A contractor’s lien allows a person or business to file a lien on a property to protect their right to receive payment for services or materials provided. The law for enforcing a contractor’s privilege varies by jurisdiction, and some require the person presenting the lien to be an authorized contractor. Before filing a lien, the contractor must notify the property owner, and the lien must be filed with the county where the property is located. The property owner must take appropriate steps to void the lien if it was filed in accordance with the laws of the jurisdiction.
A contractor’s lien is a legal right that allows a person or business to file a lien on a piece of property to protect a contractor’s right to receive payment for services or materials provided. When a policyholder files a lien, he creates a security interest against the property. Security interest prevents the owner from selling the property unless the debt to the contractor is satisfied. If the owner of the property fails to pay the debt, the contractor can initiate foreclosure proceedings on the property to obtain payment for the services or materials provided.
The law for enforcing a contractor’s privilege varies by jurisdiction. A statute typically defines who has the right to file for lien and what the foreclosure procedures will be. The statute will generally define a contractor as any person, including commercial entities, who provides services or materials in the construction of a building. This includes architects, general contractors, subcontractors and builders or any other person involved in the construction of a building or the improvement of a property. Court decisions will further define or clarify who may or may not file a policyholder lien under a statute.
Some jurisdictions require that the person presenting a contractor’s lien be an authorized contractor for the lien to be valid. If a contractor performs work and does not have a valid license from the jurisdiction to perform that work, a court will find the contractor’s lien void. A contractor operating without a license may also face fines or other criminal penalties.
Before filing a contractor’s lien, many jurisdictions require the contractor to notify the owner of the property. This requirement is a notice of intent to present a lien. Statutes typically specify what information a contractor must provide in the notice. The law will also require a policyholder to provide advance notice within certain time frames for a policyholder to recover the full value of a lien. If a contractor fails to provide notice as required by the jurisdiction’s statute, the contractor’s lien may not be enforceable.
The person or business must file the contractor’s lien with the county where the property is located. The county clerk will take the lien, stamp it with the date and time, and register the lien with the county records. If the contractor’s lien was filed in accordance with the laws of the jurisdiction, the property owner will then have to take appropriate steps to void the lien by making payments or filing appropriate court actions to remove the lien.
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