Back to top

Mechanics' Liens

Most states have laws allowing laborers, material suppliers, subcontractors, and general contractors to file mechanics' liens against the owner's equity interest as to the real property their work and materials go into.

Since a lienor's rights come ahead of the rights of existing and filed mortgagees (banks) on the liened property, and because the existence of a mechanics' lien on real property for thirty days or more frequently constitutes a breach of most financing agreements for the owner/borrower, mechanic's liens have the potential to produce quick results. A mechanic's lien can also lead to establishing alternative forms of payment guaranty, such as escrow arrangements and lien bonds, which are often more secure and preferable to the complexity of proceeding with a mechanic's lien.