Mechanics lien vs. collection agency: what contractors should do about unpaid invoices
If you supplied labor or materials to a construction project and weren’t paid, you may have two tools: lien rights against the property and ordinary collection. Here’s how they compare.
What is a mechanics lien?
A mechanic’s lien is a security interest in property granted to those who supplied labor or materials to improve it[source]. In practice, it attaches your claim to the property itself, which gives the owner a strong reason to see that you’re paid.
What a collection agency does
An agency pursues the party that owes you, the general contractor, owner or customer, through notices, calls, negotiation and, if authorized, referral to an attorney. It doesn’t need a lien and works whether or not the debt relates to real property.
Side by side
| Mechanics lien | Collection agency | |
|---|---|---|
| Leverage | Claim against the property | Pressure on the debtor |
| Deadlines | Strict, state-specific notice and filing deadlines | Generally the statute of limitations for the debt |
| Who it affects | Property owner (even if they paid the GC) | The party that owes you |
| Cost | Filing costs and often attorney fees | Usually contingency on what is recovered |
| Best for | Construction work on real property with rights still open | Any business debt, including when lien rights have lapsed |
A practical sequence for contractors
- Check your lien rights immediately. Preliminary notice and filing deadlines can be short and depend on your state and tier. Missing one can forfeit the lien.
- Send a written demand to whoever owes you, referencing the contract and any change orders. Use our demand letter template.
- Preserve the lien if your rights are still open, typically with a construction attorney’s help.
- Escalate collection in parallel or afterward: get matched with an experienced collection partner familiar with construction accounts.
When a collection agency is the better first move
- Lien deadlines have passed, or the work wasn’t on real property
- The debt is for materials sold on open account to a contractor you deal with regularly
- The amount doesn’t justify lien and foreclosure costs
See our construction section on the industries page and the full collection timeline.
General information, not legal advice. Lien laws are state-specific; consult a construction attorney licensed in the project’s state.
What does it cost to file a mechanics lien?
Costs vary by state and county: recording fees, any notice requirements and, often, attorney or lien-service fees. Check your county recorder’s fee schedule and your state’s lien statute.
Can I put a lien on a business for an unpaid invoice?
Not automatically. Common routes are statutory lien rights such as mechanics liens, a security interest you took in advance, or a judgment lien after you win in court. Ask an attorney which applies.
Frequently asked questions
What is a mechanics lien?
A legal claim against real property by someone who supplied labor or materials to improve it and wasn’t paid. It can make the property harder to sell or refinance until the claim is resolved.
Can I file a lien and use a collection agency?
Often yes. Many contractors preserve lien rights first, because lien deadlines are strict, and pursue collection in parallel. A construction attorney can advise how the two interact in your state.
How long do I have to file a mechanics lien?
It depends on your state and your role on the project, and the deadlines are often short. We don’t list deadlines here; check your state’s lien statute or ask a construction attorney immediately.
Sources: Cornell LII Wex, “mechanic’s lien” (accessed Oct 18, 2026).
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