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Looking at some of the basics of mechanic's liens, P.1

Mechanic's liens are an important tool for contractors providing services to property owners. Construction projects can get messy when parties end up disagreeing on their mutual obligations, and the ability to file a mechanic's lien ensures contractors and subcontractors are able to secure payment for services when the property owner refuses to cooperate.

By the same token, property owners need to understand their rights when they are served with a mechanic's lien. Because construction projects can become complicated, owners need to make sure they work with an experienced attorney so that they aren't unfairly targeted by an ill-founded lien. 

The basic idea behind a mechanic's lien is that it allows any party who performs or furnishes labor under a valid contract to enforce a security interest in the property in order to ensure payment. In order to file a valid mechanic's lien, there must be a valid contract for work. The contract can be express or implied, formal or informal, but there must be some valid contract for work.

Also, the contract for work must have been made with the owner of the property. This means that the individual who claims to be the owner must be listed as the owner in property tax records. If the property is held as a tenancy by entirety--in which both spouses have an equal and undivided share--the contract must be with both spouses to file a valid lien.

In terms of the work provided, a lien can be filed for any improvement to the real property, including labor, materials, design, surveying, and equipment rental, but not for performed work on personal property or fixtures.

In our next post, we'll continue looking at this issue, particularly the relief available to a party who files for a mechanic's lien, as well as the basics steps in the process and how an experienced attorney can help parties involved in the process.

Source: meckbar.org, "NC Construction Liens: What Every Lawyer Should Know," Ned McNaughton, Presentation given to MCB Sole Practitioner/Small Firm Section on April 10, 2014.

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