Mechanic's Lien
A mechanic's lien is a legal claim against a property by contractors, subcontractors, or suppliers who provided labor or materials for improvements but were not paid, creating a security interest in the property.
Exam Tip
Mechanic's lien = protection for unpaid contractors/suppliers. Priority varies by state. Some states 'relate back' to when work began.
What is a Mechanic's Lien?
A mechanic's lien (also called a construction lien or materialman's lien) is a security interest in property granted to those who have supplied labor or materials for construction or improvements. It ensures workers and suppliers get paid by using the property as collateral.
Who Can File a Mechanic's Lien?
| Party | Example |
|---|---|
| General Contractors | Main builder hired by owner |
| Subcontractors | Plumbers, electricians, roofers |
| Material Suppliers | Lumber yards, hardware suppliers |
| Laborers | Workers who provided labor |
| Architects/Engineers | Design professionals (some states) |
How Mechanic's Liens Work
- Work performed - Labor/materials provided
- Non-payment - Owner or GC doesn't pay
- Preliminary notice - Required in most states
- Lien filed - Recorded with county
- Enforcement deadline - Must sue to foreclose within time limit
- Foreclosure - Property sold to satisfy lien
Mechanic's Lien Priority
| Situation | Priority |
|---|---|
| vs. Property Taxes | Taxes have priority |
| vs. Prior Mortgage | Usually mortgage has priority |
| vs. Later Mortgage | Lien may have priority (varies) |
| Relation Back | Some states: priority from start of work |
Time Limits (Vary by State)
| Action | Typical Deadline |
|---|---|
| Preliminary Notice | 20-30 days from first work |
| File Lien | 60-120 days from completion |
| File Lawsuit | 6 months - 2 years |
Protecting Against Mechanic's Liens
| Strategy | Description |
|---|---|
| Lien Waivers | Get signed waivers with each payment |
| Joint Checks | Pay GC and sub together |
| Title Insurance | Endorsement for mechanic's liens |
| Contractor Bonds | Require payment bonds |
Lien Waivers
| Type | Effect |
|---|---|
| Conditional | Effective only when payment clears |
| Unconditional | Immediately effective |
| Progress | For partial payments |
| Final | For final payment |
Mechanic's Lien vs. Other Liens
| Feature | Mechanic's Lien | Mortgage |
|---|---|---|
| Voluntary? | No | Yes |
| Created by | Unpaid work | Loan agreement |
| Relates back | Often yes | No |
| Priority | Varies | Recording date |
Study This Term In
Related Terms
Lien
Real EstateA lien is a legal claim against a property that must be paid when the property is sold, serving as security for a debt or obligation.
Encumbrance
Real EstateAn encumbrance is any claim, lien, charge, or liability attached to real property that may diminish its value or burden its title, but does not necessarily prevent transfer of ownership.
Foreclosure
Real EstateForeclosure is the legal process by which a lender takes ownership of a property when the borrower fails to make mortgage payments, typically after several months of default.
Title Insurance
Real EstateTitle insurance is a policy that protects property buyers and lenders against losses from defects in title, such as liens, encumbrances, or ownership disputes that existed before purchase.