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Construction Liens

A mechanic’s lien or construction lien gives builders, contractors and suppliers legal recourse to get paid for their work as well as any materials or supplies purchased for a project.

Mechanic’s lien is a term originally associated with the automobile industry. When the owner of the automobile failed to pay the bill for the repair services, the mechanic was allowed to place alien on the car’s title by filing a claim in the local magistrate’s office. This practice was eventually followed in the construction industry and today, a Mechanics’ Lien is an effective remedy for contractors, subcontractors, and others involved in the construction or improvement of real estate to resolve payment problems. If a service or materials provider records a Mechanics’ Lien against the real estate being improved, it becomes difficult for the owner of the property to sell or refinance the property without first paying off the debt secured by the lien. A Mechanics’ Lien is an essential precondition to filing a foreclosure action on the property. Almost anyone who contributes labor, services, or materials to a real estate improvement project can claim a Mechanic’s Lien for non-payment. Once a Mechanics’ Lien has been recorded, the claimant must file a court action to enforce the lien within 90 days.

Although all 50 states have construction lien laws, laws differ widely from state to state. While all states permit a person who supplies labor or materials for a construction project to claim a lien against the improved property, some states differ in their definition of improvements. In some states, lien claims are allowed only for buildings or structures. States differ widely in the method and time within which a party may act on their lien.