Mechanic's Liens - Avoiding the seller nightmare!
Have you ever heardof a Mechanic's Lien?...If you haven't, let me enlighten you- a Mechanic's Lien (sometimes called a Construction Lien) is a security interest taken in a property by contractors or other workers who have not been paid for their work. This type of lien can apply to anyone who has provided work, improvements, construction, materials or goods to real property. To be technical, the minimum amount is $10.00, however paltry that may sound to you. A Mechanic's Lien against your property will preclude you from selling your home until the amount is satisfied, and it will have to be recorded in Town Hall as public notice, just as the lien was.
To reiterate, a Mechanics Lien can be placed upon your property by ANYONE that performs work on your property and has a claim against you for non-payment . If you have sold your home before, you might recall that your attorney always asks you if anyone has performed work on the property in the last 90 days. It may seem like an odd question, but your attorney asks you that for a reason. If you have had work done within the past 90 days, and have not paid for the work performed, there is a chance that a Mechanics Lien can be filed against your property. The reason for this seemingly innocent question is that any lien statement must be filed no later than 90 days after the supplies are delivered or the last day that work has been performed.
The work must be agreed to by the owner of the property and can occur on the building, in the structure itself, or within the confines of the property owned. Besides the fact that the buyer will be unable to obtain Title Insurance for the bank, they may not be able to obtain the loan for your property because Title Insurance is required by the bank for a mortgage. This will cause an absolute mess at the closing table if that happens- if it doesn't ruin the sale altogether.
A few things that are VERY IMPORTANT to know:
Check your contractor out thoroughly before hiring him/her. If your contractor has a history of non-payment, I would be wary. You can always ask if he has ever been involved in any type of Lawsuit. It's a basic question and the only people that would be offended by that are people that have. So do yourself a big favor, and ask. There are ways to find this out as well without asking, and you can always contact me to look up records if you wish- it only takes a few minutes, and is well worth the effort.
Also important to know: If your contractor does not pay the supplier for goods used in the work at your home, and the supplier is aware of your address for those materials, the supplier can even file against you. If there are sub-contractors involved, they can also file against you, if the contractor has not paid them.
Make sure you have a contract for work to be performed with a stated cost, and get a receipt for your payment.
The contractor filing the lien has up to one year to file a foreclosure notice on your property to get paid. Contact an attorney and handle this NOW.
If a Mechanics Lien is filed against your property, contact an attorney NOW. Even if you are not selling your property at this very minute, contact an attorney now.
If you have any legal questions about Mechanics Liens, contact your attorney. This article is not intended to give legal advice.
