WHAT IS A MECHANIC’S LIEN AND WHAT DOES IT DO?
Aug. 16, 2022
Unlike many other liens, the mechanic’s lien has gained visibility in the public eye because it may arise in instances of home improvement projects. Due to this wide applicability, many non-attorneys are aware of the common threat but do not appreciate its intricacies and significance. In this month’s post, we broadly discuss the nature, applicability, and significance of mechanic’s liens.
What is a Mechanic’s Lien?
A mechanic’s lien, also known as a mechanic and materialsman’s lien and informally known as an “M&M lien,” is a legal right sometimes pursued against a property owner. The mechanic’s lien is governed in relevant part by Texas Property Code § 53. The Code affords the right of mechanic’s liens to any person or entity who provides labor or materials for the improvement, construction, or repair of real property. Although this includes typical home improvement and home repair projects, it also applies to professional services, such as plat, design, drawing, plan, or survey preparation by an architect, engineer, surveyor, or other professional, even if the work does not require physical labor or presence upon the property. In addition to residential properties, the mechanic’s lien also applies to commercial projects, such as apartment complex projects, shopping centers, office buildings, and multi-use developments. The mechanic’s lien also applies to projects governed by written contracts as well as projects lacking written contracts and applies to small projects just as much as to large projects. Indeed, the mechanic’s lien boasts wide applicability.
How Do I File a Mechanic’s Lien?
Proper creation and perfection of a lien is a highly technical and multi-step process best reserved for a separate and detailed discussion. In brief, one creates a mechanic’s lien first by sending a pre-lien notice to the property or project owner. Subcontractors generally should also send this notice to the project’s prime contractor, general contractor, or superior contractor. Suppliers in turn should generally also send the pre-lien notice to the applicable subcontractor. The contents of the notice and the number of days by which the claimant must send the notice vary according to the type of project and according to the claimant’s position in the project. Second, the claimant must file an affidavit of lien with the appropriate government body. In this affidavit, the claimant identifies the dollar amount of the claim; the project, the property’s owner(s); any general, prime, or superior contractors; and the nature of the services or materials rendered.
This presents an opportunity to clarify a common misconception and misnomer. A lien is a legal theory and right. The physical document(s) filed in creation of a lien are not themselves the lien; rather, a proper and timely filed affidavit of lien creates the mechanic’s lien. Despite this legal distinction, many inaccurately describe the lien affidavit as the lien itself and describe filing the lien affidavit as filing the lien itself. For the sake of simplicity and approachability, this discussion of mechanic’s liens does not distinguish between the two.
Why Should I File a Mechanic’s Lien?
A claimant should consider filing a mechanic’s lien because it preserves the claimant’s payment rights and pressures the property owner to resolve the conflict. A lien upon a property may delay, complicate, or prevent the property owner from selling the home or property for several reasons. Liens cloud title; title companies will likely detect the lien; liens reduce the dollar amount pocketed by the seller; and a lien may render the seller in breach of contract, in breach of the deed, and vulnerable to suit. If despite these difficulties the transaction proceeds, the lien will entitle the claimant to payment upon the lien before consummation of title conveyance to the buyer. Finally, the claimant may bring suit against the property owner and/or general contractor to enforce the lien. Suits in enforcement of liens often also bring related actions, such as breach of contract claims, conversion claims, other torts, and potentially violations of applicable statutes. An interested claimant should discuss with an attorney which of these several remedies may present the best avenue of recovery in a particular case.