A construction lien, often called a mechanic's lien, is a legal claim against real property that can secure payment for construction work. A party that supplies labor and materials for a construction project may file a lien against the property even if he signed a contract with a general contractor instead of the property owner. Once a lien is recorded, the holder of the lien can force the sale of the property to generate funds for payment.
Research state law on construction liens, because laws differ among the states. In particular, make sure the property you are supplying labor or materials to is eligible for the filing a construction lien. Property owned by a state government, for example, may be subject to sovereign immunity, which prevents the filing of a lien. The required forms are standardized in most states and may be downloaded from the Internet.
Submit a Preliminary Notice to the property owner, the lender and the general contractor, if you are a subcontractor. A Preliminary Notice is notification that you have supplied labor and materials and are entitled to a lien against the property. It must be filed within a statutory time period, typically 20 days after furnishing labor or materials, even if no default has occurred. Some states do not require a Preliminary Notice.
Serve a Commencement of Work statement on the property owner and any other required parties within the statutory time period. A Commencement of Work statement formally notifies interested parties that you have begun work on the project. Many states do not require this statement.
Submit a Notice of Intent to File a Construction Lien or equivalent notice to the property owner and the general contractor, if you are a subcontractor, within the statutory time period after payment becomes overdue. This notice demands payment and warns that you will record a construction lien if you are not paid within 10 days. Some states also require you to file this statement with a government office such as the county land recorder's office.
File a Notice of Lien with the appropriate government office, normally the county land recorder's office. This document notifies the state government that you are claiming a lien against the property. A record of the lien then appears on public records.
Check the property's land records at the county recorder's office a few days after filing the Notice of Lien, to ensure that the lien has actually been recorded. The land recorder's office contains files that include title records for all land in the county. If your lien has been recorded, it will appear in the title records.
- A construction lien endures even if the property is sold to a new owner.
- In many states you must file a lawsuit within a statutory time period, typically 90 days, after recording a construction lien. If you don't, the lien automatically expires.
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