What You Need to Know About Mechanic’s Liens
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Whether you are about to have construction work done on your property, have recently had renovations completed, or are looking to buy a new home, it is important to have a working knowledge of how mechanic's liens work and the ways they can affect you as a homeowner. Below are the answers to some of the most common questions homeowners have about mechanic's liens.
(Disclaimer: This article is not intended to provide medical or legal advice and is only for informational purposes. If you think you have asbestos in your home, it is best to consult a professional.)
What is a mechanic’s lien?
A mechanic's lien, also known as a contractor lien, is a legal claim that a party behind any construction work on a property can make to ensure that they receive payment for their work or materials. If a laborer or supplier involved with a home improvement or repair project is not paid by either the homeowner who hired them to do the work or the general contractor in charge of them, they may file a mechanic’s lien in response.
Who can file a mechanic’s lien?
While the specifics of who is qualified to file a mechanic’s lien differ from state to state, generally speaking, anyone who works on or provides supplies for a construction project can file this type of lien. In Texas, a mechanic’s lien can be filed by a general contractor, subcontractor, material supplier, specialty material fabricator, or design professional. The person who files the lien is called a lienor.
What can a mechanic’s lien be put on?
A mechanic lien can only be put on private property, such as houses and privately owned businesses. If a worker is not paid for their construction on public property, they will need to file a bond claim instead.
How long does a person have to file a mechanic’s lien?
Depending on state and county requirements, the deadline for filing a mechanic’s lien can be anywhere from two months to a year after completing the project that the worker has not been paid for. In most parts of the US, including Harris County, Texas, a lienor must meet whichever of the following two deadlines occurs first to file a lien:
- 90 days after a project’s completion
- 60 days (for direct contractors) or 30 days (for subcontractors) after the owner records a notice of completion
How does someone file a mechanic’s lien?
Most states require a lienor to carry out the following steps to file a mechanic lien:
- Provide notice to the property owner.
- Fill a claim of mechanic’s lien form.
- File the lien with the county clerk or recorder for the county where the project took place.
- Provide a copy of the lien claim to the property owner and any lenders for the project and, in the case of subcontractors, the primary contractor above them.
Texas has notoriously strict laws for filing liens, especially if the property is a homestead, i.e., a home where the owner resides. For homesteads, the lienor must sign a written contract with the homeowner and file it with the county clerk before a project could become eligible for a mechanic's lien. Lienors must also adhere to strict guidelines for providing notice to the homeowner, which vary depending on the specifics of a project and who is doing it. Therefore, it is crucial for anyone filing a mechanic's lien to do extensive research on exactly what forms of notice they need to send to avoid missing anything.
What kind of proof is required for someone to file and be granted a mechanic’s lien?
To be granted a mechanic's lien in most states, a lienor must provide a description of labor and materials. Texas law states that the party filing the lien must submit “a general statement of the kind of work done and materials furnished by the claimant and, for a claimant other than an original contractor, a statement of each month in which the work was done and materials furnished for which payment is requested.” This wording may be vague, but when in doubt, a lienor should provide as much detail as possible
A lien claim must also include a list of any applicable notices sent to the property owner, including the dates when the notices were sent and the method used to deliver them.
How much does it cost to file a mechanic’s lien?
The cost to file a mechanic’s lien varies greatly from one county to the next and can range anywhere from $5 to over $300. In Texas, Harris County’s fees are in the middle of this range, with a base fee of $95 for a single-page document and $3 for every page after that. Be aware that there are penalty fees of a few dollars for failure to adhere to formatting guidelines, and you may have to pay a small price to make copies of a lien.
Does a mechanic’s lien need to be served?
For a mechanic's lien to be valid, it must be served—That is, the property owner being asked to pay the claim must receive a copy. While some states require that a lien be served in person, most states, including Texas, allow them to be served by mail.
How long is a mechanic’s lien good for?
While the lifespan of a mechanic’s lien is not the same in every state, every lien expires eventually. In Texas, a lien on a residential project expires after a year, and a lien on a commercial project expires after 1-2 years.
After a lien’s expiration date, it is no longer enforceable, but this does not mean that it disappears entirely. Until it is actively canceled, even an expired lien will remain on a property’s records.
How do I find out if there is a mechanic’s lien on my property?
Most counties have property record searches available on the website for their county clerk or recorder of deeds, where you can check if there is a mechanic's lien, or any other lien, on your property. If you live in Harris County, Texas, you can perform a document search here. If you cannot find information on your property online, you can contact your county clerk or recorder of deeds to inquire about how to access your records.
How do you get a mechanic’s lien removed?
To remove a mechanic's lien, you will need to request that the lienor fill out a release form. If the lienor agrees to sign the form, the lien will be removed. If the lienor does not agree to sign the form, you will need to file a lawsuit to get rid of the lien.
Can you fight a mechanic's lien (and how)?
While it is usually easiest to get rid of a mechanic’s lien by paying it off or negotiating a deal with the lienor, it is also possible to file a lawsuit as a last resort. However, you should be aware that this process may cost you a lot of time and money. If you choose to take legal action against the lien, you can argue that the project was not completed as agreed upon and therefore is not deserving of payment or that the lien was not filed properly according to state or county laws.
Can a mechanic’s lien trigger foreclosure?
While a mechanic’s lien can serve as grounds for foreclosure, this requires the lienor to file a lawsuit. Most lienors will not bother going through the effort of taking a lien to court unless the case is worth a lot of money. Hence, foreclosures resulting from mechanic's liens are not very common. Still, it is a possibility, and failing to deal with a lien properly is not worth the risk of having your property go through a foreclosure.
Does a mechanic’s lien take priority over a mortgage lien?
A mortgage lien usually takes priority over a mechanic’s lien, but there are some exceptions to this rule. If construction on a project began or its materials were supplied before the mortgage took effect, a mechanic's lien may take priority. However, this rarely occurs, as mortgage lenders will usually check to ensure that no projects are taking place on a property before issuing the loan.
Does a mechanic’s lien survive foreclosure?
While one may expect a property that has been foreclosed to be free of any liens, this is not always the case. For example, suppose a project took place before a foreclosure. In that case, there might be a window of opportunity shortly after the foreclosure when a laborer or supplier responsible for the project can still file a mechanic's lien. As such, it is essential to thoroughly research a property to ensure that it has no liens on it before buying it.
Does a mechanic’s lien hurt your credit?
As long as it is filed correctly, a mechanic's lien is considered part of a homeowner's payment history, which makes up a considerable portion of a person's credit score. A lien can also remain on a credit report for as long as 7 years if it is paid off and as long as 10 years if it is not paid off.
Can you sell a house with a mechanic’s lien?
While it is legal to sell a property with a mechanic’s lien on it, most buyers will probably not be interested in a house with that kind of baggage. If you want to sell a home with a mechanic's lien, consider selling it to AMI. We buy homes in all conditions and can make you a no-obligation cash offer when you contact us