Working on a construction site and not being paid? The mechanics lien might be just what you're looking for. This article will explain how to file a mechanic's lien in any state. We'll walk you through the overall procedure of filing a claim, regardless of which state your project is in.

How Liens Work in Construction

Every state has construction lien laws that provide contractors and suppliers the legal ability to lay liens on property if they are not paid. Because it clings to the property title and causes major hassles for the owner, a lien is an incredibly useful instrument for assisting construction enterprises in being paid.

On the surface, filing a lien does not appear to be a difficult process. Filling out a form and sending it to the recording office in the county where the property is situated is all that is required. After filing a claim, the claimant has 60 days to two years (depending on the state) to negotiate payment with the property owner.

A mechanics lien, on the other hand, should be seen as a process rather than a single document. This is due to the fact that, in most situations, a contractor must issue specific warnings at the start or during a project in order to safeguard their right to file a lien later on. If you overlook a step or miss a deadline, you may find yourself without lien rights when you need them.

Even small lien errors might render your non-payment claim null and void. The devil is in the details, and mechanics lien rules in the United States necessitate an unusual level of information. Furthermore, the restrictions varies based on where the real estate is located and the type of project.

Despite the difficulties, a mechanics lien is the most powerful payment mechanism available to construction companies. It has the potential to be even more powerful than attempting to enforce a building contract through legal action (which will ultimately rely on a judgment lien). A construction lien, on the other hand, may frequently get a contractor compensated without ever having to pay a lawyer or appear in court.

The 5 Steps to File a Mechanics Lien

Step 1: Ensure You Have the Right to File a Lien

The first step in registering a mechanics lien is determining if you have the legal authority to do so. Every state has construction rules that control who has the authority to use an unpaid mechanics lien. Furthermore, even if you have lien rights at the outset of a project, you might lose them if you do not follow the state's unique standards. If you file a lien when you don't have the authority to do so, it might be termed a "frivolous lien" and result in a costly legal tangle. However, because this is rarely a black and white problem, there is a lot of space for mistake.

To determine if you have the authority to file a lien, ask yourself the following three questions:

Is your work or materials protected by a lien in your state?

Construction projects involve a plethora of professional services, responsibilities, and participants, and construction tasks come in different forms and sizes. Some persons are allowed to file liens in each state, while others are not. As a general rule, anybody who adds a permanent improvement to real property has the right to file a mechanics lien if they are not compensated. However, the answer to this issue will always be determined by the applicable state legislation for your project. In our guide on mechanics lien rules and regulations in every state, you may discover the solution for your state.

Lien rights are virtually always available to the most conventional construction players, such as general contractors, subcontractors, and material suppliers. 

Is it required under state law to send notice?

The majority of states have some kind of notice requirement. Because it goes by so many various names and has so many distinct variations, the phrase "notice" may be just as perplexing as the phrase "lien." Construction notifications are critical in assisting contractors and suppliers in collecting payment.

In general, while determining whether you have the legal authority to register a lien, you should consider the following two notices:

Preliminary Notice: Many states require contractors, material suppliers, and equipment lessors to provide the property owner with a "preliminary notice" at the start of work. Depending on your state, it might be referred to as a Notice to Owner, a 20-Day Notice, a Notice of Furnishing, or something different. If you do not provide this notification in a timely manner, you will most likely lose your lien rights. If you were required to provide a notice but did not, you are unlikely to have the right to lien the job. And, because most states demand this notification at the start of your employment, you probably don't have time to deliver it right now.

Notice of Intent to Lien: Although only a few states need it, the “notice of intent to lien” is typically more easier to deal with than the preliminary notice. If your state needs a notice of intent prior to filing a lien, just mail this notice before filing your lien. The biggest trap here is waiting too long...because your lien deadline will not wait!

It's critical to know which states demand notice — and if you may file a lien without providing notice.

Are you within your lien deadline?

You do not have indefinite time to file your mechanics lien claim. The time period for filing a lien varies by state. You must submit your lien within this time window or face penalties. These deadlines are stringent, with few exceptions.

The lien filing timeframe is often linked to the project completion date, or the final day you furnish labor or supplies. It will not wait for your notice of intent to lien delivery, and it will not normally wait for a holiday or weekend! Download a free chart to find out when your lien and notification deadlines are.

Step 2: Draft the Lien

If you have the legal right to file a lien, the following step is to create the lien paperwork. This entails creating the lien form that will be submitted. This is referred to as your lien claim.

Unfortunately, preparing your mechanics lien is more involved than just downloading and filling out your lien form. Lien laws are peculiar. You must be cautious and enter all needed details. And you must use caution in order to get the proper shape.

Obtain the appropriate lien form for your project and state.

The mechanics lien claim form itself is critical. Most state rules specify exactly what must be included in your mechanics lien application. Some jurisdictions even go so far as to publicize the form. You may get free mechanics lien forms in a variety of sites, but be cautious. On the Internet, there are a multitude of "form houses" that make a living by supplying various forms. They will also offer you with lien forms.

However, it is all too usual for these free form farms to just copy and paste forms from other websites. Alternatively, they employ a single state's form for all states. Even renowned firms have issues with the complicated lien paperwork.

Construction attorneys and payment professionals curate and/or produce these. Our intense emphasis on the mechanics lien and construction payment procedure, as well as our high quality standard, may make you feel confident that you're obtaining the proper form for your company.

There are three challenging components to completing out your mechanics lien form.

Each state's mechanics lien form is slightly different. However, here's a guide to the most frequent elements you'll need to put on your lien, as well as the most typical mistakes contractors and suppliers make when filling out the lien claim.

1. The Lien Amount

When you file a mechanics lien claim, you are requesting money. Every state requires you to specify the monetary amount owed to you. This is known as your "Claim amount" or "Lien amount." The lien amount seem straightforward, yet it might raise some difficult concerns. To begin, you must understand what charges can be included in a lien amount.

Including other fees or costs

Is it possible to include legal fees, filing fees, or filing costs? There will be fees regardless of how you file your mechanics lien. Can you include these fees in the amount of the lien claim?

This is one of the most often asked questions by contractors. The answer is truly determined by the laws of each state.

Including retainage

Should I include retainage in the amount of my lien claim? Past due monies may be owing to you on the job, but retainage is not technically due.

Should the retainage amount be included in the lien claim? Again, this varies by jurisdiction, but the general rule is that you should include the retainage amount in your lien claim.

If the task isn't finished

What if the task isn't finished? Do I include the entire contract fee or only the job done? You might be in a financial disagreement and filing a mechanics lien claim before you finish the job.

Should you include the entire contract cost? Or only the funds owed for job completed? After all, the other party owes you the whole contract amount! And what if the GC is requesting restitution? Should they be factored into the lien amount or not?

In response to the query, "Can I proceed with a lien if a client is disagreeing over the owing amount?" The answer to this issue is nearly always the same: you can lien for the amount owed for labor done or supplies provided (even if you can legally recover more by contract).

2. The Claimant’s Name (You)

Getting your own name correct appears to be the simplest portion of the form.

However, this is a typical error, and the question may be tricky. What if you have a business name? What if you're a partnership? Is it necessary to include the words "LLC" in your company name? And the list goes on and on.

There are several court examples in which property owners win a lien challenge because the individual submitting it spelled their name incorrectly. This is a simple one to nail: Use your full legal name.

3. Property Description

The final difficult aspect of completing the lien form is identifying the property. The property is a critical component of your mechanics lien. After all, you are placing a lien on this property. You must accurately identify it so that the lien may be registered and indexed, and because liens can be readily rejected if they fail to identify the property.

“Which property?” you ask.

We're talking about the premises where you conducted the job or supplied the materials. This property must be identified in the lien.

Step 3: File your Lien with the County Clerk or Recorder

We've demonstrated that you have the legal authority to file a mechanics lien at this stage. Even better, you've completed the correct mechanics lien form! This is significant development. You are now prepared to file your mechanics lien.

The filing fee varies by county and can vary from $5 in some counties to hundreds of dollars with a high-priced counsel.

The county registrar makes the rules.

All mechanics lien claims must be filed in the county where the construction work is being done. You should not file the lien where you are, where the general contractor is, or even where the property owner is. The lien is recorded in the county in which the job site is located.

Once you've determined the county, you'll need to determine which county office issues mechanics liens. In this piece, we refer to these offices as the “County Recorder's Office,” which may or may not be the name used by your county. However, in certain states, the office is known by a different name, such as the county clerk's office, the Tax Records office, or the Prothonotary, and so on.

Before filing a lien, always check with the recording office. Each office has its own set of standards and processes. It is not unusual for the county recorder to reject a lien multiple times before the claimant gets it right the first time. They may refuse a lien for the following reasons:

• The paper was prepared incorrectly by the claimant.
• The filing fee has not been paid in full.
• Several minor typos
• There is an absence of specific substance.
• The absence of a cover sheet (i.e. some county recorders require you fill out a cover sheet with every filing)

Many counties also have rigorous rules for font, margin, and paper size. Failure to adhere to these guidelines may result in increased filing costs or the rejection of your lien. It's a good idea to check with the county recorder's office ahead of time to learn about any unique filing requirements. 

Filing your lien via mail, in person, or electronically with the county

County record offices aren't always the most technologically sophisticated or user-friendly places. You may discover that the process of recording a lien is similar to going to the DMV.

When filing your lien with the county recording offices directly, you have three options:

In-person filing: If you want to perform the lien filing personally, this is definitely your best option. You can handle any minor complications that arise in person, and you could get lucky and find a nice government official who helps you through the procedure. In fact, some recording offices require you to file and/or serve the lien in person. If you are unable to accomplish this yourself (for example, because you are out of state), you may usually submit the lien to a courier who will record the lien for you.

Mail your lien claim: If you're sending your lien to a courier or the recording office, keep in mind that shipping delays (due to weather and holidays, for example) might lead you to miss your lien deadline. Take notice of county cautions that liens received in the mail might take days or weeks to process!!

Electronic filing, often known as "eRecording," is available in some counties. To take use of this, you must use a third-party eRecording service. Only a few counties enable contractors or suppliers to immediately register liens online. For persons that have to perform a lot of county record recordings, using a third-party eRecording service makes sense (i.e. law firms, mortgage lenders, etc.). Setting up and paying for an eRecording account makes little sense for contractors or suppliers that only deal with this on a sporadic basis.

Making use of a lien filing service or a legal firm

As you can see, the process of filing liens may be confusing, include a lot of different processes, and take a long time. It's an excellent idea to delegate this task to someone else, such as a mechanics lien filing service or a legal company.

They will know how to rapidly record your lien claim and how to through all of the county red tape. And they are your greatest bet for rapidly filing your mechanics lien electronically.

Step 4: Inform the Parties

You must provide a copy of the lien claim to all involved in the job and impacted by the lien immediately after filing a lien claim, and often even concurrently with filing.

This is sometimes referred to as "serving" the lien claim.

When and how should you serve your mechanics lien?

When and how you must serve your mechanics lien will differ from state to state, as will everything else when filing a mechanics lien.

In general, you must serve your mechanics lien at the time of filing or soon after filing. In most circumstances, you'll want to do this in a single move. File the lien, obtain an official copy, and distribute that copy to the relevant recipients as soon as possible.

Generally, it is sufficient to just mail a copy of the lien filing. Of course, certified mail is used (see our discussion on this here: Methods of Delivering Notices). There are a few significant exceptions to this, such as in Pennsylvania, where the sheriff's office is required to perform complicated service needs! This is a rather unusual requirement, as most states only need basic postal notification. Some states consider service complete when the notice is deposited in the mail, while others require that the notice be received by the party.

Who should be served with your lien claim?

So, who should get a copy of your mechanics lien filing?

In most states, the lien claimant must provide the property owner with prompt notice. Other states require you to serve the prime contractor and the construction lender as well (if there is a lender on the project). It's a good idea to ensure that everyone above you in the contractual and payment chain receives a copy of your lien.

Make and retain documentation proving that you fulfilled the service criteria.

Finally, it is critical that you maintain thorough records of your attempts to serve the lien, as well as any proof showing the lien service was successful. In certain areas, you must sign a paper declaring that you transmitted the lien to all parties. This is referred to as an affidavit of service. In certain places, such as California, this must be filed with the county recorder.

Step 5: Enforce, Extend, or Release Your Lien

This final step is not officially part of the lien recording process. So, if you got through Steps 1–4, congrats! Your mechanics lien is already working hard to assist you in collecting your money.

What happens after you file a mechanics lien, on the other hand, is unquestionably a part of the lien process, and making sure you get this aspect correct is a critical step in ensuring you get the total mechanics lien filing correct. And there are normally three things to bear in mind.

Don’t let your lien expire

Contractors and suppliers frequently make the mistake of believing that their mechanics lien filings are indefinite. They certainly do not! Mechanics lien filings are just temporary and will expire after a certain amount of time...and in certain situations, very little time. The time span varies from state to state.

A few states enable lien holders to prolong this amount of time, however consent from the property owner is occasionally required. However, this is extremely rare and only permitted in a few states.

If the time for enforcing your lien is nearing, you should take steps to extend the deadline or file a lawsuit to enforce the lien, which normally necessitates the assistance of an attorney.

Proceed to foreclose your lien or issue demands and foreclosure notices.

If you filed a mechanics lien and have not been paid, you should take action to enforce your claim. The “Mechanics Lien Foreclosure Process” entails filing a civil case.

If you aren't ready for a full-fledged foreclosure litigation, consider upping the pressure by sending out a "Notice of Intent to Foreclose." This document is not normally required by states. It is, however, another step that raises the pressure to pay. Sending a notification that you plan to foreclose does not always work. In such situation, you'll need to initiate a formal legal process. However, it is extremely unusual for liens to get that far.

If you have been paid or if the mechanics lien has expired, release it.

You will almost certainly need to discharge your mechanics lien at some time. Yes, mechanical liens do expire, but this does not always mean they are deleted from public records.

You will very certainly need to release (or cancel) the lien once you have received your cash. Although not all states compel lien claimants to cancel the lien, property owners will typically request this after paying the lien claimant.

To cancel the lien, submit a Lien Release (or Lien Cancellation) with the same office where the lien was registered. In fact, in many places, you may be responsible for penalties and fines if you do not disclose your claim within a particular time frame.

Introduction to the Mechanics Lien in Plain English

Filing a mechanics lien is a significant weapon for contractors and suppliers to use in order to obtain paid on construction contracts. If you worked on a job or supplied supplies to a job in the United States, you almost certainly have the authority to file a mechanics lien.

What effect does a mechanical lien have on the property?

Mechanics liens are not filed against a specific individual or corporation. Rather, the lien is put on the property itself after it is filed. It becomes public record and belongs to the property rather than the owner. So, what does this imply for the proprietor? If a lien is placed on the property, they will have a difficult time refinancing, selling, or otherwise transferring it.

As an example, suppose you placed a lien on a house. When that owner attempts to sell the property or obtain a second mortgage, the buyer or lender will do a title search. Alarms will go off if they discover a lien has been issued against the property. Typically, they will compel the owner to settle the obligation and settle the lien first. If not, they will be responsible for the lien. This is one of the primary reasons mechanics liens are so effective.

Is it a mechanic's lien or a bond claim?

It might be difficult to understand how filing a lien claim differs on private projects versus state, federal, county, or other public work. Contractors and suppliers can use a lien-like remedy on both private and public projects, but the process is slightly different.

As previously stated, a mechanics lien filing applies to the land itself on private building projects. This clouded the property title and made it incredibly difficult for the owner to do anything with it until the lien was settled. More information may be found here: What a mechanics lien is and how it works to get you reimbursed.

However, it is not normally possible to register a "lien" on the land itself on state, county, federal, or other governmental jobs! After all, the land belongs to the public and cannot be transferred or sold by a contractor or supplier. Contractors and suppliers can still lodge a payment claim – known as a "bond claim" – against and attached to a bond.

Consider submitting a notice of intent to lien before filing a lien.

Filing a mechanics lien is a significant step for all parties involved. A lien filing has the potential to interrupt and, in some situations, halt a building project. As a result, establishing a lien should be regarded as a last resort.

Consider mailing a Notice of Intent to Lien before filing a mechanics lien. A few states require contractors and suppliers to give a notice of intent to lien before proceeding with a lien. This normally serves as a 10-day or 30-day notice to the property owner or general contractor that if payment is not received, a lien would be filed.

If you live in one of the states that requires a notice of intent, you should absolutely submit one. You are unlikely to be compelled to submit the notice of intent, but if you have the time, you should do it anyway.

A notice of intent to lien is similar to a demand letter or "dunning letter," except that it is a true demand letter.

When you file a mechanics lien, all the milk is spilled. The lien is registered, served, and has severe legal ramifications. A notice of intent, on the other hand, captures everyone's attention and is likely to be sufficient to resolve the payment disagreement without the more severe effects or obligations. It's only a letter!