Contractors & suppliers have strong lien rights in Maryland. If a contractor or supplier isn’t paid on an Maryland job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about Maryland’s mechanics lien law.
1) Maryland Mechanics Lien Protection Is Broad
In Maryland, any project participant providing labor or materials for a construction project can file a mechanics lien. This includes architects, engineers, surveyors, and certified interior designers. There is no specific party that is considered too removed to file, however, there are some regulations to be aware of. For example, if a property is being repaired rather than newly constructed, mechanics liens are only allowed if the property is being repaired, rebuilt, or improved by at least 15% of its value. Additionally, if a lien claimant is a corporation, it must be registered with the state of Maryland.
2) Maryland Requires That Court Action Be Filed
The deadline to file a mechanics lien in Maryland is 180 days from that date that labor or materials were last provided for a project. To establish the lien, an “action” must be filed with the court in the county where the property is located. This action must be served on all interested parties.
3) Preliminary Notices Are Required for Subcontractors and Can Include Additional Deadlines
In Maryland, preliminary notices are not required for general contractors. They are, however, required for subcontractors who are not in direct contact with the property owner. The notice must be sent within 120 days from the date that the project participant last provided labor or supplies.
For single-family residential properties, there are some special deadline requirements. The notice must not only be sent within 120 days from the last day the participant last provided labor or supplies but additionally prior to the property owner making full payment to the general contractor.
It’s further important to note that liens filed on owner-occupied single-resident properties are also limited to a specific worth dependent on the contract (between the property owner and the general contractor) amount due at the time the property owners received preliminary notice. It’s always best to file preliminary notice early so that the rights of a project participant can be protected.
4) Sometimes Maryland Mechanics Liens Can Include Interest
Generally, attorney’s fees, collection costs, and other amounts cannot be included in a Maryland mechanics lien. Things to include in the lien are the following: unpaid labor, material, and equipment supplied to the project (the total contract amount being the cap). However, a participating party may be able to include interest if the contract so provided. A court may award attorney’s fees to a successful lien claimant.
5) Priority Determined by Date of Judicial Order
Mechanics liens in Maryland do not have priority over pre-existing mortgages or construction loans. Any encumbrance attached to the property prior to the start of construction will take precedence over a mechanics lien. A Maryland mechanics lien does not attach until formally established by judicial order. Among competing mechanics liens, project participants must share funds depending on the amount available.
Sending a Notice of Intent to Lien may be enough to push for payment without ever needing a Mechanics Lien.