What Happens After I File My Lien? How Do I Get Paid ? - Mississippi Webinar

In this blog, presented by SunRay Construction Solutions and Lynn P Thompson, Attorney, Biggs, Ingram, & Solop, PLLC, construction professionals in Mississippi can learn in detail about the various do’s and don’ts that they need to follow to ensure that their lien remains valid, and they get paid successfully.  
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Definition of ‘Lien Action’ and ‘Payment Action’ (Miss. Code Ann. §85-7-401(c) and (d))

Let us assume that you have properly filed your lien in the correct county, and you have provided all the required notices, the next thing that you must do to enforce your lien to get paid is to file a ‘lien action’ or a ‘payment action’.

1. Lien Action – A lien action means a civil action against the owner of the improved property to perfect and make the lien permanent created by 85-7-403.

2. Payment Action – A payment action means a lawsuit, proof of claim in a bankruptcy case, or a binding arbitration to establish the amount, if any, owed to a lien claimant.  

Payment Action vs. Lien Action (Miss. Code Ann. §85-7-305(1)(d)(ii))

A payment action is typically made against the party with whom you have got a contract, or a purchase order and they haven’t paid you. This means that you will file a payment action directly against the party with whom you have a dispute.

1. However, there may be situations, such as the owner has not made the payment to the prime contractor, bankruptcy, death of an individual, or payment is not due as per the contract agreement, then the lien claimant can enforce the lien directly against the property.

2. The lien action must be filed within the required time for filing it.

3. The lien claimant is limited to judgement in rem against the property which means that you can satisfy the amount of your lien against the property and there would be no personal liability upon the owner of the property.

4. Another key point to remember is that a lis pendens notice should also be filed along with the commencement of this action, with a copy to the owner and contractor.

• A lis pendens is typically a book with information on all the litigation that has been filed on the property. So, if there is any action pending against the property, it would appear in the lis pendens book.  

• In Mississippi, if you do not timely file your payment action or lien action and if you fail to file the lis pendens notice at the same time, then you will not have any lien rights.

• The purpose of filing this lis pendens notice is to let other claimants know that there is an action pending that affects the ownership of or liens against that property.    

Where and When to File Suit to Recover Amount of Claim? (Miss. Code Ann. §85-7-405(1)(c)(i))

You can file the ‘payment action’ in:

1. County Court (up to $200,000)  

2. Circuit Court

3. Chancery Court (this is where you will typically file your lien action)

4. Arbitration

Below are the timelines to follow with regards to when to file your ‘payment action’:

• Within 180 days after the date of filing for claim of lien; or

• Within 60 days if a Notice of Content is filed.

This 60-day deadline is typically to benefit the owner or contractor against whom the lien is filed. So, if they want to bring an action forward sooner to resolve the lien, then they can reduce the 180-day deadline to 60 days.  

Time for Commencement of Payment Action may be Shortened with Notice (Miss. Code Ann. §85-7-423(1) and (2))

1. An owner or an owner’s agent or attorney, or the contractor or the contractor’s agent or attorney, may elect to shorten the time 180-days deadline by recording a “Notice of Content of Lien” in the Chancery Clerk’s office, along with a proof of delivery to the lien claimant.

2. The notice to the lien claimant must be sent via registered or certified mail or statutory overnight delivery at the address notice on the face of the lien.

• So, make sure that when you file your lien, you put in your correct address because you need to watch out for the Notice of Contest of Lien because if you receive it, then you have only 60 days to file your payment action.

3. This notice should be sent within seven days of filing the “Notice of Contest of Lien”.  

4. You can use the statutorily authorized notice of contest forms and something that is similar to it. You should also ensure that the notice is properly filed.  

How is Payment Action Commenced? (Miss. Code Ann. §85-7-405(1)(c)(ii))

Commencing a payment action is the same as any other lawsuit in Mississippi. You need to have a summons and a complaint (demand for arbitration).

1. Similar to other actions at law, the defendant shall be summoned to appear and defend the action.

2. If the defendant is a non-resident, then you have to serve them the same way that you serve a non-resident in any other case and default judgments can be entered if they fail to appear.  

Failure to Commence Payment Action (Miss. Code Ann. §85-7-421(1))

If the lien claimant fails to commence payment action within 180 days from the date of filing the lien, then the claim of lien becomes unenforceable. If you receive the notice of contest of lien, then remember that the deadline is shortened to 60 days.  

Extinguishment of Lien if Payment Action not Timely Filed (Miss. Code Ann. §85-7-423(3))

1. If the payment action is not filed timely, then the lien shall be extinguished by law upon the earlier of 90 days after the filing of the notice of the contest of lien or 180 days from the date of lien filing.  

2. Also, there is no release or voiding of the lien required. This means that the lien just evaporates and there is no further action required by the person against whom the lien is filed to get the lien removed.  

Required Parties to Enforcement of Lien (Miss. Code Ann. §85-7-405(3) (a))

1. It is not necessary for the lien claimant to sue the party against whom they have a direct contractual relationship. They may be made a necessary party if the action is to establish the amount that is owed.  

2. Typically, you would include the entity against whom you have a claim as the necessary party.  

3. Design professionals, contractor or subcontractor, of all of them, may intervene in the proceedings at any time before judgment for the purpose of resisting the establishment of the lien or of asserting against the lien claimant any claim with the contractor or subcontractor.  

1. What this means is that if the debt is contested, these other parties can intervene in the proceedings and assert their rights to defend the amount claimed in the lien.  

Action Against Owner to Enforce Lien (Miss. Code Ann. §85-7-405(3)(b))

There is an action against the owner to enforce the lien.  

1. Any party to an action against the owner to enforce lien against the property may put in issue the fact of indebtedness or the existence of the lien and may interpose any other defense or join any counterclaim applicable to the action.

2. If it is ascertained that the plaintiff has a lien as claimed, judgment shall be entered for the amount secured thereby, plus interest costs against the party liable for the same.  

Award of Attorney’s Fees to Prevailing Party (Miss. Code Ann. §85-7-405(3)(c)

This is one of the most important statutes to know. Generally, in Mississippi, there is no right to attorney’s fees in breach of contract actions. However, this is one of the few statutes that give the court the authority to award costs, interest and attorney fees.  

So, this is a good tool to use if you are trying to resolve a payment issue. You can let the party who is not paying you know that if forced to file a lien, then the lien claimant may be awarded reasonable costs, interests, and attorney’s fees.  

Lien Must Be Cancelled Once Satisfied (Miss. Code Ann. §85-7-421(2))

Once the lien is satisfied, the lien claimant should file a cancellation of the lien in the record in the office of the Chancery Clerk. This means that if you have filed a lien and it results in payment, then you must file the cancellation of lien, or it may result in improper cloud of title.

Always remember that your responsibility does not end with receiving the payment. You need to perform this additional step as well.  

Penalty for Failing to Cancel Lien Once Satisfied (Miss. Code Ann. §85-7-421(3))

There is a penalty if the holder of the lien has been paid fully and fails to file the cancellation of the lien.

1. The cancellation of lien has to be filed within 15 days of receiving the full payment.  

2. If the lien holder fails to do so, then they will have to pay a penalty of $500 per day plus reasonable attorney’s fees and costs.  

No Waiver of Right to Arbitrate (Miss. Code Ann. §85-7-405(1)(c)(iii))

Nothing in Mississippi's lien law prejudices the party's contractual rights to arbitration. So, if the contract/subcontract/purchase order has an arbitration provision, the contractor, subcontractor or materialman can proceed with the arbitration in lieu of a payment action in court.

It is recommended that you file the payment action and include in there that it's being filed for the purposes of ensuring compliance with the Mississippi law to file a payment action within 180 days or 60 days, but that the right to arbitrate is preserved.  

So, ideally you should:

1. File the proper action in a court and reserve the right to arbitrate; and

2. Also file a demand for arbitration.

Remember that filing a lien does not give up your right to arbitrate.  

Priority of Construction Lien (Miss. Code Ann. §85-7-405(3)(d))

All liens shall have an equal priority and be first paid out of the proceeds of the sale of the property or money collected from the owner.  

1. This means that just because someone else filed a lien before you does not mean that they will get all the money.

2. However, if there are lien claimants who failed to timely and properly file their payment or lien actions, then they will not be considered.  

3. This is why you must also look at the lis pendens notice to know what other actions have been filed against the property and if you want to join any of those suits.

Mind your Corporate Particulars

Finally, here are some general housekeeping rules to bear in mind:

• If you are an entity, then you must ensure that you maintain active registration with the Mississippi Secretary of State’s office.

• You must also maintain your current Certificate of Responsibility.

• Ensure that you sue in the name of the correct business entity.

To summarize, filing a lien does not ensure a successful payment. There are several steps that have to be taken after you file your lien to ensure that your lien is enforceable and valid. You must ensure that you follow the above-mentioned do’s and don’ts to improve your chances of getting paid successfully.  

If you find yourself in a situation where you need assistance to get paid, then ensure that you get in touch with SunRay’s experts well in advance, so that they can take all the required steps promptly. Call 800-403-7660 today and get paid what you deserve.      

Common Questions Contractors Ask

1. How long do I have to file a lawsuit after filing my lien in Mississippi?

In Mississippi, after filing a lien, you must file a payment action (lawsuit) within 180 days of the lien's filing date. If a "Notice of Contest of Lien" is filed by the owner or contractor, this timeframe can be shortened to 60 days.

2. What is the difference between a payment action and a lien action?

A payment action is a lawsuit or arbitration against the party that owes you money under your contract, such as a contractor or property owner, to recover the unpaid amount. A lien action is a lawsuit specifically to enforce the lien against the property and to secure payment through the sale or value of the property. Both must be filed within statutory deadlines.

3. What happens if I don’t file a payment action within the required timeframe?

If you fail to file a payment action within 180 days (or 60 days if a Notice of Contest is filed), your lien becomes unenforceable and is extinguished by law. You will lose your right to recover payment through the lien.

4. Can I still pursue arbitration after filing a lien?

Yes, Mississippi law preserves your right to arbitrate even if you file a lien. You can file a payment action to meet legal deadlines while also pursuing arbitration under your contract terms.

5. How do I cancel a lien once I’ve been paid, and what happens if I forget?

After being paid, you must cancel the lien by filing a cancellation in the Chancery Clerk’s office within 15 days. If you fail to do so, you can be fined $500 per day plus attorney’s fees until the lien is properly canceled.

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