| The mechanics' lien law provides special protection to contractors, subcontractors, laborers and suppliers who furnish labor or materials to repair, remodel or build a home. If any of these people is not paid for services or materials provided, the property where the services or materials were provided can be subject to such a lien and eventual sale in a legal proceeding to enforce the lien. This can occur even though a homeowner made full payment for the improvement to the property.
A mechanics' lien is a legal right that states grant to certain workers and suppliers so that these people can be sure they're paid for the goods and services they provide. For the lien to be valid, a specific process must be followed exactly, and the lien must be recorded at the county recorder's office. The lien also must be enforced within a specific amount of time that is spelled out in the law.
A mechanic's lien can be filed for lack of payment by the homeowner, but also can be filed against a property when a property owner has paid his contractor in full but the contractor failed to pay his subcontractors or suppliers. Thus, in the worst case, a homeowner could end up paying twice for the same work.
The theory behind the mechanics' lien is that the value of the property upon which the labor or materials were bestowed must have been increased by virtue of the improvements in which they were included. Thus, the homeowner who has reaped the benefit should be required in return to act as the ultimate guarantor of full payment to the persons responsible for the increase in value.
In practice, a homeowner who has already paid, but who is faced with a valid mechanics' lien, may be compelled to pay the lien claimant and then pursue other legal remedies against the contractor or subcontractor whom the homeowner paid for the work.
Another justification for this relates to the relative financial strengths of the parties to a work of improvement. Historically, the law has viewed a property owner as being in a better situation to absorb the financial setback occasioned by having to pay the amount of a valid mechanics' lien, as opposed to a laborer or material man who has been viewed as less able to absorb the financial burdens occasioned by not being paid for services or materials.
The best protection against these claims is for the homeowner to employ reputable firms with sufficient experience and capital and to require completion and payment bonding of the construction work. The issuance of checks payable jointly to the contractor, material men and suppliers is another protective measure, as is the careful disbursement of funds in phases based upon the percentage of completion of the project at a given point in the construction process. The protection offered by mechanics' lien releases can also be helpful.
Even if a mechanics' lien is recorded against a property, the owner may be able to resolve the problem without further payment to the lien claimant. This possibility exists where the proper procedure for establishing the lien was not followed.
Needless to say, this is one area of the law that is very complex. A homeowner facing a mechanic's lien absolutely should consult a qualified attorney.
In the event that a lien has been recorded against a property, but no effort was later made to enforce the lien, the lien could remain as a cloud on the property's title, but may be able to be removed with a certain amount effort.
During a sale of the property, a title company could choose to ignore the lien, depending on the company policy and the age of the lien. However, the owner should be prepared to be presented with a plan to eliminate the title problem created by the lien. This may be accomplished by recording a lien release from the person who created the lien, or by other measures acceptable to the title company.
As with all matters relating to real estate, homeowners should thoroughly investigate the quality, integrity and business reputation of any firm they consider hiring. Once satisfied that they're dealing with a reputable company, and before beginning construction, homeowners should discuss any concerns about liens with their contractors and should work out, in advance, a method of ensuring that problems will not occur. |
