Mechanics Lien for Contractors Work

A mechanic’s lien is a legal means by which those who work on real property, such as sub-contractors, suppliers, auto mechanics, and others, may make claim for payment for the work done. Upon full payment, the lien holder provides a release of the lien. However, if the lien is not paid within the proscribed time limit, the lien holder(s) may request that a judge order a foreclosure of the property to satisfy the lien holders in the order of their priority. Because sub-contractors often have less recourse to file lawsuits for payment than other service or personal property providers, a lien is the most appropriate means for them to ensure payment.

Types of Mechanic’s Liens

There are a wide variety of workers and laborers who are entitled to file mechanic’s liens for work done either to construct, improve, or repair property. The specific guidelines for mechanic’s liens vary by state, but these general categories are representative.

  • Vehicular liens, including mechanics, tow truck operators, suppliers
  • Laborers, including carpenters, electricians, plumbers, mechanical/HVAC contractors, and others
  • Suppliers, including lumber yards, plumbing supply providers, and electrical suppliers
  • Planners and designers, such as civil engineers and architects
  • Others who are considered offsite fabricators, providing specific items that require construction in other locations but whose products will be incorporated into the final construction
  • And in most states, Artisan’s liens, for those who provide specialized construction of personal property, as well as additions to or repairs of such property.

Methods of Claim

There are specific laws in each state that govern how a mechanic’s lien is filed and pursued. However, in most states a mechanic’s lien must be “perfected,” or filed and pursued in accordance with the state statutes, ending in foreclosure. They generally follow these conditions:

  • Some states require the property owner be given notice of the entitlement to the lien
  • Some states require that workers file notices that the required work is beginning
  • Some states require that, if payment is not forthcoming, the lien holder file notice of the lien in the appropriate records office
  • All states require that the claim of lien, or a notice of claim, be filed with the appropriate office within the specified time period, which varies by state. It can be when the work begins, within a specified period after it is completed, or within a specified period after the entire project is completed.
  • All states require that a lawsuit for foreclosure on the lien be filed within a specified period of time.

Government or Public Projects

All federal projects prohibit claims by private parties, such as sub-contractors and suppliers. As a result, they cannot attach liens to federal, state, or municipal property. To protect sub-contractors, a law called the Miller Act applies to construction projects of $100,000 or more. The contractors to post two bonds with a corporate surety company approved by the U.S. Department of Treasury. Those bonds are

  • A performance bond which the owner’s representative considers sufficient to cover the project
  • A payment bond to cover all sub-contractors and suppliers(first-tier claimants) and those sub-contractors and suppliers working for those sub-contractors (second-tier claimants).

As a result, federal projects cannot be subject to the claims of these sub-contractors and suppliers, only the contractor and the bond company can. Those principles have been adopted at the state level in recent years as well, often being referred to as “Little Miller Acts.”
Since the laws governing mechanic’s liens differ by state, it is important to consult a real estate attorney to determine the requirements for filing a claim, fighting a claim, and pursuing your rights under these laws. They have the experience and expertise to ensure that you take advantage of all the protections the laws in your state allow.

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