Mechanics' and Materialmen's Liens

Question 1

Who is a “mechanic?”

Answer 1

People who build, improve, or repair buildings or repair/alter personal property
* Also includes those who supply materials (sometimes referred to as a Materialmen’s Lien)

Question 2

What must the contractor file in the clerk of the court’s office?

Answer 2

A memorandum of lien, along with a certification that they have mailed a copy of the memorandum to the affected owner within 90 days of the completion of the work or as “otherwise terminated”

Question 3

What is must be included in the memorandum of lien?

Answer 3

• Names and addresses of the owner of the property and of the claimant
• Amount of verified claim (and when payment is due)
• Intent to claim a lien
• Description of the property
• Date from which interest is claimed
• Claimant’s license number
• Notice to Owner (memorandum must be mailed to owner of property)

Question 4

What property is subject to a mechanics’ lien?

Answer 4

Can only file to secure payment for work performend on behalf of owners of real property
* Can’t file for work performed at the request of a lessee
* Not permitted on public buildings

Question 5

What are the rights of subcontractors and suppliers?

Answer 5

May obtain an independent mechanic’s lien by filing a memorandum and giving notice to the owner of the amount and character of the claim

Question 6

What is a subcontractor’s lien limited to?

Answer 6

The amount owed by the owner to the general contractor when they receive notice

Question 7

How can a subcontractor make the owner personally liable up to the amount of the general contractor’s liability?

Answer 7

Give notice to the owner before the work is done and file an affidavit with exact amount due within 30 days

Question 8

What is the right to set-off?

Answer 8

The owner’s right, whereby any claim that the owner has against the “mechanic” may be subtracted from the claim that the “mechanic” has against the owner

Question 9

How is a mechanics’ lien enforced?

Answer 9

By a creditor’s suit in equity
* Must be brought within 6 months from the time the memorandum was recorded OR within 60 days of the time the work ended, whichever is later
* Owner and affected creditor may plead SOL and owner may defend on grounds of poor workmanship

Question 10

What is the priority of a mechanics’ lien?

Answer 10

Commences from the time work on the project started and takes priority over all liens except a lien for the value of the land perfected before the project started
* Subcontractor has priority over general
* Persons performing labor for subcontractor have priority over him
* Lienors furnishing manual labor have priority over materialmen to the extent of labor performed 30 days preceding the date of the performance of the last laborer

Question 11

What is the owner’s right where the building is not completed?

Answer 11

Owner may set off against the amount still owed to the general contractor under the contract the amount necessary to complete the project

Question 12

What is a mecahnic’s lien in personal property?

Answer 12

A lien for “just and reasonable charges” for alterations or repairs to a piece of personal property

Question 13

What is the scope of a repairer’s lien?

Answer 13

By statute, mechanic obtains possessory lien when she is not paid for making requested repairs to personal property (i.e., possession is public act)

Question 14

For how much money may a lien against the lawful possessor be asserted?

Answer 14

For $1,000

Question 15

Who is considered a lawful possessor?

Answer 15

Both the owner and the holder of a security interest–so the mechanic’s lien takes priority over the holder of the security interest

Question 16

What is the priority of a machanic’s lien in personal property?

Answer 16

Has priority over competing security interests if the repair was made in the ordinary course of business and the property remains in their possession
* MOTOR VEHICLES–will prevail over competing security interest if repairer provides itemized sworn statement of the work done and materials supplied

Question 17

How may a lien for repairs be enforced?

Answer 17

• Self-help sale if the value of the property is less than $5,000 (e.g., sell the car)
• If over $5,000, enforce by bringing a creditors’ suit in equity (join all interest holders as Ds)

Question 18

What is the default for determining priority between mechanics’ liens and other types of liens?

Answer 18

First in time, first in right
* Priority date for mechanics’ lien based on date the work was performed
* EXCEPTION–for construction of a new building (but not repair to existing one), mechanics’ lien will take priority over lien recorded prior to commencement of the work to the extent of building value (earlier recorded lien retains priority for value of the land)