Mechanics liens provide powerful protection against slow and non-payment to construction industry participants. These tools, originally developed by Thomas Jefferson, give the project participant a right in the improved property itself in the amount of the labor or material furnished. This right allows the claimant to foreclose on and force the sale of the improved property if s/he remains unpaid, a powerful incentive to prompt payment from the interested parties.
In order gain the benefit of this powerful protection, though, there are notice, timing, procedural, and formal rules and requirements that must be met. You know all about sending preliminary notice, making sure you meet your filing deadlines, and making sure your lien is recorded and served properly.
One of the requirements that can be confusing to some potential lien claimants is how the property must be described on the lien claim.
General Lien Requirements
While the specific requirements of what must appear on the face of a lien document change from state to state, a sufficient description of the property is a universal requirement. The type of description that constitutes a “sufficient” description, however, is different depending on the state in which the lien is claimed.
Nearly a quarter of the states require a “full legal description,” with almost that many either requiring a “short” legal description or on which providing the legal description is clearly a best practice. Even in states where a legal description is not specifically required, however, it can (usually) be the best practice to include the legal description of the property on the lien claim.
In fact, as I have noted before, in the best of all possible scenarios a lien claimant would include the full legal description of the property along with the municipal address on their lien form. This is the best possible description of the property, and is sufficient for a lien in any state, and completely cuts off any potential for confusion regarding the property to which the lien is supposed to attach.
This is not always possible, however, and in states that do not require a full legal description of the property – it’s better to only include an address you know is correct rather than a potentially incorrect legal description (or one that doesn’t match the property address). In other words, in the states that do not require a full legal description of the property in the lien claim, it’s best to go with what you know.
Common Issues Regarding Legal Descriptions That Cause Discrepancies With Addresses
There are a few possible explanations for why a legal property description may not match up exactly with a project/property address.
First, your job may have been part of a larger parcel that has one address associated with the parcel in full and many other addresses associated with particular businesses or buildings within the larger parcel. This is common in shopping malls, apartment complexes, strip malls, and office parks.
Another possibility is that the project site you worked on is commonly known by one address, but actually or additionally identified as something else. One famous example is the New York Stock Exchange, located at 11 Wall Street in New York City. 11 Wall St. is not the official recorded address, however, that is 2 Broad Street.
Occasionally, parcels can have no specific address actually recorded with the county. This is common for new developments where street names and numbers are still being finalized, or when the large property on which the development is occurring has not yet been subdivided.
There are also discrepancies that are more problematic. Legal descriptions can be long, confusing, and difficult to get your head around. (We’re not exaggerating – follow this link to see what a typical legal property description might look like. It’ll make your eyes cross!)
Sometimes, the relation to the property address is difficult to figure out, and a legal description that is used on the lien document is not just associated with a different municipal address than the project address but still describes the same property – but describes a completely different piece of property than the municipal address of the project. In that case – no matter why it happened – the issue is potentially much more crucial.
So, What Happens?
If the legal property description and municipal address don’t match there are two general questions to consider: 1) do the address and legal description describe the same actual property; and 2) if not, which one is correct?
If the descriptions describe the same property (i.e. the lien lists 123 Main St. as the project address; the legal description of the property included on the lien is associated with 121 Main St., but 123 Main street is just a street address associated with the parcel address of 121 Main St. such that the property described by each is the same), there is likely no problem. The lien attaches to the property described, which is the same.
If the property described by the address and the legal description are different properties there is likely a more significant issue to deal with. First, it must be determined whether the municipal address or the legal property description describes the correct property (at which the labor or material was furnished). In most cases, it would be better for the lien claimant if the correct description was the legal description (but this is not always the case).
While the two descriptions should match – and any discrepancy would provide at least some ammunition for an adversarial party to contest the lien – the practical aspects of how documents are recorded and indexed may provide some relief to the party that got the legal correct but the municipal address incorrect.
Generally, documents are indexed for recording through the legal property description (or block and lot) rather than the municipal address. This means that a lien with the correct legal is more than likely going to be recorded appropriately. This, when coupled with notifying the proper parties, may be sufficient for payment and sufficient for a valid lien.
Long story short, though, to best protect your lien rights, the descriptions of the project property should: 1) be correct; and 2) match.