A contractor's lien (often known as a mechanic's lien, or a construction lien) is a claim made by contractors or subcontractors who have performed work on a property, and have not yet been paid. A supplier of materials delivered to the job may also file a mechanic's lien. In some states, professionals such as architects, engineers, and surveyors may also be entitled to file a lien for services rendered on a home improvement project.
The best way to avoid a contractor's lien, of course, is paying your invoice on time. But if you are unable to pay or need more time, you may avoid a lien just by talking to the contractor and negotiating a payment plan. After all, contractors would rather work out a deal than go through the hassle of filing a lien against your property.
This article focuses on contractor liens. See Understanding Mechanics' Liens and Contractors' Liens: Select State Laws for additional details.
Contractor's Liens: Priority and Waivers
The priority of liens on a construction project does not depend upon the time of completion of the particular job, but rather everything relates back to the first visible commencement of the work. This stipulation means the final work (such as painting) is equal in priority to the initial work of laying a cement foundation. Therefore, during the entire work of construction, the owner must obtain lien releases or waivers of lien from each subcontractor and material supplier. Without these waivers or releases, the real estate is subject to liens of all the subcontractors, even if the general contractor (though paid in full) fails to pay the subcontractors.
Lien Notification
In some states, contractors and subcontractors must notify the property owner prior to filing a lien, but in other states such liens can be filed without any notification to the owner. Lien claimants who are contractors or subcontractors are protected under this legal doctrine because all their materials and labor are "buried" in the real estate, having become part of it. Unlike mortgage liens, however, the liens of these claimants cannot force a foreclosure.
Contractor's Liens: Additional Resources
State laws regarding contractor liens can get confusing. If you would like to do additional research after reading this article, click on the links below to learn more. Remember, if you are involved in real estate litigation, it is always wise to contact an attorney before making any major decisions regarding your case.
Hit with a Contractor's Lien? Get Professional Legal Help
If a contractor's lien has been filed against your home, your best course of action is to either pay the amount (if valid) or negotiate a longterm payment plan. But if you're not sure whether it's valid or need additional legal advice, it may be a good idea to speak with a real estate attorney.Â
