Mechanics Liens 

Mechanic's lien law creates a structured process for the prioritization and repayment of claims. Property that has a lien imposed upon it cannot be borrowed against, refinanced, or sold until the lien is satisfied. Thus, the property owner has a greater incentive to satisfy the debt.

How a Mechanic's Lien is Created

A mechanic's lien arises by operation of law, but the requirements for creating a lien depends upon whether real or personal property is involved. In some states, a preliminary notice must be given to the property owner that there is a right to place a lien on the property. Some states require the contractor to file a notice to commence work. Some states also require a contractor to file a notice of intent to file a lien for any unpaid work. Most states require a contractor to file a notice of lien within a certain period of time after the work has been performed or the materials supplied.

A potential lienholder must file notices and liens in the city or county public records office in which the property is located to ensure that the lien properly attaches to the property's title.

Real Property

While each state has lien statutes that have their own particular requirements, there are overall similarities. Real property liens are imposed when a person performs labors or supplies materials to improve real property. Persons who typically impose liens are laborers, carpenters, electricians, and plumbers. Types of businesses enforcing mechanic's liens are electrical suppliers, lumber yards, architects, civil engineers, and offsite fabricators of specialty items.

Personal Property

A person providing a service, labor or materials for personal property, such as an automobile, may obtain a mechanic's lien on the property. The place for recording such a lien will differ depending upon the type of property attached. For automobiles, a mechanic lien is usually recorded with the department of motor vehicles for the state in which the vehicle is registered.

Lien Enforcement

A lien is enforced through a forced judicial sale, or foreclosure, of the asset. Before foreclosing, a court will determine the priority of the lien and whether the lienholder property complied with the applicable lien statute. The court will then force the sale of the property and distribute the proceeds from the sale in accordance with the priority of the liens.

Conclusion

People who perform services, labor or provide materials to improve personal or real property may obtain a security interest in the property. A foreclosure of the asset may occur if the property owner does not pay for the services, labor, or materials. Most states have specific statutory requirements that must be met for a lien to arise and for foreclosure to be granted.

Questions & Answers: Mechanics Liens

What are my writes? Had my van towed. To a auto shop to find out why it did not run. Did not was told why it did not run and how much it would cost to repair. The shop repaired....

I hired a guy to put in a driveway for $4000. I paid him when the work was completed. 9 days later a person claiming to be a subcontractor said the person I hired to do the work d...

David, You don't mention what state you're in, but most states allow subcontractors to place a lien if they are unpaid by the general contractor. Basically, you need to contact th...

I placed a lien on a rental home in 2010 for landscaping that was not paid. The house was sold this year but I did not receive anything. Do liens expire? This was in Utah. Than...

A lien on my home in Utah was filed in 2010 but no court action has been taken in court. Can I file as request for release on this lien? Can I file to charge the contractor for f...

Is a contractor liable for code violations, if the project was built according to architectural drawing provided him that where also approved by the local building codes dept. b...

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