3 Myths About Mechanics Liens Dispelled

If there is one thing that petrifies home and car owners alike, it is a lien, and with good reason.  The tiny little word, “lien”, is a big deal.  Having one placed against you could mean your family loses a car, or worse, your home.

One of the more common lien types is the mechanics lien typically placed by contractors.  Though the name denotes a lien against a person’s car by a mechanic, this is not usually the case, although it can – and does – happen.

Lien Legalese

While the legalese used in lien filings can make the general concept difficult to understand, the legalese used within the contract types that allow companies and people to place liens is even more so.  According to the Oxford Dictionary, the word “lien” defined means that the person or company placing the lien has the right to “keep possession” of any real property that a person owing money owns until he or she settles the debt in question.

Lien Myths Dispelled

Myths about what liens are – and about who can place a lien against your property – run rampant, so let’s dispel some of these myths and help you avoid potential issues.

“Mechanics lien?  Hahaha”.  IMG_2380 by tolkien1914, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

Myth: Only mechanics can place a lien – and only on your car.

Truth: Despite the lien’s name, the history of the mechanics lien does not come from the auto industry.  This lien type gets its name from eighteenth century laborers, usually called “mechanics”.  Also called a construction lien, Thomas Jefferson created the mechanics lien system, as we know it today.  Homeowners, contractors and laborers alike have since used them to guarantee that all contractors and laborers who rendered construction services on homes and businesses received payment.

Service providers can also place liens on homes and other real property.  One recent real world example includes a company that provided a grief stricken family with crime scene cleanup services, according to an ABC report.  While the family’s insurance company footed $9,000 of the $12,000 bill, the family must pay the remaining $3,000, and the company placed a mechanics lien on the home until they do.

Myth: A mechanics lien lasts until paid, or the property is sold.

Truth: In reality, a properly filed lien lasts about six months, unless the company that placed the lien takes proper action against the property owner.  To place mechanics liens on a property the contractor, subcontractor, or materials supplier must follow specific steps.

First, within 30 days of the service date, the person or company filing for the lien must notify the property owner of what they have contributed to the project.  Second, if the property owner doesn’t pay, then the contractor must file a claim with the courts, usually within the county of rendered services.

Called a “claim of mechanics lien”, the contractor must either file a lawsuit to recover the money, or work out an amicable solution with the property owners.  If a solution is not achieved, and if the contractor does not file a suit, then no further action is taken and the lien is dropped.

Myth: The construction company is paid in full, so a lien cannot be filed.

Truth: Unfortunately, there are many other companies and people involved in a construction contract than the construction company.  Oftentimes, the construction company hires subcontractors, and the contract you signed probably includes a provision that provides lien relief to the subcontractors and materials suppliers in addition to the company with which you signed the contract.

Unfortunately, this means that if you paid the company, and the company didn’t pay the subcontractors or suppliers, then they have every right to file a lien against your property until they recover the money owed them.  Yes, that means you might be required to pay twice for the same work, but unfortunately, the law allows this to happen.  However, a case such as this also provides remedies to the homeowner as well, in which he or she can sue the general contractor to recover the money that the contractor should have paid to the suppliers or subcontractors.