Mechanics Lien Rights for Contractors: Your Most Important Collection Tool

A mechanics lien is a security interest in the property where your work was performed. If you file a lien and the owner does not pay you, you can force a sale of the property to satisfy the debt.

For practical purposes, lien rights are a collection tool long before you need to foreclose. Most property owners do not want a lien on their title. A properly filed lien motivates payment because it clouds the title and prevents the owner from selling or refinancing until the lien is resolved.

Lien rights exist for general contractors, subcontractors, material suppliers, and equipment rental companies. Anyone who furnishes labor or materials to a project has a potential lien right.

Lien deadlines are set by state law and are not flexible. Miss the deadline and you lose the right.

There are typically two or three relevant deadlines. First, a preliminary notice deadline: many states require you to send a notice to the owner and sometimes the lender within a certain number of days of first furnishing labor or materials. This is a prerequisite to lien rights in those states, not the lien itself.

Second, the lien filing deadline: the period after project completion or last furnishing within which you must record the lien with the county recorder. This ranges from 30 days to six months depending on the state.

Third, the enforcement deadline: after filing a lien, you have a limited time to file a lawsuit to enforce it. If you file the lien but do not enforce it, the lien expires.

In many states, subcontractors and suppliers must send a preliminary notice to the owner within 20 days of first furnishing to preserve lien rights. California, Texas, and many other states have this requirement.

The preliminary notice does not mean you are filing a lien. It is a routine notice that informs the owner who is working on their project. Most owners receive them regularly and do not read them as a threat.

Sending a preliminary notice on every project you work on is one of the simplest risk management practices available to a subcontractor. Skipping it on a project that later has a payment problem costs you your lien rights.

Mechanics liens generally cannot be placed on public property. Governments are immune from lien claims in most states.

On public work, the substitute is the payment bond. Federal projects under the Miller Act have a payment bond that covers unpaid subs and suppliers. State public work has similar statutory protection.

If you are doing public work and have not been paid, your claim is against the payment bond, not the property. The notice and claim deadlines for payment bond claims are different from mechanics lien deadlines. Know which set of rules applies.

Send a preliminary notice on every project where you are a sub or supplier in a state that requires it. Do this at the start of the project, not when payment problems appear.

Track your lien deadlines. For each project, note the date of first furnishing and calculate the lien filing deadline. Put it in your calendar.

When a payment is seriously overdue, send a notice of intent to lien before the deadline. This often resolves the dispute without filing.

If payment is not made, file the lien before the deadline. You can always release it if you get paid. You cannot get it back if the deadline passes.