A perfected mechanics lien is one that has met all the requirements needed to be considered effective and enforceable on a property.
While mechanics liens are incredibly effective at getting you paid when perfected, disagreements or misunderstandings about these documents can easily lead to a payment dispute.
So how does one “perfect” a mechanics lien? Here, we’ll break it down — and explain some of the other legal jargon you’ll come across in the lien process.
How to perfect a mechanics lien
A claimant can perfect a mechanics lien by recording the lien in the appropriate recorder’s or clerk’s office. And — where state law requires it — by serving the lien on the interested parties. That’s technically the one step in the lien process that specifically perfects it.
But there are a number of related steps leading up to it to be aware of.
Having the right to file a mechanics lien
In order to have the legal right to perfect a mechanics lien, you must follow the required steps. Not just anyone can record — and perfect — a mechanics lien. It’s important to remember that, in most cases, you do not automatically have the right to file a lien.
Perfection is critical
In order for your mechanics lien to work to get you paid, you must perfect it. But your lien form itself must also be perfect. Claimants make a lot of mistakes on their lien claims. Even simple mistakes can cause the recorder’s office to reject the lien or the court to invalidate it. Or worse — approve it anyways and leave you vulnerable to later court scrutiny in a payment dispute. Follow the steps to file a mechanics lien to the letter, and pay attention to the details.
Legal jargon in the mechanics lien process
Security instruments all must go through specific steps to complete their “lifecycle”: (1) attach, (2) perfect, and (3) enforce.
This is true for any security instrument, whether it be UCC liens, mechanics liens, or something else. These legal terms all have specific meanings and are very important in determining things like the lien’s priority, or even its validity.
It’s important to understand these terms and how they relate to each other in the process in order to use them effectively.
When referring to a project, lien attachment describes what section of a property and timeframe of work on it in are legally designated to a creditor.
For mechanics liens, the date of attachment generally automatically relates back to the start of the project as a whole. This means that most mechanics liens are of equal priority.
The date of attachment is generally used to determine the lien’s priority in the event there are competing claims. A competing claim may be from a mortgage on the property, or from another contractor’s mechanics lien filing.
Perfecting a mechanics lien
Perfection is the recording (which requires action) of a mechanics lien. Mechanics liens are an involuntary security interest in real property that entitles construction participants to secure payment for labor or materials furnished to improve property. The related terminology follows the general terms related to security interests in general.
Enforcing a mechanics lien
Enforcing a lien is foreclosing on the property that you’ve perfected a lien on prior to the lien’s expiration. The easiest way to remember the difference is that enforcing is done in court while the perfection of a lien is simply the appropriate recording of the document.
Enforcing a lien claim in court is only required in a small fraction of cases.
In most cases, perfecting your mechanics lien is the last step you’ll need. A lien encumbers the property — effectively freezing it. As a result, it puts enormous pressure on the property owner to pay your claim.
However, if someone asks whether you perfected your lien claim, here’s some legal jargon you can give back to them. “The lien was recorded and served appropriately and according the the statutory requirements. Now pay me.”