What is a materialman or mechanic lien?
by admin on March 6, 2011 in FAQ
So you have done some work on a house with the expectation of getting paid, but for whatever reason the owner of the house refuses to pay what he or she owes you. What do you do now? Most people know that they can put a lien on the owner’s house at this point, but are not really sure what that means or what that entails.
In fact, any person who supplies labor, services, or materials for the construction or repair of any home, building, or even boat may be entitled to place a lien on the home, building, or boat for the amount which the owner owes. If you have done any work which meets the above description, and you were not paid for that work, you might very well be entitled to a lien.
A lien on someone’s property is a very powerful mechanism. Once a lien is placed on a particular piece of property, it stays with the property for fifteen (15) months. The owner of property will likely not be able to sell the property if a lien is attached thereto. The only way for an owner to remove the lien from his or her property is to pay the lienholder for the work which went unpaid and led to the lien in the first place.
If the owner still refuses to pay for the work performed on his or her property, the lienholder can foreclose on the lien. This means that the property with the lien attached to it will actually be sold at a public auction to the highest bidder, and any money obtained from the sale will be used to pay the lienholder for the amount he or she is owed.
Perhaps a simple example would best illustrate how a lien works. Imagine that you have a contract with a homeowner to put a new roof on his or her house for $10,000.00. Upon the completion of your services you send the homeowner an invoice for the full $10,000.00. After a few weeks of phone calls and messages he or she finally makes a payment of $5,000.00. However, after another few weeks pass, it is apparent that he or she does not plan on paying the remaining $5,000.
So you decide to have KMBSP put a lien on his or her house. Assume for the sake of our example, that after the attorneys at KMBSP go through the necessary legal process to place the lien on the house, the owner still refuses to pay. At this point, you can foreclose on the lien, which means the attorneys at KMBSP will file a foreclosure lawsuit against the homeowner. The owner can stop the lawsuit at any time if he or she simply pays you the $5,000.00.
However, if the owner still refuses to pay, the house will be sold to the highest bidder at a public auction. To makes things simple, we will assume for our example that the house does not have a mortgage on it and it sells to the highest bidder for $170,000.00. This $170,000.00 will be used to pay the $5,000.00 you are owed. Under some circumstances you will also be reimbursed for the attorney fees you paid KMBSP to get you this far. Hopefully now you understand why a lien is so powerful. If an owner of property refuses to pay your invoice, he or she faces a very real possibility of losing the entire property.
There are some limitations to liens to which you should be aware. To begin with, a lien can only be filed on an article of property within 120 days from the last time you performed work or provided materials for the property. Further, you are required to provide the owner of the property with certain notices before you can place a lien on the property. For example, a lien cannot be placed on commercial property unless the owner is notified in writing, within 75 days after the time the labor or materials were supplied, that the laborer or material supplier is currently entitled to payment but has not been paid. In some cases a lien cannot be placed on property unless the owner signs a specific document before work begins notifying him or her that non-payment will result in a lien.
If you believe you are entitled to a lien due to non-payment, you are encouraged to contact KMBSP. Generally, we advise our clients to contact us if they have not received payment and a month has elapsed from the time they finished work. This provides KMBSP adequate time to comply with all the legal requirements before filing a lien. Even if you do not have a non-payment issue at the moment, we encourage you to contact KMBSP if you are engaged in a business in which a lien is a possibility. The attorneys at KMBSP can guide you as to what notices will be required for liens in your line of work. If your trade requires owners sign a document before you begin work to preserve your lien rights, the attorneys at KMBSP can advise you of that fact. If this is the case, KMBSP can also draft specific documents, tailored to your needs, for the owner to sign before you begin work. This will allow you to rest assured that in the event of non-payment you have preserved your right to a lien.