A mechanic’s lien is a security interest in a property, granted to builders, subcontractors, architects, surveyors, and others providing labor or materials in connection with the construction or improvement of the property. It establishes a legal claim against the property itself, and not just against the owner, in the event that the contract is not fulfilled or payment for labor or materials is not made.
A mechanic’s lien allows the lien holder to assert a claim against the property not only for the total value of the unpaid services or materials provided, but also for any legal and administrative costs associated with enforcing the lien. Because of this, it can be a powerful enforcement tool that prevents dishonest parties from taking advantage of the work of those who build and improve properties.
How Does a Mechanic’s Lien Work?
To establish a mechanic’s lien, contact information for the lienholder and the contract amount must be filed with the records of the county or municipality where the property is located. This is usually done by a title company a few days after the contract is signed. This creates public record rights that benefit the lien holder.
The lien will remain in force for a set period of time, usually three or four months. If the lienholder takes no action during that time, the lien will expire, and the lien holder will no longer have a legal claim on the property. If payment is not made, the lienholder can take legal action to enforce the lien.
What Are the Benefits of a Mechanic’s Lien?
The mechanic’s lien is an effective way to ensure that businesses are paid for their services and materials. It also helps to ensure that contractors, architects, and subcontractors are not taken advantage of or treated unfairly. Finally, it provides the lienholder with a path to collect damages and unpaid costs associated with the contract.
Conclusion
A mechanic’s lien is a powerful tool that can be used to secure payment and protect the interests of those providing labor and materials in connection with a construction project. It establishes a legal claim, and provides a recourse to those who have been treated unfairly or taken advantage of. While the process to obtain a mechanic’s lien can be complicated, understanding its basics is essential for anyone in the business of constructing or improving property.