How to Avoid Losing Mechanics Lien Rights

Mechanics liens are created by state statutes. You can avoid losing mechanics lien rights simply by following the rules. The time frame to file the lien may differ by state as can the place to accomplish it. To prevent losing your mechanics liens, follow the steps below.

Instructions

Difficulty: Moderate

For Both Residential and Public Liens

1. Read your state statute. Cornell University has a website that displays each state's statutes. Choose your state and follow the links.
2. Determine whether the construction project is public or private. Public schools, for example, are treated differently in the law than a contractor working on your first home. A public construction project may have its own statute altogether so search under the specific lien you wish to use when looking at the statute.
3. Ask an attorney to draw up a contract for you or read over the contract to determine whether this language is in the form.
4. Check to see that the type of construction work is covered by the statute in the state the work is taking place. Some types of construction work are not covered under the mechanics lien statute.

Public Lien

5. Make sure the public authority has completed a Notice of Commencement. Some states may differ in the exact language, but this is the document that sets forth the parties, the property location for the project and other important information.
6. Secure a contract listing all subcontractors or use a Notice of Furnishings. The general contractor needs to make sure that everyone is in the loop. This is done through the Notice of Furnishings document. Send it via certified mail for your records and for proof that it was made.
7. Establish a mechanics lien and serve the affidavit within the statutory time limit. Include the amount due and the unpaid portion, the date the work was last done, and the address of those involved.
8. File the lien with the proper official within the statutory time frame. The state of Ohio, for example, requires that you file the lien with the County Recorder.

Residential Lien

9. The subcontractor who does not deal with the homeowner directly needs to give the homeowner notice in writing of your rights to take advantage of the lien laws of the state where the work is taking place. Oregon's statute calls this document a Notice of Right to Lien and it must be sent certified mail within a time limit.
10. Give other notices that are required by your state's mechanics lien statute. If the contract is over a certain dollar amount, there may be additional documents required. When bidding on jobs, some states require a special document to be given to the client.
11. Meet all the deadlines. There are several deadlines between each step of the filing and perfecting of a mechanics and construction lien. Consult your state statute to find these deadlines or consult an attorney.

Tips & Warnings

• Document names, where to file the documents, and other terms may vary by state.
• Contact an attorney who is familiar with lien law. The mechanics lien law can be tricky, so get some help. You must meet all the requirements to perfect the lien.
• This is not legal advice.
• A legal contract may have language in it that waives lien rights. Try not to use fill in the blank legal documents because this language could be buried in the document.