How do you enforce your mechanic’s lien if you have a binding arbitration provision?
It is very common for a construction contract to include a provision for binding arbitration. This means that in any enforcement procedures or for breach of contract for damages, you must seek redress through an arbitrator and not your local courthouse. Frankly, this is a good idea, because traditionally arbitration is a better method to resolve disputes because the arbitrator typically has vastly more experience than a judge. For example, arbitrators are typically experienced construction attorneys, as well as engineers or architects.
But we also know the lien must be perfected through an action to enforce the mechanic’s lien or it will expire. So what do you do if there is an arbitration provision? Simple. You bring a lawsuit in local court through the filing of a summons and complaint. You then prepare a short petition with an order for the judge to sign indicating the proceedings will be stayed pending the outcome of the arbitration, thereby preserving the statute of limitations as to timely enforcement of the mechanic’s lien. You then go on your merry way through the arbitration proceeding and when you have finished, simply confirm the arbitration award as a court judgment.
Technically, an arbitrator may not issue an award enforcing a mechanic’s lien. They can only award monetary damages for the unpaid labor and materials. This is because it is an equitable cause of action that only the courts can do. However, in most cases, if you win the arbitration, the other side makes payment quickly because they do not want a judgment to be entered. Or the arbitrator can simply indicate the prevailing party is entitled to the amount stated in the breach of contract count and to foreclose a mechanic’s lien. When you confirm the arbitration award as a court judgment, the court can then use that language for the foreclosure of the lien itself.