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Mechanic’s Liens

The Mechanics’ Lien law serves to protect contractors, subcontractors, laborers, and suppliers who provide labor or materials for the construction, repair, or remodeling of a home. Here are some key points to understand about mechanics' liens:

  1. Potential Lien and Sale: If contractors or suppliers are not paid for their services or materials, they may file a mechanics’ lien against the property. This could lead to a legal process where the property is eventually sold to enforce the lien, even if the homeowner has already paid the contractor in full.
  2. Increased Property Value: The mechanics’ lien is based on the principle that the property's value has increased due to the labor and materials provided. Therefore, the homeowner is seen as responsible for ensuring full payment to those responsible for the increase in value.
  3. Double Payment Risk: In some cases, homeowners may end up paying twice for the same work if they are compelled to pay the lien claimant and then pursue legal remedies against the contractor who failed to pay the claimant.
  4. Protective Measures: Homeowners can protect themselves by hiring reputable firms with experience and capital, requiring completion and payment bonds, issuing joint checks to contractors and suppliers, and carefully disbursing funds based on project completion stages.
  5. Resolving Lien Issues: Homeowners may be able to resolve mechanics’ lien issues if the proper procedure for establishing the lien was not followed. Consulting with an attorney is advisable in such cases.
  6. Title Company Consideration: If a mechanics’ lien has been recorded but not enforced, a title company may choose to disregard it. However, homeowners should be prepared to address title problems caused by the lien, possibly by obtaining a recorded mechanics’ lien release.
  7. Due Diligence: It's important for homeowners to thoroughly research and vet the firms they work with to minimize the risk of mechanics’ lien issues. Discussing concerns about potential lien problems with contractors in advance can help prevent such issues from arising.

Understanding the complexities of mechanics’ liens and taking proactive steps to mitigate risks can help homeowners avoid costly legal disputes and protect their property interests. Consulting with legal professionals and conducting due diligence before starting construction projects is highly recommended.