My client recently acquired a multi-family property in Arizona and after escrow closed, a mechanic's lien was filed for work done for the previous owner. My client has now been sued and a Lis Pendens may have been filed. What are my client's rights?
2 replies
Nov 26, 2019
In Arizona, like every other state, there are specific and strict rules, requirements, and deadlines that must be met in order for a claimant to be allowed to claim a valid and enforceable mechanics lien. In Arizona, a preliminary notice must be sent by every project participant within 20 days of first providing labor or materials to the project in order to retain lien rights for the full value of the work or materials provided. The notice can be sent late, but it then only works to protect lien rights for the work done beginning 20 days prior to the date on which the notice was sent.
If the preliminary notice is sent, the lien itself must be filed within 120 days of the completion of the project as a whole (or within 60 days of the date a notice of completion is filed).
Since Arizona is a "full price" lien state, if the requirements for a valid lien are met, the general rule regarding mechanics liens filed after a property is sold is that the new owners are responsible for the satisfaction of the debt, or they risk the foreclosure and sale of the property to pay the amount due. A mechanics lien is a claim against the improved property, while the owner is involved, s/he is really just kind of along for the ride. In a case where an innocent third party purchases the property, they will generally be liable to satisfy the lien claim and will need to seek recovery from either the original owner, GC on the project, or, potentially, the title insurance company.
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Helpful
Jan 5, 2020
Hi,
I have questions regarding liens. What documents do you use to file a claim against a contractor for waste, fraud and abuse?
looking forward to hearing from you.