Anyone who has hired a general contractor or who works in the construction industry has had to deal with mechanic’s liens. Getting a mechanic’s lien requires navigating an unforgiving process riddled with multiple deadlines and notice requirements that can easily bury you in paperwork.
Below we discuss some common issues encountered in the mechanic’s lien process to help you successfully traverse its landscape.
Want to talk to a licensed attorney instead? Get Law on Call today for only $9 a month.
Mechanic’s liens are powerful legal instruments used by those in the construction industry to secure payment. Liens are only used in situations where a contractor (or other independent worker) has not been paid. Mechanic’s liens assert a legal claim on the property where work has been done. Because of this, when a mechanic’s lien is in place, it can be extremely difficult if not impossible to secure further funding, refinance, or sell the property.
Due to their robust nature, the process of obtaining a valid mechanic’s lien consists of a gauntlet of required notices and deadlines. While mechanic’s liens are allowed in all 50 states, the law in every state varies. There are general rules, but the likelihood of state-level exceptions to those rules is almost certain.
Mechanic’s liens go by many names, including construction lien, contractor’s lien, supplier’s lien, laborer lien, materialmen’s lien, and artisan’s lien.
Not the legal subject you’re looking for? Visit our Legal Topics page for our full list of free resources.
Whether or not you have mechanic’s lien rights depends on the position you hold and the state you live in. But even if you have lien rights, they’re not necessarily guaranteed—you must take actions to uphold them.
Not everyone has the right to assert a mechanic’s lien. Generally, licensed general contractors, subcontractors, suppliers, and independent laborers have lien rights, but eligibility varies by state. The most significant eligibility differences are when it comes to extending lien rights to second tier subcontractors, second tier suppliers, suppliers to suppliers, and design professionals. (A second tier worker is hired by the first tier of the same position.)
Anyone working on a construction job who has the right to assert a mechanic’s lien is required to take certain actions at certain times to preserve those rights.
There are two types of notices that preserve mechanic’s lien rights: preliminary notice and notice of intent to lien.
Preliminary notice is provided when a lien claimant begins providing work or materials. In most states, providing the property owner, general contractor, and construction lender with the notice is all that is required. Some states, like Utah and Pennsylvania, have a centralized registry or directory where all required notices are filed.
Typically, everyone working on a construction job who has lien rights is required to provide a preliminary notice. But, many states make exceptions for general contractors and do not require them to provide preliminary notice depending on the type of project and its value.
When a preliminary notice is required, knowing the deadline is important. Depending on the state, the deadline can range from a few days to a few months after beginning to provide work or materials.
Most states have additional requirements, but the general required contents of a preliminary notice include:
A Notice of Intent to Lien is provided after the lien claimant provides work or materials and after payment is past due. A more serious document than a preliminary notice, Notice of Intent indicates that you will file a lien if payment isn’t promptly received.
Several states require a Notice of Intent to preserve lien rights. The content and service requirements for a Notice of Intent to Lien are generally the same as for a preliminary notice.
Preparing a mechanic’s lien requires good record keeping and attention to detail. Incorrect information can lead to an otherwise valid lien being challenged and invalidated.
A lien claimant has to make sure the contents of the lien comply with the law in the state where the construction job is located. Including items that are prohibited or omitting items that are required can cause the lien to be voidable. Further, not including items that are allowed can lead to the lien claimant waiving his rights regarding those items.
In general, the necessary contents of a mechanic’s lien include:
Note that most states have additional requirements or unique components when it comes to the content of a mechanic’s lien.
After the mechanic’s lien is prepared, it’s time to record it. At this point of the process, the issues to be aware of are the deadline, where to record the lien, and notice requirements.
The deadline to record a mechanic’s lien can be anywhere from two months to a year after the work or materials were last provided or the project was completed.
Depending on the state, mechanic’s lien recording deadlines can be impacted by:
Since the deadline to record a mechanic’s lien can be difficult to accurately calculate—and is a deadline that cannot be missed—the best thing is to record a mechanic’s lien as soon as possible.
Mechanic’s liens are recorded in the county where the property subject to the lien is located.
Every county has a specified location where mechanic’s liens are recorded. In most states, this place is called the county recorder’s office or the county clerk’s office.
Almost all states require notice of the recording of a mechanic’s lien. Serving the property owner personally or by certified mail, return receipt requested, at the time (or shortly after recording the lien) satisfies the notice requirement in most states. Exact deadlines vary.
Failure to provide timely notice of the recording of a mechanic’s lien to the property owner can result in a lien claimant forfeiting their right to recover costs and attorney fees in an action to enforce the lien. In some states, such as Pennsylvania, it can cause an otherwise valid mechanic’s lien to be voidable, as seen in Americo Construction v. Four Ten, 227 A.3d 421 (PA 2020).
Enforcing a mechanic’s lien becomes necessary if the lien’s recording does not prompt payment. To enforce a mechanic’s lien, the claimant files a lawsuit in the county where the lien was recorded. The lawsuit will seek to foreclose on the mechanic’s lien and force the sale of the property. The proceeds of the sale are then distributed to the parties who have encumbrances on the property in order of their priority.
Mechanic’s lien foreclosure litigation is complex because it usually involves numerous parties and is document intensive. The discovery phase can easily lead to the production of tens of thousands of pages of documents. For these reasons, a lien claimant will need to hire an attorney to enforce their mechanic’s lien.
Every state has a deadline by which a lien claimant needs to file a lawsuit to enforce the mechanic’s lien. The required time frame can be anywhere from a few weeks to several years. Some states also require the lien claimant to record a “lis pendens” with the county, which is a public notice that a suit is pending. To make matters even more confusing, lis pendens have deadlines of their own.
To ensure that you maintain your ability to enforce a mechanic’s lien, it’s important to know the laws and deadlines that operate in your state.
When enforcing a lien, lien waivers and lien priority can affect payment and lien rights.
Lien waivers are essentially a receipt for work that’s already been paid for. They keep track of payments and prevent liens from being filed on portions of a project that have already been paid.
Lien priority determines the order in which creditors get paid. If Lien A has priority over Lien B, Lien A will get paid first.
The releasing of a mechanic’s lien is the final step of the mechanic’s lien process. Releasing a lien is done by recording the release at the same place where the lien was recorded. The release should contain the recording information of the mechanic’s lien it is releasing to avoid any confusion about what lien is being released.
Although it is a simple task, releasing the lien is often overlooked. A lien claimant who fails to release a mechanic’s lien after receiving payment can be liable to the property owner for any actual damages incurred.
Always remember the golden rule of mechanic’s liens. Never, under any circumstances, authorize the recording of the release of lien until payment has been received for all of the work and materials covered by the lien.
Yes. With very few exceptions, only licensed contractors can assert a mechanic’s lien.
Yes. A mechanic’s lien can be amended as long as it is done before the deadline for filing the original lien expires.
The laws in the majority of states prohibit these types of clauses, but some states have laws that are ambiguous on the subject.
No. Providing a preliminary notice by email is not an accepted method of service. Personal service or certified mail, return receipt requested, are the generally accepted methods of providing notice.
After a mechanic’s lien is recorded, a property owner or general contractor can purchase a bond to replace the property as security for payment to the lien claimant. Since the bond is now the security, the mechanic’s lien is released. This process is known as bonding around a mechanic’s lien.
Yes. Litigation that involves foreclosing on a mechanic’s lien or enforcing a claim against a bond is complex and can include thousands of pages of documents.
A conditional lien waiver is expressly conditioned on becoming effective upon the receipt of payment by the lien claimant. An unconditional lien waiver is effective upon execution, regardless of whether the lien claimant has been paid.
No. A lien waiver is used before a lien is recorded and gives up one’s right to lien. A lien release is used after a lien is recorded and removes the lien from the property.
The first step is to make a written demand to the lien claimant and include a lien release for him to sign and return to you for recording. If that does not work, go to court and obtain an order declaring the lien null and void and releasing it.