Mechanic's liens are an important tool for those who provide labor, materials, rental equipment, professional design or surveying services to the owner of real property for the purpose of making improvements to the property.
Property improvements, of course, commonly involve disputes about the terms of the agreement and can result in contractors not being paid the agreed upon amount. A mechanic's lien can ensure that a contractor does not walk away from a project with a major financial loss.
There are a variety of requirements that a contractor must meet for a contractor to receive the benefit of a mechanic's lien. There are also limits as to what real property may be the subject of a lien. As to the latter point, a lien on real property extends to as far as the owner's interest in the lot or tract of land on which the improvement was made.
A lien is effective from the time a contractor first furnishes labor or materials at the site. In order to put a lien into motion, a claim of lien must be "perfected." This means that several conditions must be fulfilled in order for the contractor to be able to enforce the claim. First, a copy of the claim of lien must be served to the owner of the real property. If a subcontractor is perfecting the lien, the copy of the claim must also be served on the contractor.
The claim of lien must also be filed properly, at the proper place and within the proper time window. The claim of lien must also contain very specific information specified by statute. A claim of lien must also be served on the proper parties. Once a lien is perfected which is done by filing a lawsuit, it may then be enforced through the Court system.
In our next post, we'll look at lien enforcement and what remedies are available to contractors who hold a lien on a property.