Understanding a Mechanic’s Lien

By | March 10, 2017

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The completion of a property in real estate is a good thing that as an owner, you are bound to celebrate. However, your joy may be cut short if you were to receive the document known as a mechanic’s lien. What does it mean and how does it affect your property or your right to use it.

Meaning of a Mechanic’s Lien

Generally, a lien is a security that is held against the property amongst people who are doing business with each other. A Mechanic’s lien is a claim that is made by a service provider against the property of a real estate owner.

When a service provider does any work that improves on a given property, or supplies materials for the improvement, it is expected that the client will pay in a timely manner. However, when this does not happen, the service provider has the right to make a claim by filing a mechanic’s lien.

The definition of what may constitute work or service provided is defined by the statutes of each state. In most cases, the work includes construction, remodeling, materials’ supply, and even landscaping services. Generally, as long as the work was done to improve on a given property, it can be used to issue a mechanic’s lien.

How A Mechanic’s Lien Works

A mechanic’s lien is also known variably as a construction lien, supplier’s lien, or laborer’s lien. When a client fails to pay for the work done, the service providers have a period of up to 60, 90, or 120 days to file for a mechanic’s lien. The number of days depends on each state. In a state like North Carolina, the grace period is 120 days. If the lien is issued past this period, it is unenforceable.

Secondly, a lien must be issued in the state where the work was done. If not, it is considered invalid. Since the laws of each state may vary widely, it may be advisable for a service provider to use the services of a construction law or a collections attorney.

If the client is pushed into paying for the services provided courtesy of the lien, then there may be no need to enforce it. However, if he fails to pay, then a lien perfection lawsuit is filed and home or real estate property is foreclosed. This makes it possible for the lien claimant to collect his money from the value of the foreclosed property.

When a mechanic’s lien is issued to a property owner, yet he has already paid the general contractor, he should immediately contact a construction attorney to assist with the case. Otherwise, he should get assurance from the general contractor that all the pending payments will be cleared in time.