Mechanics’ Liens and How to Remove Them
A mechanic’s lien is technically a hold that is placed on property when you owe money to someone. If for instance, you hire a contractor to build a home and you neglect to pay that contractor, he or she can take a mechanics’ lien against your home until the debt is paid. In many states, a mechanics’ lien can cost you the property in question if an amicable solution is not found.
Typically, when a home is sold, the mechanics’ liens must be paid before anyone else. In some states, unpaid property taxes are paid first, followed by the mechanics’ lien. Even in cases of foreclosure, when the home is sold the lien is paid before the bank can take out what is actually owed against the property. The actual value of the lien is determined by the price of the debt that is owed or by the reasonable value and is often the lesser of the two. In some states, a mechanics’ lien can force foreclosure if not paid.
There are a few things that you can do if you are in jeopardy of losing your property due to a mechanics’ lien. First, the lien has to be properly recorded within a specified time period. All states are different so you should check the guidelines for your state to see how long the contractor has to file the lien. The claim has to be written and must contain information that is necessary to record the lien. Again, all states are different so it is a good idea to learn about the guidelines in your specific area.
There is a time period that the claimant must meet regarding notice. You are entitled to receive notice of the lien in a reasonable period of time before any further legal action can be taken. In some states, this time period is 20 days after the work has been completed before a lien can be filed. After the lien has been filed, you have a specified period of time to answer the claim.
Mechanics’ liens that are properly filed will stay on the property until the appropriate actions are taken to remove them. This means that you must come to an agreement with the lien holder or completely pay the debt. If you feel that a lien has been placed on your property that is not valid, there are certain legal steps that you can take to have that lien removed.
In most states, you will need to send the lien holder a notice that demands that the lien be removed. You must include grounds for the removal and if the record of release is not filed within a specified time period, you may have to petition for the courts to remove the lien. Again, your specific state may have different guidelines so it is important that you check the laws in your area. Regardless of where you live, if you feel that a lien has been placed on your property unduly, you should contact a real estate attorney for assistance in having that lien removed.