What Is a Mechanic's Lien?
After weeks of dust, banging and clanking, and construction, you completed a brand new bathroom with a huge tub, two sinks, and heated tile floors for your customer. While the customer is luxuriating in his new comfort, he refuses to pay you!
How do you get your money? Have you considered a mechanic's lien?
Here are three things you need to know about a mechanic's lien:
1. What is it?
A lien is a claim of right to property of another person to cover a debt. A mechanic's lien is a claim on your customer's property to pay for services and improvements that you did on their property.
For example, Bob hired you to fix his bathroom, and doesn't pay you. You then file a mechanic's lien on Bob's house. If Bob still doesn't pay, you can force a foreclosure of Bob's house to pay for your services.
The lien is not on Bob and his personal property. It is on the house. So, you can't go into Bob's bank account or sell his baseball card collection to get his money. You can only force him to sell the property on the lien.
2. Who Can Get a Mechanic's Lien?
Despite the name, a mechanic's lien is not only for car mechanics. The term "mechanic" refers to anyone who provides a service, such as:
- Construction worker
- Car mechanic
- General contractor
As long as you supplied some kind of service or supplies that improved your customer's property, then you can file a mechanic's lien on his property.
3. Is The Lien Valid?
Make sure that your lien is valid. When he receives the mechanic lien Bob may run to his attorney and check:
- Who filed the lien? -- Are you a general contractor or a subcontractor? All too often, a general contractor takes the customer's money and then doesn't pay the subcontractor. If you are a subcontractor asking for money, Bob will likely check with the general contractor and demand that he pay immediately. To avoid this issue, Bob might also require you and the general contractor to sign a lien waiver. The lien waiver prevents you, the subcontractor, for going after Bob for payment, so he wouldn't have to worry about paying twice.
- Is the lien timely? -- Most states have statutory limitations on when a mechanic's lien must be filed to be valid. In California, general and subcontractors have 90 days after a project is completed to file a lien. Additionally, subcontractors must first send a Preliminary Notice to the customer within 20 days of starting work or supplying materials before they can file for a lien. If the lien was not timely filed, then it is invalid.
- Is the lien for the right property? -- A lien can only be filed on the property that was improved. This seems obvious, right? Consider a situation where you do a massive renovation on Bob's California home. Afterwards, the value of Bob's California home falls dramatically. It's not even worth the money owed to you. However, he has a home in Texas worth a lot more money. You may want to file a lien on the Texas home instead of the California home to ensure that you receive your full price. Sadly, you can't do this. If the lien is filed on a property that you didn't actually work on, it is invalid.
If you want to place a mechanic's lien on your customer's home, an experienced construction attorney may be able to help.
- Browse Construction Lawyers by Location (FindLaw's Lawyer Directory)
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