A mechanic’s lien is a type of lien used to place an encumbrance on a property that has been renovated, modified or improved by a supplier, contractor or subcontractor. They usually result in enforcing payment from the property owner before further works are carried out on the property.
While a lien is in force, the said property cannot be refinanced by the owner and in severe cases might be sold by the court to clear the lien. If for example the kitchen of a home is renovated with new cabinets and the supplier hasn’t been paid, a mechanic’s lien can be placed on the whole property (which is the house) until the lien is cleared.
You should note that a lien can be placed on your property even if you already paid your general contractor. In the very bizarre scenario that your irresponsible general contractor fails to pay suppliers or subcontractors, they can obtain a mechanic lien on your property until they are paid. Many a time, homeowners and property owners often fall victim of paying twice for a particular product or service.
The law however, makes provisions to sue your general contractor to get the money but it’s often a long process to get money off a reckless general contractor. To avoid subcontractors and suppliers coming after you, it is very important to know how a mechanic’s lien work and how to avoid them.
How does Mechanic’s Lien work?
Here are the top three things you must know about a mechanic’s lien. The suppliers or contractors must do the following:
1.) Mechanics Lien Preliminary Notices (20 days prior to serving)
There must be a preliminary notice of what is been contributed (either in service or product) to the home or property owner. Preliminary notices are usually served within the first 20-30 days of contribution. In the case of the example cited above, the notice will involve the cost of supplying kitchen cabinets.
2.) The claim of Mechanic’s lien
After the notice has been served to the property owner and the said amount not paid in full the supplier/subcontractor can file a “Claim of Mechanics lien” in the location or country where the modified or improved property is located.
3) Filing a Lawsuit
Once the mechanic’s lien is in force, the supplier will have a window of between two to six months to work out a solution with the property owner before a lawsuit can be filed.
Challenging a Mechanic Lien for frivolousness
For a Lien to be effective, it must have been raised under certain conditions and formalities. This is why it is advisable to seek legal counsel from a reliable attorney like mechanics lien to assist you every step of the way. A good attorney can get a mechanic’s lien canceled if he identifies that it didn’t compile with legal rules and formalities. Here are a few reasons why a lien might be revoked:
- Whether a notice was given prior to seeking the Mechanic Lien.
- If the Lien was filed within the stipulated 90 days after the supplier/subcontractor stopped labor on the property.
- Wrong description of the property or labor and services rendered.
- Frivolous amount for which the lien is claimed.
Three ways to avoid a Mechanics Lien
1) Use Joint Checks to pay for services and products
To avoid a Mechanic lien you can write a series of joint checks to the general contractor and subcontractors/suppliers. That way, all parties involved are paid in time
2.) Get a Lien Waiver
One secure way to get out of the mess of a lien over your property is to get the general contractor get lien waivers from all those affected.
3.) Pay Subcontractors/Suppliers yourself rather than paying the general contractor
Finally, if you have the time, do the hard part of negotiating and paying suppliers yourself.