"Where did all the money go?" Lately, this question has been on the minds of many building owners who pay general contractors expecting they will use those funds to pay their subcontractors and suppliers for work done on projects. These days, owners have less reason to assume the funds will get there.

Given these trying economic times, it appears some overextended and cash-strapped general contractors may be using money received for current project work to pay off subcontractors for work on previous or concurrent projects. As a result, unpaid subcontractors turn to lien laws that protect them from nonpayment.

And if worse comes to worst, the owner could end up paying twice for the same work: once to the general contractor and a second time to the unpaid subcontractor. Even worse, the owner's property may be foreclosed in the process and sold off to satisfy the debt. This presents a potential double-whammy, leaving an owner to defend expensive and time-consuming lawsuits while its project (or investment) is stalled or terminated.

In a nutshell, construction liens are like security interests created by statute as a vehicle to help contractors get paid for work completed on privately-owned projects. Provided an unpaid contractor strictly complies with all notice and timing requirements, it may file a claim of lien (in essence, a formal "heads-up" to inform the owner of a payment issue), followed by a lawsuit to enforce the lien. If the case is not settled, the property is sold and the proceeds from the sale are used to satisfy amounts due the contractor.