While it may seem that a mechanic's lien should have something to do with the person who works on your car, it doesn't. Under the law, a mechanic is anyone who provides labor, services, or supplies to improve real property, like the carpenters, electricians, roofers, and plumbers you hire to work on your house. A lien is a legal claim against real property. A mechanic's lien, then, is a legal hold against your property.
It's recorded in the county recorder's office by individuals or entities who are owed money for their contributions to improving your property. A mechanic's lien allows these unpaid contractors, laborers, or suppliers to claim a lien against your property until they are paid.
Let's say you've hired a builder to add a room to your house. There's a dispute, and you refuse to pay for the work. The builder can then file a mechanic's lien against your house. He files the lien to notify you, any mortgage holders, and any prospective buyers, of his claim against your house.
What Happens if a Lien is Filed Against Your Property
A mechanic's lien against your property can lead to several problems, including:
- Foreclosure, if you don't pay off the lien
- Double payment for the same job--if you pay the prime contractor and then have to pay a subcontractor or supplier who the prime contractor didn't pay
- A cloud on the title of your property, which may affect your ability to refinance or sell the property
There is no uniform mechanic's lien law. Instead, the process of establishing or "perfecting" a mechanic's lien is governed by state law, usually the state mechanic's lien statute. The governing statutes vary significantly from state to state. There are some common elements in the process: most states require notice to the homeowner and other persons or entities involved in the project. But pre-lien notice requirements and mechanic's lien filing deadlines differ greatly from one state to the next. State laws even differ as to exactly who is entitled to file a mechanic's lien.
How the Law Protects You
Although lien laws are designed to benefit workers, there are protections built into the process for the owner. Lien law requirements are specific, and the failure to follow them exactly can invalidate the mechanic's lien. There are also limitations on the amount of time that lien filers have to act on the lien and to file a lawsuit to collect the money. If the time elapses without action on the lien filer's part, you can demand that he or she execute a release of lien, freeing your title. If the lien filer refuses to comply, you can file an action in court to have the lien removed since it's likely you won't be able to refinance or sell your property until the title is clear.
How You Can Protect Yourself
As a property owner, you can avoid unwarranted liens by requiring contractors and subcontractors to sign a mechanic's lien waiver and release giving up their lien rights and releasing you from liability for nonpayment. But if someone files a lien against you anyway, you should attempt to negotiate a settlement with the lien filer, either directly or with the help of mediation services. If the lien filer acts on the lien, you should probably hire a lawyer to defend you.
Questions for Your Attorney
- What happens if I don't get a lien for the work on my property and someone gets hurt?
- Is this like a permit I would get from my town?
- Do liens expire?