A Mechanic's Lien is a document is used by a company that has supplied labor or materials to a property to create a security interest in the property. This means that a property can’t be sold, transferred, or refinanced until your loan is resolved. This ensures that the business receives payment for their labor and materials. This document is also known as a Construction Lien, Laborer’s Lien, Artisan’s Lien, Materialmen's Lien, or Supplier's Lien.
To obtain a Mechanic's Lien, you need to provide information about the parties involved and the services or materials supplied. The business that is claiming the secured interest will need to provide their information, such as name, address, and license number and list the state and county that the lien is created in. The business will also need to describe the services or materials rendered. Providing this information and filing it with the appropriate recorder's office will ensure that the business is covered for all their labor and supplies in the event of non-payment.
To qualify for a lien, you must have provided goods or services for the construction or improvement of real property. This work must be unpaid.
Different states have different rules about what constitutes work that qualifies for a mechanic’s lien. Generally, you will qualify for a lien if you have provided:
A mechanic’s lien form is used to protect contractors who have improved the value of real property. For example, if the company that supplies the tiles that are installed on your bathroom floor is not paid, it will be able to file a lien against the property.
Not every cost associated with a construction project will qualify for a mechanic’s lien. For example, if a general contractor erects a fence around a site during the construction, the cost of the fence may not qualify for a lien because that temporary fence did not increase the value of the property.
If a contractor does not obtain a lien, they run the risk of not being paid. If a property owner does not pay for the work done on a property, the lien gives the contractor a security interest in the property.
If a contractor has a security interest in a property, he will have a claim for a portion of the proceeds when that property is sold. If a property is sold, the proceeds from the sale will be divided between the parties with a secured interest in the property, including the mortgages, tax liens, homeowners associations, and construction liens. Any money that is left after these debts are settled goes to the property owner.
The names and addresses, as well as contact information, of the lienor (the person or entity claiming the lien), the lienor's attorney, and the owner of the property against which the lien is being claimed.
In this section, provide all details of the contract. This includes descriptions of the actual labor performed, details of payment, and the dates between which services were rendered.
This should be as detailed as possible. Include the address of the property and construction specs like size and material. If the property in question is a vehicle, you should provide the color, make, model, year and license plate number.
Provide the address at which the contractor performed the services. You should also include the type of building the site is, such as "industrial lot" or "private residence."
As with any legal form, the form is not legal until it has been signed by all involved parties. The signing process must take place in the presence of a notary public, who should also sign and date the document.
Each state has its own mechanic’s lien laws and separate requirements about what should be done to “perfect” your lien. Generally perfecting a lien requires:
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