What is a Mechanic's Lien?
Goods and services have real value that people and entities agree to pay in order to obtain them. Some goods, like a house or a new car, serve as collateral for buyers who do not want to pay the purchase price upfront and instead finance them. If the buyer does not pay as agreed, a finance company can enforce a lien and take possession of the collateral.
High-value services are not as easy to secure, and a mechanic’s lien is what protect service providers against non-payment. A lawyer who is well-versed and experienced in lien law might become necessary to help service providers solve payment problems.
The concept of a mechanic’s lien is to make it easier to develop properties and communities and quicken the pace of growth and commerce. The faster homes and businesses can be built, the faster the nation will grow and prosper.
When mechanic’s liens were first conceived, the agreements provided skilled labor in exchange for future payments to get things done relatively quickly and efficiently. As long as the artisans were paid in a timely manner, everyone was happy. While good intentions are fine, follow-through is the key to making them work, and many artisans found themselves with no compensation for hard work provided. The mechanic’s lien was their solution. How Does a Mechanic’s Lien Work? In its most basic form, a mechanic’s lien is a claim against property upon which the mechanic performed valuable work. Until the mechanic is paid in full for the services rendered in accordance with agreement, a mechanic’s lien gives the mechanic leverage to obtain payment if the work was done correctly.
An excellent example of how a mechanic’s lien works is when someone takes a vehicle in for repairs. The vehicle’s owner does not pay upfront for labor to maintain it. If repairs are needed, the vehicle owner can pay for the parts or have the service center provide the parts in exchange for full payment upon successful conclusion of maintenance and repairs.
When work is completed, the vehicle’s owner pays the costs of parts, labor, and any applicable taxes and fees. Sometimes, though, the vehicle’s owner does not return for the vehicle or waits too long to pay the bill. When that happens, a mechanic’s lien makes it possible for the repair shop to hold the property until paid for work done and any applicable storage fees. If the bill remains unpaid, the shop could file the lien against the property and possibly gain full possession of the vehicle with a title to prove it.
Enforcement of Mechanic’s Liens A mechanic’s lien places a cloud of uncertainty over a titled property. If a contractor completed work on a home and the homeowner did not pay, a mechanic’s lien could block a future sale. The same goes for a car or another titled property upon which the contractor performed work as agreed but did not receive payment. If the contractor or artisan still has possession of the property, it might not be made available to the owner until the bill is paid in full. It just requires a filing of a mechanic’s lien claim in a state court and a final judgment in the contractor’s favor.
When it comes to work done on a home or commercial property, a valid claim for a mechanic’s lien will follow the title to the new owner if the property is sold. Often, either the seller or the buyer will satisfy the debt as part of the transaction. A valid lien that a court has affirmed must be paid to complete a legal title transfer.
How Unexpected Lien Claims Might Arise? Whenever a contractor agrees to do a job and hires subcontractors, third parties could wind up with lien claims against a property. While a property owner would have a direct agreement with a contractor and none with any subcontractors, the work done by those subcontractors and materials provided by suppliers still deserve compensation when done properly.
If the contractor with the initial work contract does not pay a subcontractor, an unexpected lien claim might arise. The property owner still is liable for the work done and is the beneficiary of that work. So even a subcontractor with whom the property owner has had no contact might wind up with a valid claim that must be satisfied.
While mechanic’s liens have legal power, they are not absolute. Many states have statutes of limitations on how long a lien could be in enforced. An example would be a statute of limitation of six months to file lien claims to prevent late filings long after work is completed. Lien claims also are invalid when made against public property. If one needs help with real estate litigation, including assistance with a mechanic’s lien claim, they should speak to a Title Search company immediately.