How to use a mechanic’s lien

Legal Corner logoMechanic’s lien laws are state laws that provide remodelers a way to get paid for labor, material, skill, equipment and machinery furnished in the improvement of property. This includes construction, remodeling and repair of any building on the property as well as excavation and landscaping of the land itself.

Mechanic’s liens are powerful because the lien is placed on the title of the improved real estate, and in many states, a remodeler has the power to foreclose on that property in order to enforce the lien and collect money owed.

Who is entitled to mechanic’s liens?

Any person or business that provides labor, materials, skill and equipment for the construction, repair or other improvement to land and any building on the land is entitled to a mechanic’s lien.

Some states distinguish between the type of service provided and the right to a mechanic’s lien. For example, in Alabama, persons providing drawings, plans and specifications for a project—in addition to persons performing construction tasks—are entitled to a mechanic’s liens, but a surveyor who installs stakes and draws plats and maps is not.

For the most part, remodelers who perform work and provide materials are entitled to a mechanic’ lien.

Most states require that a contractor/remodeler give some type of notice to a property owner before a mechanic’s lien can be enforced. The legal requirements for pre-lien notice tend to be very state-specific. Some states, such as Iowa, distinguish between commercial and residential real estate, with more burdensome notice requirements for residential property.

Some states use the size of the building being improved as a factor in whether pre-lien notice is required. In New Mexico, no pre-lien notice is required on a residential project containing four or fewer dwelling units. In Minnesota, the opposite is true—no pre-lien notice is required when the residential property contains four or more units.

Be very careful when deciding whether you fall within any pre-lien notice exceptions. They are often very technical and quite unforgiving. For example, in Minnesota, no pre-lien notice is required if the building is 5,000 square feet or greater. Let’s say a remodeler subcontracted to work on a retail store in a mall. The mall obviously exceeded 5,000 square feet, so the subcontractor did not provide pre-lien notice to the owner. When the remodeler was not paid, the remodeler filed a mechanic’s lien and a foreclosure lawsuit followed. In the lawsuit, the court invalidated the subcontractor’s mechanic’s lien because even though the mall exceeded 5,000 square feet, the store that was remodeled did not. The court used the total amount of leased space, instead of the total building space, to determine whether pre-lien notice was required, leaving the subcontractor high and dry.

Similarly, most states also have specific content requirements and time limits for providing pre-lien notice to the property owner. Check your state’s law for the exact wording required for pre-lien notice and for time limits. Some states require that pre-lien notice occur within a certain number of days of signing a contract or subcontract; other states require pre-lien notice be provided within a set number of days of providing labor or materials to the project.

Here again, these time limits can be very unforgiving. Know when pre-lien notice must be given in your state and give it. (See the list of states at the end of the article for specific information.)

Given the technical nature of pre-lien notice, the only way to truly protect your mechanic’s lien rights is to always give pre-lien notice in the form required by your state, within the time required.

I have had a number of clients express concern with serving pre-lien notice on a project for fear that they will appear combative or fear they might offend the general contractor.The solution to these concerns is simple: Blame it on your lawyer. Tell the general contractor that your lawyer makes you send this pre-lien notice, and it is absolutely no reflection on the general contractor—it is those lawyers. Then give the pre-lien notice.

What should a mechanic’s lien statement say

Every state has its own form for a mechanic’s lien statement. Normally, a mechanic’s lien statement must include the name of the person or business claiming the mechanic’s lien, the amount of the lien, a description of the real property against which the lien is being filed, the name of the owner and the dates of the work on the property.

There are times that it can be tempting for a remodeler to inflate the amount of the mechanic’s lien in order to have negotiating room later. This is a very dangerous approach because many states have laws that completely invalidate a mechanic’s lien if a remodeler knowingly overstates the amount of its lien.

Once the mechanic’s lien statement is complete, it must be served on the owner of the real property, by certified mail, personal service, or posting on an online state registry in order to be valid.

Having mechanic’s lien rights to enforce is probably the remodeler’s most effective tool for getting paid. With that said, make sure that all pre-lien notice requirements are met, the mechanic’s lien statement is accurate and the owner has been properly served with the mechanic’s lien statement. If these requirements are properly accounted for, you will be able to fend off legal challenges and, ultimately, get paid for your hard work.—Patrick Noaker

noaker pat for web file 1158Patrick Noaker is an attorney in Minneapolis, who aggressively represents construction contractors in the courtroom and arbitration. He can be reached at (612) 839-1080 at noakerlaw.com.

 

Click on your state below for the mechanic’s lien laws in your state

Alabama – Ala. Code § 35-11-1
Alaska – A.S. § 34.35.050
Arizona – Ariz. Rev. Stat. § 33-981
Arkansas – Ark. Code Ann. §18-44-101
California – Cal. Civ. Code § 8400-8404
Colorado – Colo. Rev. Stat. § 38-22-101
Connecticut – Conn. Gen. Stat. § 49-33
Delaware – Del. Code tit. 25, § 2701
Florida – Fla. Stat. § 713.01
Georgia – Ga. Code Ann. § 44-14-361
Hawaii – Haw. Rev. Stat. § 507-42
Idaho – Idaho Code Ann. § 45-514
Illinois – 770 ILCS 60/1.2
Indiana – Ind. Code § 32-8-3-1
Iowa – Iowa Code § 572.2
Kansas – Kan. Stat. Ann. § 60-1101
Kentucky – Ky. Rev. Stat. Ann. § 376.010
Louisiana – La. Code Civ. Proc. Ann. § 9:4801
Maine – Me. Rev. Stat. tit. 10, § 3251
Maryland – Md. Real Property Code § 9-102
Massachusetts – Mass. Gen. Laws ch. 254, § 1
Michigan – Mich. Stat. Ann. § 570.1107
Minnesota – Minn. Stat. § 514.01
Mississippi – Miss. Code Ann. § 85-7-135
Missouri – Mo. Rev. Stat. § 429.010
Montana – Mont. Code. Ann. § 71-3-521
Nebraska – Neb. Rev. Stat. § 52-126
Nevada – Nev. Rev. Stat. § 108.221
New Hampshire – N.H. Rev. Stat. Ann. § 447:1
New Jersey – N.J. Stat. Ann. § 2A:44A-3
New Mexico – N.M.S.A. § 48-2-2
New York – N.Y. Lien Law § 3
North Carolina – N.C. Gen. Stat. § 44A-7
North Dakota – N.D. Cent. Code § 35-27-02
Ohio – Ohio Rev. Code § 1311.01
Oklahoma – Okla. Stat. tit. 42 § 141
Oregon – Or. Rev. Stat. § 87.010
Pennsylvania – 49 Pa. Cons. Stat. § 1101
Rhode Island – R.I. Gen. Laws § 34-28-1
South Carolina – S.C. Code Ann. § 29-5-10
South Dakota – S.D. Codified Laws § 44-9-1
Tennessee – Tenn. Code Ann. § 66-11-101
Texas – Tex. Prop. Code § 53.021
Utah – Utah Code Ann. § 38-1a-101
Vermont – Vt. Stat. Ann. Tit. 9, § 1921
Virginia – Va. Code Ann. § 43-1
Washington – Wash. Rev. Code § 60.04.021
West Virginia – W. Va. Code § 38-2-1
Wisconsin – Wis. Stat. § 779.01
Wyoming – Wyo. Stat. Ann. 29-1-201

One thought on “How to use a mechanic’s lien

  1. Pingback: How to get paid on an overdue bill | NARI National News

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