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mechanics lien with no contract, fees above standard

Hello, I have a small work done at my house but the contractor was not having a professional behavior and we decided not to proceed. We are willing to pay but the bill provided is above what is to be expected (we consulted with other contractors). I got a claim of mechanics lien, can I do something about the fees requested if there was no contract signed? Thanks,

1 reply

Jun 27, 2019

That's a good question, and I'm sorry to hear you've had some trouble with this project and contractor. First, it's worth mentioning that Tennessee's mechanics lien laws don't require a contract be in writing in order for mechanics lien rights to arise. So, the fact that there was so signed contract won't preclude the attachment of a mechanics lien. However, that doesn't mean a filed lien is necessarily valid. Let's look at two potential issues based on the information above: (1) Exaggerating the lien price, and (2) Whether home improvement licensing or contract requirements might affect a lien's validity.

Mechanics liens secure amounts that are owed but unpaid for work performed. If an amount on a lien doesn't represent what's owed, or if the amount ties to some work that wasn't actually performed, then a filed lien might be rendered invalid or unenforceable. And, in situations where the lien claimant has intentionally overstated the amount of their lien, they might even open themselves up to liability for a fraudulent lien. But, of course, there's a difference between fraud and an honest mistake.

Looking to Tennessee's lien laws, specifically - if a mechanics lien exceeds the price for work set out under the contract, that lien will generally run afoul of the Tennesse mechanics lien statute. Now, as mentioned above, that doesn't require that a written contract be present. Rather, if the agreed upon price between the parties has been exceeded, that will be problematic for a lien claimant - and an owner might be able to challenge the filed lien on that basis. But, where a contract wasn't in writing, it might be hard to prove what amounts were agreed to.

As for home improvement contract requirements...
Under § 62-6-508 of the Tennessee Code, all home improvement contracts must be in writing between the owner and the home improvement contractor. So, any time a contract for work is considered a home improvement contract (generally, residential projects costing between $3,000 and $25,000), the contract must be in writing. There are also a myriad of other requirements for these contracts (which you can learn about here). While one issue with a home improvement contract might not be enough to render the contract unenforceable, if there are several issues present, those issues might render a contract invalid - which could also invalidate a lien claim filed pursuant to that contract.

What's more, Tennessee home improvement contracts also require specific licensure. And, in Tennessee, if a contractor must be licensed but fails to hold the necessary licensure for a project where they perform work, that contractor cannot file a valid and enforceable mechanics lien for their work. So, if the project was, in fact, a home improvement contract, then a contractor's failure to hold the necessary licensure could prevent a lien claim from being successful. And, if the contractor is properly licensed, a failure to use the proper procedures could affect their ability to pursue a lien claim. For more on Tennessee's home improvement licensing requirements, try this page: Tennessee Home Improvement Licensing Requirements.

Bonding off a Filed Lien
It's also worth mentioning that, when a mechanics lien is filed in Tennessee, an owner has the ability to bond off the filed lien. When a lien is bonded off, that bond will replace the project property so that the lien is no longer attached to the underlying land - though, a contractor can still recover directly against the bond. It's not necessarily cheap for an owner to secure and file a surety bond for the release of a lien on their property, but when it's important that the lien claim is removed from the property title, that might be an option an owner would want to explore. You can learn more about that process here: Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien.

Of course, there are a number of different factors that could point one way or another as to a lien's validity and how a property owner might best be able to fend off a filed lien. And, the best way to fully understand what options are available to challenge a filed lien would be to consult a local construction attorney and have them review the circumstances as well as any relevant documentation or communications. They'll be able to review the situation and advise on how best to proceed.

For more information about Tennesee liens and what might make them valid or invalid, this is a great resource: Tennessee Mechanics Lien Overview.

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