the sale of the property in order to satisfy the debt.
**Notice of Commencement #
** A notice of commencement is a document that the owner of a construction project must record with the county recorder's office to establish the start of the project. The notice of commencement typically includes the names and addresses of the owner, contractor, and surety, a description of the property, and the estimated start and completion dates of the project.
**Notice of Furnishing #
** A notice of furnishing is a document that a subcontractor or supplier must provide to the owner and contractor to preserve their lien rights. The notice of furnishing typically includes the name and address of the subcontractor or supplier, a description of the work or materials provided, the name of the contractor, and the date on which the work or materials were provided.
**Payment Bond #
** A payment bond is a type of construction bond that guarantees that the contractor will pay all of the subcontractors, laborers, and material suppliers for their work on the project. A payment bond is often required by the owner of a project to protect against non-payment by the contractor.
**Performance Bond #
** A performance bond is a type of construction bond that guarantees that the contractor will complete the project according to the specifications and terms of the contract. A performance bond is often required by the owner of a project to protect against the contractor's failure to complete the project.
**Prompt Payment Act #
** The Prompt Payment Act is a federal law that requires the government to pay contractors and subcontractors within a certain time frame for work performed on federal construction projects. The Prompt Payment Act also requires that contractors and subcontractors pay their subcontractors and suppliers within a certain time frame.
**Surety #
** A surety is a company that provides a bond to guarantee the performance of a contract or obligation. In construction, a surety is often a insurance company that provides payment and performance bonds to contractors.
**Waiver of Lien #
** A waiver of lien is a document that a contractor, subcontractor, or supplier signs to relinquish their