What happens with a mechanics lien if company owner dies? Who is responsible for payment?

2 weeks ago

The owner and builder of 7 several homes died after I started lien process, what happens now? His wifes lawyers are not cooperating and the bank that that financed this project has not replied? This is multi million dollar project.

Senior Legal Associate Levelset
109 reviews

Mechanics liens attach to the project property itself, and not to any individual or business involved with the project or the property. So, while it may sound a little harsh, an owner’s death should have little official effect on the viability of a lien filed prior to that death.

As for who’s required to make payment – there shouldn’t be all that much change there, either. If the owner/builder was conducting business through a business entity, rather than as a sole proprietor, then the business doesn’t disappear simply because the owner dies. Rather, that business is still on the hook for all of the obligations entered into before the death.

How to get paid on mechanics lien claims when the owner passes away

In terms of who’s liable for paying lien claims, whoever is in charge of the property now will typically have a vested interest in holding onto the property and/or clearing up claims made against it. So notices, demands, and other communications that would normally go to the owner should generally be redirected to whoever is in charge of the estate.

As for what steps to take – this resource from Levelset should be really helpful for guidance on that front: The 4 Steps to Take After Filing a Mechanics Lien. As discussed in that article, it’s crucial to send any required notices once a lien has been filed. But, additionally, it’s a good idea to send notice to every party who might be able to make payment – or at least every party who would be substantially affected by the lien filing.

Further, escalating things a bit by sending a document like a Notice of Intent to Foreclose can lead to payment, too. A Notice of Intent to Foreclose serves as a warning that if the mechanics lien isn’t paid and paid soon, then the claimant will proceed with a lien enforcement action – potentially resulting in the foreclosure of the property.

When dealing with a large estate, going through an attorney may be necessary

Finally, sometimes filing a lien enforcement action will be necessary. While that’s unfortunate, a multi-million dollar job wasting away in limbo would be even worse. And, to bring a lien enforcement suit, hiring a constuction lawyer would be necessary.

What’s more, before things even come to that, note that a lender and attorneys for the estate of a deceased owner will both take communications from a lawyer more seriously. This, too, is an unfortunate truth – but if there’s a respected law firm attached to the debt collection procedure, that could create a lot of additional leverage.

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