A general contractor finished a job and paid his subcontractor in full. Then a supplier he'd never dealt with filed a mechanics lien. The subcontractor had never paid that supplier, and under lien law the contractor was on the hook for it, paying twice for the same work.
What you'll learn
- Why overlooking lien notices leads to financial loss and legal trouble
- How APARBooks automates lien notice management by linking contracts, lien notices, and payments so manual errors don't cost you
What you'll need
- Construction accounting software with lien management
- Digital contracts, invoices, and lien notices
- A process for managing payments and subcontractor relationships
The problem: a lien from a supplier he'd never met
During a demo, a general contractor described a costly situation. He had completed a project and made what he thought were the final payments to a subcontractor. After that, one of the subcontractor's suppliers filed a mechanics lien. The subcontractor had failed to pay the supplier, and that left the contractor legally responsible for the balance. He had to cover the supplier's costs to get the lien released.
The money was one part of it. He also lost time dealing with the subcontractor, the supplier, and attorneys. If he had known the lien status before releasing payment, he could have avoided the whole thing.
The idea: link lien notices to contracts and payments
He believed an automated system that tracked lien notices and tied them to contracts and payments would stop this from happening again. If a notice was on file, no payment should go out until it was resolved.
The solution: APARBooks
- Automated lien tracking. APARBooks creates an alert whenever a lien notice is filed, so no payment goes out while an outstanding notice sits unaddressed.
- Document linkage. The system connects each preliminary lien notice to its contract, supplier details, and invoices, so every step is easy to follow.
- Error prevention. Taking manual paperwork out of the process cuts the risk of a costly mistake and gives the contractor the full picture before deciding to pay.
The impact
Since switching to APARBooks, the contractor hasn't had another lien problem. The automated alerts make sure every lien notice is handled before a payment goes out. He spends less time chasing down notices and payments, he isn't paying twice for the same work, and he can make decisions with all the documents in front of him.
Frequently Asked Questions
Why is a general contractor liable when a subcontractor doesn't pay their supplier?
The supplier can file a mechanics lien against the project. To clear the lien, the contractor has to cover the unpaid balance, even though they already paid the subcontractor in full, which means paying twice for the same work.
How does tracking lien notices prevent paying twice?
When lien notices are linked to their contracts and payments, an outstanding notice blocks payment until it's resolved. The contractor knows a supplier hasn't been paid before releasing funds to the subcontractor.
How does APARBooks alert you to lien notices?
APARBooks generates an automatic alert whenever a lien notice is filed and holds payments until the notice is addressed. It also links each preliminary lien notice to the related contract, supplier, and invoices.
Built for Contractors. Built for Construction Accounting.
APARBooks is purpose-built construction accounting software for general contractors and bookkeepers. Manage job costing, AIA progress billing, subcontractor payments, retainage, change orders, lien compliance, and WIP reporting in one place.
