Mechanics liens

Mechanics liens.

A mechanics lien is a hold, on real property, for the benefit of someone whose work or property improves the property. It is called, by various names. This includes materialman's lien, supplier's lien, laborer's lien, and others.

"Perfecting" a lien is the technical term for establishing a mechanics lien. This places an interference on the owner's title, to the property. It must be addressed, before the owner restores clear title.

Generally, a lien only arises if there is a payment dispute. However, in some states (e.g. California), a pre-lien notice is required at the beginning of a project.

Real property ownership is mostly a function of state law. Thus, establishing a mechanics lien is mostly a process governed by state law, in particular a mechanics lien statute. The process for perfecting a mechanics lien varies significantly, from state to state.

There are common parts, of the process of perfecting a mechanics lien. They include notice to the owner and to other persons, or entities, involved in the construction project. Also, there is the drafting, and filing, of a document with the government office recording deeds, or titles, to land.

Other types.

Mechanics liens are sometimes known as contractors liens and construction liens. Historically, the term "mechanic" referred to any person peforming skilled labor. This was not limited to current usage, which assumes a machine to be the subject of work. Thus, when the phrase, "mechanics lien", was invented, a person might be a carpenter, plumber, or similar.

Since the meaning of the word "mechanic" has changed, some states have modified the statutes to have a "mechanics lien" for people who work on cars, and the like. There is a separate "construction lien" statute. It deals with construction-related payment disputes.

The word "lien" comes from the French root (via William the Conqueror). It has a meaning similar to 'link' and is related to "liaison."

Valid liens.

What contribution counts as valid, for mechanics liens, is variable. The purpose is to protect the benefit a worker provides. This includes time and effort a carpenter puts into nailing boards together, on the job site.

Other types, of contributions, are less direct. A few less obvious contributions are an architect; the supply company delivering materials; a company renting a backhoe to the contractor; a company renting port-a-pots to the contractor; or a truck bringing food to the workers at lunchtime.

There is no simple dividing line which is useful in every state, nor every case. Often, the determination of a legitimate lien right depends on examining other cases. See which lien claims have been upheld, or rejected, in the same state.

Worker Benefits of mechanics liens.

There is an imbalance of power between a worker, at a construction site, and an owner of that land. The worker invests time and effort, on the assumption the owner pays. However, until the owner does pay, the owner is in a significantly superior position.

The improvements are already complete. It does not significantly benefit the worker, to demolish the work. Thus, an unscrupulous owner simply locks the tradesman out of the property. The owner retains the benefit, and refuses to pay.

Society benefits, by having improvements to buildings. Knocking them down, as a resolution to disputes, is economically inefficient. There are inherent difficulties, in contract suits, chiefly time and cost. States decided to provide simpler procedures, for pressuring owners to pay a claim, short of executing a judgment.

Owner Benefits of mechanics liens.

The overall benefit, of mechanics liens, is to the worker. However, there are protections, in the process, for the owner. Generally, the worker follows a strictly constrainedprocess. Failure, to follow that process, invalidates the lien.

Some parts, of that process, are intended to prevent disputes from occurring. This is manifested in the structure of mandatory notices and disclosures. This provides the owner an opportunity to ensure a project's finances are being properly managed. In addition, they are able to monitor the physical progress of the work.

Protections for government contractors.

Property, of the government, is ordinarily not subject to the claims of private parties. A purported mechanic's lien, against government land, is generally void.

The Miller Act (40 U.S. Code 3131) requires general contractors to give a surety bond, on US federal government construction projects, where contract price exceeds $100,000.00. This guarantees payment for work done, in accordance with the terms of the contract.

Many state, and municipal, governments require contractors on public works projects to be bonded.

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