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Mechanics lien
A mechanics lien is a hold on real property
for the benefit of someone whose work or property improves the property.
It is called by various names, including materialman's lien, supplier's
lien, laborer's lien, construction lien and others. Through "perfecting"
a lien, the technical term for establishing a mechanics lien, the
owner's title to the property suffers an interference that will
have to be addressed before the owner can restore clear title. Generally,
a lien would only arise if there is a payment dispute, although
some states (e.g. California ) require pre-lien notices at the beginning
of a project. Since real property ownership is mostly a function
of state law, establishing a mechanics lien is mostly a process
governed by state law, in particular a mechanics lien statute. The
process for perfecting a mechanics lien varies significantly from
state to state. However, common parts of the process of perfecting
a mechanics lien include notice to the owner and to other persons
or entities involved in the construction project, and also the drafting
and filing of a document with the government office that records
deeds or titles to land.
Mechanics liens are also sometimes known as
contractors liens and construction liens. Historically, the term
"mechanic" once referred to any person who performed skilled
labor, not limited to current usage that assumes a machine to be
the subject of that work. Thus, at the time the phrase "mechanics
lien" was invented, the understanding was that such a person
might be a carpenter, plumber, or the like. Because of the change
in the meaning of the word "mechanic," some states have
changed the statutes to have a "mechanics lien" for people
who work on cars and the like, and a separate "construction
lien" statute to deal with construction-related payment disputes.
The term "lien" comes from the French root (via William
the Conqueror), with a meaning similar to link; it is related to
"liaison." Mechanics liens on property in the United States
date from the last 1700's.
What type of contribution counts as a valid
basis for a mechanics lien is also variable, depending on the particular
state statute that applies. The core purpose is protecting the benefit
that a worker provides, such as the time and effort a carpenter
puts into nailing the boards together on the job site, and thus
is included in the scope of most liens. However, other types of
contributions are less direct - the contribution of an architect,
or the supply company that delivers materials, or a company that
rents the backhoe to the contractor, or the company that rents the
port-a-pots to the contractor, or the truck that brings food to
the workers at lunchtime. There is no simple dividing line that
is useful in every state, or even in every case. Often, determining
whether a party has a legitimate lien right depends on examining
other cases that have either upheld or rejected lien claims in the
same state.
Mechanics liens are a reaction to the imbalance
of power between a worker at a construction site, and an owner of
that land. The worker makes the time and effort investment on the
assumption that the owner will pay, but until the owner does pay,
the owner is in a significantly superior power position. The improvements
have already been made, and it will not significantly benefit the
worker to demolish the work. Thus, unscrupulous owners could simply
lock the tradesman out of the property, retain the benefit, and
refuse to pay. Additionally, as a society we benefit by having improvements
to buildings, and knocking them down as a resolution to disputes
is economically inefficient. Because of the difficulties inherent
in contract suits, most clearly time and cost, states decided to
provide a simpler procedure for putting pressure on an owner to
pay a claim, short of executing a judgment.
While the mechanics lien is overall a benefit
to the worker, there are protections in the process for the owner.
Generally, the worker must follow a strictly constrained process,
and failure to follow that process will invalidate the lien. Some
parts of that process are intended to prevent disputes from occurring,
such as a structure of mandatory notices and disclosures that provide
the owner an opportunity to ensure that the project's finances are
being properly managed, in addition to being able to monitor the
physical progress of the work.
Real property of the government is ordinarily
not subject to the claims of private parties, and a purported state-law
mechanic's lien against government land is generally void. However,
the personal property of the state, namely the funds allocated for
the project, are lienable, at least in some states. To protect subcontractors
and suppliers of US federal government construction projects where
the contract price exceeds $100,000.00, the Miller Act (40 U.S.
Code 3131) requires general contractors to give a surety bond which
guarantees payment for work done in accordance with the terms of
the contract. Many state and municipal governments also require
contractors on public works projects to be bonded.
Most states require that the claiming party
has given noticification to the owner of their existence and claim
via a Preliminary Notice to establish a right to file a mechanics
lien. In addition, owners can protect themselves against frivolous
lien claims by obtaining Lien waivers from the claimants.
The mechanics lien process can be of great
value to contractors, subcontractors, materialmen and other related
parties to a construction work in enforcing their claims, if done
according to the laws of the various states, or the federal government.
These parties are entitled to be paid for their material or labor
contributions to the improve of real property. Most forms for the
process can be obtained from local office supply stores, and a few
computer programs exist to handle the process on a nationwide basis.
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