What You Need To Know About Mechanic Liens
When you work or provide certain services, you expect to be paid by the client you provide the work for. But unfortunately, that does not always happen in a timely fashion. This nonpayment may entitle you to file mechanical liens against any real property they own. What are mechanic liens, who can file one, and what are the filing requirements? Here is some information to help you better understand this subject.
What Are Mechanic Liens?
Mechanic liens are legal documents that usually arise from the nonpayment of a debt owed by the property owner on which you have performed work. These are sometimes called garage man's liens, property, or construction liens. They are legal claims or security interest in the property until the debtor pays the debt owed. Mechanics do not just file mechanical liens. A wide variety of people can use them, including some of the following:
- Tow companies
- Storage facilities
- Interior Designers
Once someone files a mechanical lien, they create a cloud on the property title that must be satisfied before the property owner can sell the property. If not addressed promptly, the lien filer can ask the court to foreclose on the property for them to recover their money.
But you cannot include all costs in mechanics liens. While this varies from state to state, mechanic liens usually only include labor, materials, and services that benefit the actual property. For example, the lien filer would not be able to include punitive or qualitative damages, attorney fees, or time missed out on work.
What Are Requirements To File Mechanical Liens?
State laws govern mechanical liens. They are highly state-specific and may even be county-specific in some states. County-specific means that each county clerk may have different formatting requirements and practices that you must meet to file in that county.
Some generalities from state to state include specific timeframes after completing the work or rendered services in which you must file the lien. But these timeframes may also vary based on the type of property you performed the work on.
For example, if you performed subcontracting work on a single-family home, there may be one time frame to file the lien as opposed to a different time frame if you completed the work on a public project. Some states require you to file the lien in the county where the property is located. Other states will allow you to file in the county where you base your business.
Because of the variances in state and local laws, it is essential to familiarize yourself with the requirements where you perform the work.
For more info about mechanical liens, contact a local company.