Mechanic's liens in their modern form were first conceived by Thomas Jefferson, to encourage construction in the new capital city of Washington.
Nevertheless, the United States version was original, as it gave builders a more robust right into the land itself (versus just the improvement's value).
[3] With respect to real property, mechanic's liens are purely statutory devices that exist in every state (although in California, as noted below, they have a constitutional foundation).
More specifically, the state legislatures have determined that, due to the economics of the construction business, contractors and subcontractors need greater remedy for non-payment for their work than merely the right to sue on their contracts.
Without the mechanic's lien, the contractor would have a limited number of options to enforce payment of the amounts owed.
To avoid the specter of various trades, materialmen and suppliers attempting to remove the improvements they have made, and to maintain a degree of equality between the various lienors on a project, the statutory lien scheme was created.
The lien arises at the time the registered owner is presented with a written statement of charges for completed work or services.
Although if services were performed that were not agreed upon and no written and signed estimate was issued beforehand, a mechanic has no right to keep the title owner from reclaiming the vehicle.
Mechanic's liens exist to secure payment for services, labor and material on both personal and real property.
The lien was created by operation of law by the fact of the artisan working on the personal property item or attaching additional material to it.
For example, in Virginia, a mechanic's lien can only be enforced up to the amount of $625, and if the property is valued at over $5,000, it must be sold at a sheriff's auction ordered by the court of appropriate jurisdiction.
[9][10] Many state and municipal governments similarly require contractors on public works projects to be bonded under so-called "Little Miller Acts."
[11] In many states, the legislature has created extra procedures in order for a mechanics lien to be placed on residential property.
Most States simply require the filing of the mechanics lien with a county or court clerk within a defined amount of time from a triggering event.
Just what type of contribution counts as a valid basis for a mechanics lien varies, depending on the particular state statute that applies.
Unlike other security interests, in most states, mechanic's liens are given to contractors and material suppliers who may or may not have a direct contractual agreement with the owner of the land.
These subs and suppliers are entitled to liens on the owner's property to secure their payment from the general contractor.
Therefore, persons dealing with the owner of the title to the property risk having their interests unexpectedly subject to mechanic's liens of which they had no knowledge.
In the State of Illinois, there is a statutory funds disbursing scheme that, if followed, provides construction loan mortgage priority.
In California Law a contractor must wait to take advantage of the lien rights until any of the following conditions occur; otherwise the lien will be considered premature: Each of these required events occur at the end of the project life-cycle (or at the end of the scope of work for the subcontractor, the project may be far from completed).
A temporary construction fence may be required, may serve a valuable function in safety and security, but is never expected to become part of the realty, so therefore is not a cost that is permitted under a mechanic's lien.
However, given the economic conditions, and that lenders' usually have priority, the sale of the property may not be sufficient to pay for the value of the lien.
In addition, the contractor must bear the cost of litigation in order to enforce their mechanic's lien rights.
For disputes of a minor value, a mechanic's lien is not going to be a cost-effective method of obtaining payment for services.
Prior to making any payment, the property owner should request a release of lien from every supplier, contractor and subcontractor, which covers the materials used and the work performed on the project.
States typically have a process by which the land owner may challenge the claimant's prima facie entitlement to the liens on grounds such as proper identification of the property, compliance with notice requirements, and timing.
[20] Some provinces of Canada (including Quebec) and New Zealand recognize a process somewhat analogous to a mechanic's lien.