Mechanic's Lien Rights: What Subcontractors Need to Know#

Executive Summary#

Mechanic's liens (also called construction liens or materialman's liens) provide subcontractors with security for payment by creating claims against project property. If a subcontractor is not paid for work performed, they can file a lien that must be resolved before the property can be sold or refinanced. Understanding lien rights—including strict notice and filing requirements—helps subcontractors protect their payment rights. This guide explains how mechanic's liens work and what subcontractors need to know.

The Context for ICI Subcontractors#

Subcontractors face unique payment risks. They have no direct contract with the property owner and often rely on general contractor payment. If the GC does not pay—whether due to disputes, cash flow problems, or bankruptcy—the subcontractor may be left unpaid for work that improved someone else's property.

Mechanic's lien laws address this imbalance by giving subcontractors recourse directly against the property. The property owner, having received the benefit of the work, cannot simply ignore subcontractor claims.

However, lien rights come with requirements. Missing deadlines or failing to provide required notices can forfeit lien rights entirely. Understanding these requirements is essential.

How Mechanic's Liens Work#

The Basic Concept#

A mechanic's lien creates a security interest in real property:

Basis: The subcontractor provided labor, materials, or equipment that improved the property.

Effect: The lien attaches to the property itself, not just to the party who owes payment.

Enforcement: If the lien is not paid or resolved, the lienholder can foreclose—forcing sale of the property to satisfy the debt.

Priority: Lien priority determines what gets paid first if multiple claims exist.

Who Can File Liens#

Generally, anyone who provides labor, materials, or equipment to improve real property can have lien rights:

General contractors
Subcontractors
Sub-subcontractors
Material suppliers
Equipment rental companies

The specific parties with lien rights vary by jurisdiction.

What Property Can Be Liened#

Liens attach to the improved property:

The real property (land and buildings)
Improvements made to the property
In some jurisdictions, the owner's interest in the property

Public property generally cannot be liened—different protections (payment bonds) apply to public projects.

Jurisdiction Matters#

State-by-State Variation#

Lien laws vary significantly by state. Key differences include:

Notice requirements and timing
Filing deadlines
Required content of liens
Enforcement procedures
Priority rules

Subcontractors must understand the lien laws in each state where they work. Requirements that apply in one state may not apply in another.

Private vs. Public Projects#

Private projects: Mechanic's lien rights generally apply

Public projects: Liens typically cannot attach to government property. Payment bonds provide alternative protection through claims against the bond rather than the property.

Notice Requirements#

Preliminary Notices#

Many states require preliminary notices before lien rights can be preserved:

Purpose: Alert property owners that a subcontractor is providing work and may have lien rights.

Timing: Usually required within a specified time after starting work (often 20-30 days).

Content: Typically must include contractor identification, property description, and general scope of work.

Effect of missing: Failing to provide required preliminary notice may forfeit lien rights entirely.

Not all states require preliminary notices from subcontractors, but many do. Research requirements before work begins.

Intent to Lien Notices#

Some states require notice before filing a lien:

Purpose: Give parties opportunity to resolve payment before lien filing.

Timing: Specified number of days before lien can be filed.

Content: Notice that the subcontractor intends to file a lien if not paid.

Notice Recipients#

Required notices may need to go to multiple parties:

Property owner
General contractor
Lender (if construction financing)
Other parties specified by statute

Filing Deadlines#

Critical Timing#

Lien filing deadlines are strict and unforgiving:

Measurement: Deadlines typically measured from specific events—last day of work, project completion, or notice of completion.

Variation: Deadlines range from 30 days to 120 days or more depending on jurisdiction.

Consequences: Missing the deadline forfeits lien rights. There are typically no exceptions.

Common Deadline Triggers#

Events that start lien filing clocks:

Last day of work: Deadline measured from when the claimant last provided labor or materials.

Project completion: Deadline measured from overall project completion.

Notice of completion: Property owner may file a notice that shortens the filing deadline.

Cessation of work: Project work stops for extended period.

Tracking Deadlines#

Subcontractors must track lien deadlines for every project:

When did work start (for preliminary notices)?
When was last work performed (for filing deadlines)?
Has a notice of completion been filed?
What is the specific deadline for this jurisdiction?

Missing a deadline because no one was tracking it is an avoidable failure.

Lien Content Requirements#

Required Information#

Liens must typically contain specific information:

Claimant information: Name, address, contact information

Property description: Legal description of the property

Owner identification: Name of property owner

Amount claimed: Dollar amount of the lien

Work description: General description of labor, materials, or equipment provided

Dates: Relevant dates (first work, last work, etc.)

Verification: Sworn statement that information is true

Accuracy Matters#

Inaccurate liens may be invalid:

Wrong property description
Incorrect owner name
Overstated amount
Missing required information

Careful preparation of lien documents is essential.

After Filing#

Lien Enforcement#

Filing a lien creates the claim. Enforcing it requires additional action:

Enforcement deadline: Liens must typically be enforced through lawsuit within a specified time (often one year from filing).

Foreclosure action: Lawsuit seeking to foreclose on the property to satisfy the debt.

Costs: Enforcement involves legal costs that must be weighed against recovery potential.

Resolution Options#

Liens are often resolved without foreclosure:

Payment: The party owing payment pays to release the lien.

Bond: A surety bond replaces the lien, releasing the property while preserving the claim.

Settlement: Parties negotiate resolution.

Litigation: Dispute resolved through court proceedings.

Lien Release#

When payment is received, liens must be released:

Release document: Filed to clear the lien from property records.

Timing: Should be released promptly upon payment.

Failure to release: Retaining a lien after payment may create liability.

Best Practices#

Before Work Begins#

Research lien laws for the jurisdiction
Determine notice requirements and deadlines
Set up tracking for deadlines
Send preliminary notices if required

During Work#

Document work performed and dates
Track last day of work on each project
Monitor for notices of completion
Maintain records supporting lien amounts

When Payment Problems Arise#

Do not wait until deadlines are imminent
Send any required pre-lien notices
Prepare lien documents before deadline
File by deadline even if still negotiating

Professional Assistance#

Lien rights involve legal requirements:

Consult attorneys familiar with construction liens
Use proper forms and procedures
Understand enforcement options and costs
Recognize when professional help is needed

Common Mistakes#

Missing Deadlines#

The most common and costly mistake:

Not tracking when work was performed
Not knowing when notices of completion were filed
Assuming there is more time than actually exists
Waiting to see if payment comes before taking action

Inadequate Documentation#

Supporting a lien claim requires documentation:

Contracts and change orders
Invoices and payment records
Evidence of work performed
Communication about payment

Improper Notices#

Notice requirements are specific:

Wrong recipients
Wrong timing
Missing required content
Inadequate delivery method

Overstated Amounts#

Liens should reflect legitimate claims:

Only amounts actually owed
Supported by documentation
Not including speculative or disputed amounts

Overstated liens may be deemed fraudulent or may reduce credibility.

How This Relates to Daily Operations#

Documentation Supports Lien Rights#

The field documentation practices that support billing also support lien claims:

Time records showing when work was performed
Material records showing what was provided
Photos showing work completed
Daily reports documenting activities

Good documentation created during work supports lien enforcement if payment problems arise.

Early Warning Signs#

Payment problems often have early indicators:

Slow payment on early billings
Increasing receivables aging
Disputes about billing or work
Rumors about project financial problems

Early recognition enables proactive lien protection before deadlines pass.

How Appello Supports Payment Protection#

While Appello does not file liens, the documentation captured through the platform—time records, material records, job documentation—provides the evidence that supports lien claims. Complete records of work performed, when, and in what amounts strengthen the subcontractor's position if lien enforcement becomes necessary.

Conclusion#

Mechanic's lien rights provide important payment protection for subcontractors. However, these rights require compliance with notice requirements and filing deadlines that vary by jurisdiction and are strictly enforced.

Subcontractors should understand lien laws where they work, track deadlines carefully, and take timely action to preserve rights. When payment problems arise, early attention to lien rights protects options that may be forfeited through delay.

Professional legal assistance is advisable for understanding specific requirements and enforcing lien rights when necessary.

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