What is a Mechanics Lien?
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Mechanics Lien FAQs
Thinking about filing a lien against property? It's common to have questions. There are tons of rules and lots of confusion. Dig through some of the most frequently asked questions here.
Map of Lien Deadlines & Rules
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Watch: How to file a mechanics lien (in every state)
Watch a video that breaks down the process to file a mechanics lien in any state. Does state law allow you to file a mechanics lien? Did you send the required notices? And are you within your lien deadline?
A mechanics lien is a legal tool that empowers the contractors, suppliers, and others that work in the construction industry to get paid the money they’ve earned on their projects and jobs. Contractors and suppliers can file a mechanics lien when they don’t get paid on construction projects.
Lien filings nearly guarantee payment for contractors and material suppliers. In fact, it’s sometimes even called a “security interest,” “collateral,” or “encumbrance.” Mechanics lien claims also go by a variety of other names — construction lien, property lien, claim of lien, laborers lien, contractors lien, suppliers lien, artisan’s lien, and even weird names like, in Louisiana, the “statement of claim and privilege.” Regardless of the name, all of these documents serve the same purpose: They help contractors and suppliers get paid for the work they do.
How a mechanics lien works
Formally, a mechanics lien is a security interest in real property. What that means is that it actually freezes the property, prohibiting the sale until payment is made to satisfy the lien. A lien filing causes disruptions to the flow of funds on a project. It can cause the general contractor (GC) to breach their contract with the owner. It gets multiple parties, like lenders and owners, involved in making sure the right person gets paid.
There are many effects to a project and property caused by a mechanics lien filing. All you really need to know is that filing a mechanics lien puts an unpaid contractor or supplier in the best position to get paid.
The right to file a lien is built directly into the law of every state as a way to protect construction participants from nonpayment. This is a fundamental public policy in the United States, to protect payments on construction projects dating back to the days of Thomas Jefferson. In many states – like California and Texas – the right to file a lien is actually baked right into the state’s constitution!
Each state has their own rules stating who can file a lien. Generally, anyone who makes an improvement to a property has the right to file a lien. This includes direct contractors, subcontractors, material suppliers, equipment lessors, design professionals (architects and engineers), and laborers.
However, states also have laws requiring parties to follow specific steps in order to protect their lien rights. We’ll go into more detail on those requirements below.
- Read more: What are lien rights?
Private vs. public projects
One important note about “mechanics lien” protection is that it’s typically only available on “private” jobs for the construction or improvement of real property. In other words, a mechanics lien is available on commercial, residential, privately-owned, and industrial projects. Publicly owned property cannot be “liened,” but does have a similar remedy available through bond claims and required payment bonds. Contractors who are unpaid on a state or municipal projects typically follow a bond claim process.
Requirements to file a mechanics lien
Filing a construction lien is a great remedy for contractors and suppliers not paid…but, there is one dilemma. Securing and using mechanics lien rights can be quite tricky without legal advice. There are numerous requirements, notices, and time limits that must be met. And, unfortunately, the rules are governed by state law and can vary state-to-state and project-to-project.
Those expecting to be paid on a construction project should take great care in understanding the notice requirements that apply to their job, the lien deadlines, and will need to stay proactive to keep their company in a “secured” or “lienable” position from the very start of the job.
Filing a mechanics lien
It’s best to think of a mechanics lien as a process, rather than a stand-alone document.
Before you can file a mechanics lien, you must take initial steps to protect your right to file a lien. Generally, state laws require you to send specific documents at specific times during a construction project in order to preserve your lien rights.
While each state has their own laws, these are the 4 basic steps in the mechanics lien process:
Step 1: Send a Preliminary Notice
Preliminary notice also goes by a variety of names in different places. Generally, it’s a document sent at the beginning of a construction project that tells the GC, property owner, and/or lender that you’re on the job. In many states, you are required to send preliminary notice in order to protect your right to file a lien later on.
Even in states where sending this notice isn’t required to protect lien rights, it is highly recommended, as it improves communication and visibility on a construction project.
- Read more: Preliminary Notices FAQs & Resources
Step 2: Send a Notice of Intent
A notice of intent (NOI) is a document that notifies the GC, property owner, and/or lender that you intend to file a lien if you aren’t paid. It’s also called a notice of intent to lien. An NOI is incredibly effective at forcing payment without the need to file a lien. Everyone wants to avoid a lien, so when they find out you intend to file, it’s often enough to get you paid.
- Read more: Notice of Intent Guide & FAQs
Step 3: File a Mechanics Lien
Filing a mechanics lien involves filling out a lien claim form with accurate detail on the property, the work you performed, the amount owed, etc. The form is generally filed with the county recorder’s office where the project is located.
- Read more: How to File a Mechanics Lien in Any State
- Read more: The 4 Things to Do After You File A Mechanics Lien
Step 4: Release (or Enforce) the Mechanics Lien
If filing the mechanics lien gets you paid, then you’ll need to release the lien. This is generally accomplished with a document called a lien release.
- Read more: A Guide to Lien Releases
If the hiring party still doesn’t pay, then you can choose to enforce the lien. This involves a court action.
- Read more: What is enforcing a mechanics lien?
For owners: Resolving a lien claim
Those who are facing a lien claim against them or their project will want to examine the applicable requirements and confirm that the lien claimant has conformed to them. In the event that a lien is invalid, frivolous, or improperly filed, a process can be used to demand that the lien be removed. Otherwise, property owners, construction lenders, general contractors, and other interested parties can seek to bond off the lien, to accelerate its expiration period, and/or to otherwise figure out a way to compromise and resolve the issue.
The Bottom Line: Mechanics Liens Work
The bottom line is that lien rights are powerful and effective, and they exist to empower contractors, suppliers, and others working in the construction industry to get what they earn. Levelset’s comprehensive mechanics lien law resources — which includes state-by-state guides, forms, frequently asked questions, and more — will help you better understand the mechanic’s lien process that applies to your state and job.