Contractor's Liens: Select State Laws

If you don't pay your contractor, they may force the sale of your property through a mechanic's lien. Mechanic's or construction liens are a common aspect of property law in the United States.

Suppose you hire an independent contractor to perform a construction project on your home. To secure payment, the construction contract may give them the right to seize the real estate they built or repaired. The written agreement will have a disclaimer stating that the contractor may file a lien if the owner fails to pay for the home improvement. States have limited or expanded this right and have frequently established notice obligations.

How Liens Typically Work in Most States

An unpaid contractor can place a lien against a property for qualifying labor and goods. Suppose you have hired a California contractor to ensure your home is upgraded to comply with building codes. Let's say you fail to pay the contractor and have no good excuse for nonpayment, and going to court or arbitration isn't an option.

As a California business, the contractor will be subject to state laws in California for lien purposes. Federal laws don't come into play as far as liens are concerned. But no matter what state you're in, the contractor will usually need to:

• Give you preliminary notice that you are in default for failing to pay them
• Identify the goods and services, such as labor and building parts, that were provided to you
• Give you sufficient time (as determined by your state) to make payment
• Following a set period after notice, write an affidavit identifying the property and the work they performed
• File the affidavit and notice of the amount owed with the county or locality in which your property is located
• Move to foreclose on the lien within a set period prescribed by law (through filing a lawsuit)

If a contractor has improperly placed a lien on your residential property, you may be able to report them to your state. Every state has a regulatory state license board that supervises licensure for contractors.

Like a state department of labor, a contractor board will enforce license laws. It'll make sure contractors are following licensing requirements. If a contractor follows the appropriate process to file a lien, they won't face any issues with their contractor's license. On the other hand, violations of the lien process may result in fines or even suspension of their business entity.

Learn More About Contractor's Liens

Like salespersons, contractors must warranty the goods and services they provide to property owners. Contractors are also required to carry liability insurance in case they make mistakes. Perhaps a contractor has placed an invalid lien against your property despite poor workmanship. If they have insurance coverage, you may be able to seek recourse directly against their insurance policy. But fighting with contractors and their insurance companies isn't easy to do on your own.

Contractor liens involve complicated legal issues beyond the know-how of real estate agents and real estate brokers. Disputes involving contractor's liens frequently hinge upon disagreements over large sums of money and impact a person's home ownership. The serious interests at play for all parties often lead to contentious and complicated legal actions. A construction law attorney can provide legal advice to navigate these issues.

Summary of Relevant State Laws

The following is a summary of interesting nuances in various state laws affecting construction or mechanic's liens.

• Alabama
• Alaska
• Arkansas
• Arizona
• California
• Colorado
• Connecticut
• Delaware
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Lousiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Nebraska
• Nevada
• New Hampshire
• New Mexico
• New York
• North Carolina
• Ohio
• Pennsylvania
• South Carolina
• Tennessee
• Texas
• Utah
• Virginia
• Washington

Alabama

In Alabama, all potential lienholders, except an original contractor, must fulfill three basic steps before perfecting a lien:

• Provide statutory notice to the owner
• File a verified statement of lien in the probate office of the county where the improvement is located
• File suit to enforce the lien

In this context, an original contractor is a contractor with a direct contract with the owner.

Alaska

In Alaska, timely notice must be provided, including a description of the property, services, and materials furnished.

Arkansas

In Arkansas, unlicensed contractors cannot take legal action to enforce their contracts.

Arizona

In Arizona, unlicensed contractors cannot take legal action to enforce their contracts.

California

In California, a subcontractor or supplier must give notice to the owner. Unlicensed contractors cannot take legal action to enforce their contracts. Design professionals may file liens, and lien rights may exist even when the design was not used.

Colorado

In Colorado, timely notice must be provided, including a description of the property, services, and materials furnished.

Connecticut

In Connecticut, a mechanic's lien may be foreclosed in the same manner as a mortgage.

Delaware

In Delaware, when applicable, contractors must provide owners with a written certification or a release of mechanics' liens.

District of Columbia

In the District of Columbia, a mechanic's lien has no priority over a prior recorded construction loan. But it does have priority over any security interest filed after the mechanic's lien. A lawsuit must be filed within six months to enforce the lien.

Florida

In Florida, a claim of lien must be filed with the circuit court clerk in the county where the property is located. The filing must be made within 90 days of the date the contractor last performed any labor or services or supplied materials.

The contractor is not required to give notice as a condition for obtaining a lien against the owner's property. However, if the contractor is entitled to receive his final payment, the contractor must give the owner a contractor's affidavit before any lien can be effective.

A contractor's affidavit must state that all subcontractors, sub-subcontractors, and material suppliers have been paid. If all subcontractors have not been paid, the contractor's affidavit must list those who remain unpaid and the amounts due. If the final payment is due, the contractor has no lien rights until the contractor's affidavit is given to the owner.

Different conditions apply if the direct contract between the owner and contractor is less than $2,500 for the entire job. In such situations, subcontractors and suppliers who do not have a direct contract with the owner have no lien rights on the job. Only the contractor (the person with a direct contract with the owner) can file a lien on jobs of less than $2,500. Design professionals may file liens, and lien rights may exist even when the design was not used.

Georgia

In Georgia, a lien can only be filed if the contractor filing the lien is in substantial compliance with the underlying contract with the owner. All liens must be filed with the clerk of the superior court of the county where the property is located. They must be filed within three months after completion of the work.

When filing a lien, the contractor must send a copy of the lien by registered or certified mail to the owner of the property or the contractor as the owner's agent. The party filing the lien has 14 days to file the lien with the clerk of the superior court in the county where the property is located. This notice must refer to the property's then-owner against which the lien was filed. It must also refer to a deed or other recorded instrument with the chain of title of the affected property.

Hawaii

In Hawaii, a lien may be filed for design work and supervision, but only if the design is used to improve the property.

Idaho

In Idaho, a claim must be filed containing, among other things, a description of the property and work performed.

Illinois

In Illinois, notice must be provided to owners, including a description of labor and materials provided.

Indiana

In Indiana, notice must be recorded in the recorder's office in the county where work was done.

Iowa

In Iowa, a lien may be filed for design work and supervision, but only if the design is used to improve the property.

Kansas

In Kansas, posting a bond is permitted; however, the court determines the bond amount.

Kentucky

In Kentucky, in some situations, a contractor must obtain a judgment before filing a mechanic's lien.

Louisiana

In Louisiana, subcontractors, laborers, employees, suppliers, and lessors may file claims against the owner and the general contractor. All claims of suppliers and subcontractors rank equally. They come ahead of the privilege of contractors, surveyors, architects, and engineers, which rank equally. A pro rata distribution is assumed if no claimant conclusively establishes a prior claim superior to others.

Maine

In Maine, notice is required and must contain, among other things, a description of the property.

Maryland

In Maryland, a lien cannot be filed unless the value of the improvements equals at least 15% of the property value. A contractor cannot obtain a lien until a suit is filed and a court orders the lien. Once obtained, however, the lien has priority over other liens filed after this court determination.

Massachusetts

In Massachusetts, a design professional may file a lien only for work done supervising construction but not for design.

Michigan

In Michigan, several design professionals may assert lien rights against property for work performed.

Minnesota

In Minnesota, liens are filed with the recorder of deeds.

Mississippi

In Mississippi, all parties claiming liens on the same property shall be parties to the suit. Any property sale shall be by a special writ of execution, and all liens paid pro rata. Subcontractors and laborers may bond the amount due by general by written notice to the owner. The owner may pay the amount due in court for final distribution according to the parties' rights.

Missouri

In Missouri, the owner cannot put up a bond to fight the lien. The lien is filed with the clerk of the court rather than in the recorder's office. A lien may be filed for design work and supervision, but only if the design is used to improve the property.

Nebraska

In Nebraska, lien waivers are invalid. Design professionals may file liens, and lien rights may exist even when the design was not used.

Nevada

To secure a lien in Nevada, a contractor must be licensed and perform at least $500 in value connected to a property improvement.

New Hampshire

In New Hampshire, a contractor must have performed work for or provided materials within the last 120 days for which they have not been paid in full.

New Mexico

In New Mexico, notice must be given containing a description of the property and work performed.

New York

In New York, unlicensed contractors cannot take legal action to enforce their contracts.

North Carolina

In North Carolina, all lien claims must be filed in the superior court clerk's office. They must be filed in each county where the real property subject to the claim of lien is located. Claims of lien may be filed at any time after the obligation becomes due but not later than 120 days after the last furnishing of labor or materials.

Ohio

In Ohio, a design professional may claim a lien only for work done supervising construction but not for design.

Pennsylvania

In Pennsylvania, advance lien waivers are permitted. Subcontractors must formally notify the owner at least 30 days before filing a lien claim. Subcontractors performing alterations or repairs must serve an additional notice on the owner before work is completed. All contractors must file liens in the court clerk's office within four months of the last work and serve notice of the lien claim on the owner within one month after that.

Lawsuits to enforce liens must be filed within two years of lien filing. A general contractor can file stipulation against liens with the court before the project begins waiving all subcontractor mechanic's lien rights. Third-tier or sub-subcontractors have no lien rights. A design professional may claim a lien only for work done supervising construction but not for design.

South Carolina

South Carolina defines consent to require a contract between the mechanic and owner before labor and materials are furnished. Notice is required.

The notice of intent to lien must include:

• The name of the claimant
• The name of the person with whom the claimant contracted or was employed
• A general description of the labor, services, or materials furnished and their contract price or value
• A description of the project sufficient for identification
• The first and last dates on which materials, labor, or services were provided or scheduled to be provided
• The amount due

Tennessee

In Tennessee, advance lien waivers are permitted. A lien claimant has no lien if the claimant makes even a minor mistake in filing this notice of lien. A single mistake can be fatal to the mechanic's lien. The lien attaches only to whatever interest the owner has in the land. Thus, if an owner is leasing property, the lien can only be asserted against the leasehold interest, not the ownership interest of the lessor.

A contractor who contracts directly with the owner need not give any formal notice to the owner to preserve lien rights against the owner. However, suppose the contractor desires to perfect the lien against someone who purchases the owner's land without notice of the lien. Here, the contractor must file a sworn statement.

It must be submitted within 90 days after the project is completed or within 90 days from the contractor's last work on the project. The statement must include the amount due and a complete legal description of the land.

A contractor without a direct contract with the owner must give two separate and distinct notices. There is no reason why they cannot be done in the same document if done within the proper time period. Notices must be given to the owner and the direct contractor. Notice must be given within 60 days of the last day of the month in which work was performed or materials were furnished. The notice of nonpayment must contain all of the following information:

• The name and address of the contractor sending the notice of nonpayment
• A general description of the work, services, or materials provided
• A statement of the last date the contractor performed work or furnished materials
• A legal description of the real property

In addition to the notice of nonpayment, the contractor must also send the owner a notice that the lien is claimed. This notice to the owner must be sent within 90 days from either the completion of the work or within 90 days from the completion of the improvements.

The lien of a contractor who did not contract directly with the owner is valid for 90 days from the date of the notice claiming the lien. The lien remains valid until the final termination of any suit for enforcement brought within the 90-day period.

Texas

In Texas, the contractor must file an affidavit claiming a lien. It must be done no later than the 15th day of the fourth month following the month in which the original contract was:

• Materially breached or terminated
• Completed
• Finally settled
• Abandoned

The affidavit must contain the following information:

• Sworn statement of the claim
• A legally sufficient description of the real property
• A description of the work performed by the claimant
• The amount due
• The name and address of the reputed owner
• The name and address of the claimant

The affidavit must be filed with the county clerk where the property is located. The original contractor must send a copy of the lien affidavit to the owner at his last known business or residential address no later than the deadline for filing the affidavit or the 10th day following the filing of the affidavit, whichever is earlier.

Utah

In Utah, unlicensed contractors cannot take legal action to enforce their contracts. State law protects homeowners from having a lien maintained on their home and from civil judgment by persons other than the original contractor, provided the following conditions are met:

• The homeowner used the services of a licensed contractor
• The homeowner has a written contract with the original contractor
• The homeowner pays the original contractor(s) in full according to the terms of the written contract and any amendments to that contract

If a lien is incorrectly placed on a property, it is the owner's responsibility to notify the lien claimant in writing that the requirements have been met and to provide all relevant documentation.

Virginia

In Virginia, the contractor's lien holder has partial priority over even the construction lender. Therefore, banks in Virginia are typically concerned about contractor's lien waivers. All persons performing labor or furnishing materials valued at $50 or more for any structure's construction, removal, repair, or improvement may file a lien upon the structure.

The contractor seeking a lien must file a memorandum of mechanic's lien with the land records of the county where the real property is located. The general contractor may file a lien at any time after the work is commenced or materials furnished but not later than 90 days from the last day of the month in which the contractor last performed labor or furnished materials.

The main elements of a lien memorandum are:

• Name of owner
• Address of owner
• Name of claimant
• Address of claimant
• Type of materials or services furnished
• Amount claimed
• Type of structure on which work done or materials furnished
• Brief description and location of real property
• Date from which interest on the above amount is claimed
• Signature of the claimant or its authorized agent

In addition, the memorandum must contain an affidavit by the claimant or its agent that the owner is justly indebted to the claimant in the amount claimed by the lien.

Washington

In Washington, unlicensed contractors cannot take legal action to enforce their contracts.

Note: State laws are always subject to change through the passage of new legislation, exemptions, rulings in the higher courts (including federal Supreme Court decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.