Lien

What is a Lien?

A lien (specifically a mechanic's lien or construction lien) is a legal claim against real property that allows contractors, subcontractors, and material suppliers to secure payment for work performed or materials provided.

Liens provide powerful protection for contractors who complete work but haven't been paid according to contract terms.

How Liens Work

When a contractor performs work or supplies materials but doesn't receive payment, they can file a lien against the property. This legal claim:

• Prevents property sale or refinancing until the debt is resolved
• Gives the lienholder the right to force property sale to satisfy the debt
• Creates a public record of the unpaid obligation
• Provides leverage to negotiate payment

Types of Liens

Mechanic's Lien

Filed by contractors who performed construction work on the property.

Materialman's Lien

Filed by suppliers who provided materials incorporated into the property.

Subcontractor Lien

Filed by subcontractors against general contractors or property owners.

Design Professional Lien

Filed by architects or engineers for unpaid design services.

Lien Filing Process

1. Preliminary Notice

Many states require contractors to file preliminary notice within specific timeframes after starting work.

2. Lien Filing

File the actual lien claim within statutory deadlines (typically 60-120 days after work completion).

3. Enforcement Action

If payment isn't received, initiate foreclosure proceedings to force property sale.

4. Resolution

Lien is released when payment is made or legal action is completed.

Lien Requirements by State

Notice Requirements: Deadlines for preliminary notices vary significantly.

Filing Deadlines: Time limits for filing liens range from 30-180 days.

Enforcement Periods: Time limits for enforcing liens typically 1-2 years.

Form Requirements: Specific information and formatting required for valid liens.

Protecting Against Liens

For Property Owners

Verify Payments: Ensure general contractors pay all subcontractors and suppliers.

Lien Waivers: Obtain signed waivers from all contractors before making payments.

Escrow Accounts: Hold funds in escrow until all lien periods expire.

Title Insurance: Purchase extended coverage for lien protection.

For General Contractors

Pay Promptly: Pay subcontractors and suppliers according to contract terms.

Track Deadlines: Monitor all lien deadline requirements in your state.

Collect Waivers: Obtain lien waivers from all parties before client payments.

Use Contracts: Include lien waiver requirements in all subcontractor agreements.

Lien Release Process

Voluntary Release: Contractor files lien release after receiving payment.

Court Order: Legal action may be required to remove invalid or expired liens.

Bond Release: Property owner can post bond to release lien while disputing validity.

Settlement Agreement: Negotiated resolution with partial payment and lien release.

Common Lien Mistakes

Missing Deadlines: Failing to file preliminary notices or liens within required timeframes.

Incorrect Information: Errors in property description, amounts, or legal requirements.

Insufficient Documentation: Lack of contracts, invoices, or proof of work performed.

Invalid Claims: Filing liens for work not actually performed or materials not delivered.

Legal Considerations

Lien laws vary significantly between states and can be complex. Contractors should:

• Understand their state's specific requirements
• Maintain detailed records of all work and communications
• Consider legal consultation for significant unpaid amounts
• Follow all procedural requirements precisely