A lien is a financial claim on the property of someone else that exists due to an unpaid debt or obligation. A mechanic’s lien is used to address unpaid labor or material costs associated with work on a property.
A mechanic’s lien can be filed when there is an outstanding financial obligation in relation to a construction project on a property. Mechanic’s liens may be filed when a client refuses to pay the full cost of the work done by the contractor, but a subcontractor can also take out a mechanic’s lien against the contractor if the subcontractor is not appropriately compensated for their time and materials.
In order to file a mechanic’s lien there must be two main factors satisfied. First, there must be an agreed upon contract between the property owner and the work contractor to perform some kind of construction or renovation work on the property. Second, there must be an unpaid balance for labor, materials, or other agreed upon expenses that the owner has refused to honor. If both of these factors are satisfied, then it may be necessary to put a mechanic’s lien in the property until the outstanding balance is repaid.
If a mechanic’s lien has been filed, then the property cannot be sold. The lien will appear on title searches and new buyers will not want to inherit the property’s lien when they buy the property. Additionally, the lien can result in the repossession of property or court enforcement if it remains unpaid by the client. If a mechanic’s lien has been filed against the property owner or contractor, the filer also does not have any further obligation to work until the lien is settled.
While a mechanic’s lien is meant to be a resolution in and of itself, there are also certain privileges granted to the holder of the mechanic’s lien. The primary benefit to filing a mechanic’s lien is gaining priority among the property owner’s debtors. In general, a mechanic’s lien is considered to take priority over most other forms of debt. This means that in the event of a foreclosure or bankruptcy, the mechanic’s lien is one of if not the first party in line to get paid.
