In all states in this country, licensed contractors and suppliers of materials for home improvement work on your property (land or a building) are entitled to "pre-lien" the property in order to assure payment.The term “pre-lien” is a requirement by your state that a licensed contractor or material supplier must follow to order to make sure that a lien is enforceable. It starts with a “preliminary notice” of work or materials supplied to the homeowner.
Problems sometimes arise when the owner of the property is unable to pay his or her contractor for the improvement work in a timely manner. Worse yet, sometimes the general contractor hired to do the work of improvement is unable to pay his or her own subcontractors on the job for services and/or materials provided.
However, lien claims are often invalid because the contractor, subcontractor or materials supplier has failed to meet the required timelines for filing a claim. Each state has different timelines required of the contractor, subcontractor, or materials supplier.
The terms “mechanic’s lien” and "contractor’s lien” are used interchangeably throughout the building industry in this country.
Homeowner's checklist
If you are a homeowner whose home has a recorded mechanic’s lien, the following is a useful checklist to attack the lien:
1. Check to see if the required preliminary notice has been given to you within the required time frame of your state’s laws. Note, the general contractor and his or her laborers do not have to file the preliminary notice.
A subcontractor or a materials supplier has a certain amount of time, usually twenty (20) days after beginning work or delivering materials to serve a preliminary lien notice. If late, the claimant loses all lien rights for work performed or materials delivered. The claim against the property is not valid if this time period has not been followed.
2. Check to see if the lien claimant (i.e., the licensed contractor or the material supplier who is claiming a lien upon your property) has recorded the mechanic’s lien within the required time period. If the claimant has failed to record the mechanic’s lien, the lien is invalid.
Usually the lien claimant must record a mechanic’s lien within a certain period of time (for example 90 days) of the first of the following events: completion of the work, or when the property owner began using the property having the improvement, or when the property owner accepted the work of improvement.
3. Check with the clerk of the county court where the property is located to see if the subcontractor or the materials supplier filed a lawsuit to foreclose upon the mechanic’s lien.
A lien foreclosure action is a lawsuit filed by the subcontractor or the materials supplier to foreclose upon the mechanic’s lien. The lawsuit must be filed within a certain time period of the date the mechanic’s line has been recorded. Many times the claimant simply fails to file a lawsuit within the required time period which invalidates the lien.
Effect of an invalid recorded lien
A recorded lien upon a property owner’s home is a cloud upon title to it until removed. An invalid lien creates problems for the refinance or sale of the home.
If the contractor, subcontractor or materials supplier fails to timely file for pre-lien or lien procedures, the homeowner usually files a petition to remove the lien.
How to remove an invalid lien
If it appears that a recorded lien is invalid due to improper “pre-lien” notice requirements, or failure to timely record the lien, or failure to file suit to foreclose upon the lien, a demand letter to the person who recorded the lien should be sent certified mail, return receipt requested, for its recorded release and removal by a specific date.
If the person who recorded the invalid lien fails to remove it and the time period to file suit to foreclose has expired, the property owner files an action in the county where the property is located.
Most property owners retain an attorney to assist in this process. The services of a lawyer are worthwhile and prudent in this case since the statutory language for placement of liens by a contractor or materials supplier is very technical and somewhat difficult to understand. In many instances the person recording the mechanic’s lien fails to file a lawsuit to perfect the lien. In such a situation, an experienced attorney is needed to file a lawsuit to eliminate the recorded lien of the contractor..