What Is a Mechanic’s Lien?
A mechanic’s lien, also known as a materialman’s lien or a construction lien, is a mechanism whereby contractors involved in the process of making improvements to real estate secure payment for their services and materials. The following scenario is an example of a situation which would give rise to a mechanic’s lien:
Lionel of Lionel’s Home Contractors, Inc. agreed to construct an addition to Mr. and Mrs. Harrison’s home at a cost of $53,000. The parties’ written agreement provided that Lionel would complete the addition within 60 days from the date of the parties’ contract and would provide all the materials necessary to do so. Lionel completed the addition in accordance with the parties’ agreement, but the Harrisons refused to pay.
In essence, a mechanic’s lien affords a contractor the same type of security as that afforded to a lender with a mortgage lien on real property.
General Requirements for a Mechanic’s Lien
A mechanic’s lien extends to real property, as well as improvements. It is important to note, however, that a mechanic’s lien does not extend to personal property. For example, a mechanic’s lien cannot be obtained by a repair shop to secure payment for repairs to a lawnmower.
Furthermore, a contractor may obtain a mechanic’s lien on real property only for improvements to the property or for materials provided in connection with improvements to the property. The mechanic’s lien must attach to the property that is benefited by the improvements or supplies. In other words, a contractor may not obtain a mechanic’s lien on one property for materials provided in connection with improvements or supplies that were provided for another property.
Lastly, the owner of the real property must consent to the improvements or the delivery of supplies for which the lien is sought. The owner’s consent may be express or implied. For example, a written contract between a contractor and a property owner, which describes the parties’ agreement as to the improvements, would evidence the property owner’s express consent. Implied consent, on the other hand, may be found where the owner merely acquiesces to the contractor’s provision of the services or supplies.
The laws governing mechanic’s liens vary from state to state. Generally speaking, a contractor must serve the property owner with a notice of mechanic’s lien. In addition, the contractor must record the mechanic’s lien in the appropriate public office so that other parties will be put on notice of the existence of the mechanic’s lien against the title of the real property at issue. In the event the property owner fails to pay the contractor for the services or supplies, the contract may initiate a legal proceeding to foreclose the lien.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.