What does "Mechanics’ Liens" mean in real estate?
A mechanics’ lien is a legal claim placed on real property by a contractor, subcontractor, laborer, supplier, architect, or engineer who has not been paid for work, materials, or services that improved the property. The lien creates a security interest in the property’s title, which can block sales or refinancing and, if unresolved, may allow the unpaid party to force a sale to recover the debt.
How mechanics’ liens work
- Who can file: Contractors, subcontractors, material suppliers, laborers and sometimes design professionals who contributed to a property improvement.
- When to file: Typically after work is completed or materials delivered and payment is overdue. Most jurisdictions have strict filing deadlines (commonly within about 90 days of last work or delivery—check local law).
- How they’re enforced: A valid lien can be enforced by filing a foreclosure lawsuit on the lien, which may lead to forced sale of the property to pay the claim.
- Effect on title: A mechanics’ lien creates a “cloud” on title, preventing clear transfers or refinancing until the lien is released or satisfied.
Real-world examples
1. Unpaid subcontractor on a home renovation
A homeowner pays a general contractor for a kitchen remodel. The general contractor fails to pay a plumber who installed pipes. The plumber files a mechanics’ lien against the homeowner’s property. Even though the homeowner paid the contractor, the lien remains until the plumber is paid or the lien is legally resolved.
2. Material supplier not paid for roofing materials
A supplier delivers shingles to a roofer working on a new house. The roofer doesn’t pay the invoice. The supplier files a mechanics’ lien against the property where the shingles were installed, blocking sale or refinance until the debt is cleared.
3. Landscaping company files a lien
A commercial property owner refuses final payment, claiming unsatisfactory work after a landscaping job. The landscaping firm files a mechanics’ lien to secure payment, giving it leverage until the dispute is resolved or the lien is paid.
4. Double payment risk for homeowners
A homeowner pays the general contractor but some subcontractors go unpaid. A subcontractor files a mechanics’ lien, and the homeowner may have to pay that subcontractor directly to clear the lien—illustrating the “double payment” risk. That’s why lien waivers are commonly requested before final payment.
How to prevent and resolve mechanics’ liens
- For homeowners and property owners: Require signed lien waivers from contractors and subcontractors as payments are made; confirm that suppliers and subs have been paid; use conditional lien waivers or final waivers upon receipt of funds.
- For contractors and suppliers: Follow state-specific filing procedures and deadlines; keep clear records of contracts, change orders, deliveries and communications to support lien filings or defenses.
- For buyers and real estate professionals: Always run a title search before closing to identify existing mechanics’ liens and obtain releases or escrowed funds to handle disputes.
- Alternatives and resolution: Negotiation, payment, or a court action to remove an invalid lien. Some projects use payment bonds (common on public works) or retainage to reduce lien risk.
Key takeaways
- Mechanics’ liens protect those who supply labor or materials by creating a security interest in the improved property.
- They can complicate sales and refinancing because the lien clouds the title until resolved.
- Strict filing deadlines and procedural rules apply—missing them can invalidate a lien.
- Owners should obtain lien waivers and verify payments; contractors should file promptly and keep documentation.
Conclusion
Mechanics’ liens are a powerful tool in construction and real estate to ensure payment for work and materials. While they provide essential protection for contractors, subcontractors and suppliers, they can create serious headaches for property owners and buyers. Understanding how mechanics’ liens work—and taking practical steps like obtaining lien waivers, verifying payments, and running title searches—helps prevent surprise claims and protects all parties involved in property improvement or transfer.
