What is a Mechanic’s Lien?

When you hire someone to work on your property or provide material to build or improve it, they are entitled to get paid.   A mechanic’s lien is the method of enforcing that payment.

Here is what you need to know about mechanic’s liens.

A contractor must usually give you written notice of intent to file a lien if the contract isn’t paid.  He needs to do this within a short time of beginning the work.   The notice will include text to the effect that subcontractors also have the right to file a lien if they are not paid.  This notice gives you two methods of defense: You can pay the subcontractors directly and withhold that amount from the payment to the contractor, or you can withhold the final payment until you have received a lien waiver from each of the subcontractors.

If the notice isn’t given correctly, the contractor forfeits his right to file a lien.  Also, in most places, if a contractor is supposed to be licensed to do the work, but isn’t, he’s not able to file a lien.

Subcontractors must also provide notice on intent within about 45 days–depending on the state–of the time they first provide services or material, or the lien is not enforceable.

Protecting Yourself

First, you only have to pay once. If you pay the contractor in full before getting the notice of intent from the subcontractors, you can’t be forced to pay again.

Next, make the contractor provide a list of all subcontractors and keep track of any notices of intent you get.  Get lien waivers from everyone involved before you make the final payment to the contractor.

Finally, you have the rights defined in the notice of intent to file a lien.  You can either pay the subcontractors directly, or you can withhold the final payment until you receive lien waivers from each subcontractor.

Resolution

The lien holder has 120 days to file the lien and 1 year to enforce it.   Enforcing simply means that it a suit has been filed.  Once that happens, you can either pay the contractor, attempt to settle with the contractor, or you can take the contractor to court to determine the “adverse claims” on your property.   There aren’t too many choices at this point.

Do yourself a favor and get lien waivers before you make the final payment on any work done on your property.