Mechanic's lien

How it works

When you improve a property and don't get paid, a mechanic's lien lets you put a claim on the property itself, not just on the customer. Once recorded with the county, the lien clouds the title. An owner who wants to sell or refinance usually has to deal with it first, which is why a lien often gets a stalled invoice paid. If it doesn't, enforcing the lien generally means a lawsuit, on a deadline.

It fits work on real property: a reroof, a furnace or heat pump install, a panel upgrade, a repipe, a solar array. It doesn't fit work on a car, and whether smaller service work qualifies depends on the state's statute.

Deadlines are state law, and they're short

Every state writes its own rules. The usual pieces are:

1. A start-of-job notice (called a preliminary notice or notice to owner in some states), often required from subs and suppliers, and sometimes from the prime contractor.
2. A deadline to record the lien, counted from an event such as completion of the work or your last day on the job.
3. A deadline to enforce it with a lawsuit, after which the lien expires.

California shows how tight these can be. There, a sub or supplier who sends the preliminary notice more than 20 days after starting work loses lien rights for work done earlier than 20 days before the notice ¹. A lien must generally be recorded within 90 days of completion, and a recorded notice of completion cuts that to 60 days for a contractor and 30 days for a sub or supplier ¹. The claimant then has 90 days from recording to file a lawsuit to foreclose on the lien ². Other states use different notices, deadlines and triggering events, so don't use California's numbers anywhere else.

Example: A plumber finishes a repipe on June 1 and the $6,000 balance goes unpaid. Suppose her attorney says her state allows 90 days from the last day of work to record a lien. She puts August 30 on the calendar as the hard deadline and July 31 as the day she decides whether to file, so the attorney has time to prepare it. The dates and the 90-day deadline are made up for illustration; your state's deadline may be shorter and start from a different event.

Common mistakes

• Waiting for reminders to work. The lien clock runs while you send polite emails. Track the lien deadline next to each open invoice in your accounts receivable.
• Skipping the start-of-job notice. In states that require one, a missed notice can cost lien rights before anything goes wrong. Make it routine on every job where it applies.
• Signing away rights early. An unconditional lien waiver for money that hasn't cleared can give up your lien for nothing.
• Overstating the amount. Lien only what you're actually owed under the contract and approved change orders. Ask an attorney about the consequences of an inflated claim in your state.
• Filing without the paperwork. Signed contract, change orders, invoices, photos and dates are what support the claim.
• Doing it yourself in a new state. Forms, service rules and licensing requirements vary. Have a construction attorney handle the first one.

How it connects

Lien rights are the leverage behind every progress billing invoice and every dollar of retainage on a construction job. Clear payment terms and fast invoicing keep most balances from ever getting near a lien. When one does, how to collect overdue invoices covers the steps before and after.