Mechanics liens are a critical tool in the construction industry, providing security by protecting payment for contractors, subcontractors, and suppliers. Understanding their nuances is crucial for anyone providing labor or materials on a project.
In this article, we break down the top five things you need to know about mechanics liens in order to protect your right to payment.
What is a Mechanics Lien?
A mechanics lien is a legal claim against a property, typically filed by a contractor, subcontractor, or supplier who hasn’t received payment for work performed or materials supplied in a construction project. The lien exists as a safeguard for payment recovery. If the property owner fails to pay the contractor, the contractor can file a mechanics lien to secure the amount owed. It must be filed in accordance with state lien laws, which vary in terms of deadlines and procedures. Once filed, a mechanics lien can affect the owner’s ability to sell or refinance the property until the debt is settled or the lien is released.
Who Can File a Mechanics Lien?
Generally, any party that contributes labor, services, or materials to a construction project and is not paid has the right to file a mechanics lien. This includes general contractors, subcontractors, laborers, and material suppliers. However, it’s always important to know your state’s specific laws regarding eligibility. If you’re unsure whether you have the right to file a mechanics lien, contact our customer service team today.
Deadlines & Expiration of Mechanics Liens
Mechanics lien rights are not evergreen; they come with strict filing deadlines that vary by state. Some states, like California, require that claimants record their mechanics lien within 90 days of completion of the project. Other states, like Arizona, require that claimants record a Notice and Claim of Lien within the earlier of 60 days after the recording of a Notice of Completion or within 120 days after completion.
It’s crucial to be aware of these deadlines, as missing them (and other common mistakes) can result in losing the right to file a lien. Additionally, once filed, a lien won’t last indefinitely and will eventually expire if no action is taken to enforce it.
Preliminary Notices are Essential to Mechanics Liens
In most states, a preliminary notice must be sent at the start of a project to preserve the right to file a mechanics lien. These notices, often referred to as “prelims” or “pre-liens,” are sent to the property owner, general contractor, and sometimes the lender to notify them of your involvement in the project. Failure to send these notices can result in the loss of lien rights.
Mechanics Liens Attach to Properties, Not Individuals
A crucial aspect of mechanics liens is that they attach to the property itself, not the property owner. This means the lien is tied to the land and improvements where the work was performed or materials supplied, regardless of ownership changes. Therefore, a mechanics lien can significantly impact the sale or refinancing of a property, compelling owners and potential buyers to address the lien to clear the title.
Filing Mechanics Liens With CNS
Understanding mechanics liens is essential for anyone providing services or materials for a construction project. These liens protect your right to payment, and their effective use requires awareness of legal rights, deadlines, and procedures. Unfortunately, because of the difference in state laws, trying to file a lien can often be confusing and time-consuming.
At CNS, we provide mechanics liens services for California, Arizona, Nevada, Oregon, Washington, New Mexico, and Florida. If you’re experiencing payment issues, protect your right to payment by contacting us today.
Prefer to call? You can reach us at 800-366-5660.
Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.