Filing a mechanics lien is a powerful tool available to subcontractors and suppliers to help them get paid the money they’ve earned on their projects. In the event of non-payment, a successfully-filed mechanics lien will allow you to collect your debt by giving you privileges against the property that you worked on during the project.
Mechanics liens are provided to the industry by law — and every single state in the country has unique mechanics lien laws for their state.
Because a mechanics lien is a legal tool, some confusion exists in the industry as to what a lien actually is. Specifically, people often wonder if a mechanics lien is a lawsuit or not. In the following article, we’ll discuss whether a mechanics lien is a lawsuit.
A Mechanics Lien Is Not Automatically a Lawsuit…
A mechanics lien is a legal remedy, NOT a lawsuit… usually.
However, there are four states where filing a mechanics lien can initiate a lawsuit:
With the exception of the four states above, filing a mechanic’s lien is not a lawsuit. Instead, filing a valid mechanics lien gives you rights against the property that you are working on. The benefit of filing a mechanics lien is that it gives you a right similar to a mortgage from the bank — otherwise known as a “secured interest.” If the owner of the property fails to pay you, then you have privileges on the property to satisfy your payment.
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…But It Can Become a Lawsuit
If filing the lien does not result in payment, then filing a lien foreclosure (which is also called a lien enforcement) might be required. The enforcement of a mechanics lien IS a lawsuit. However, enforcing a mechanics lien is rare and usually only happens when it gets to that point if the claimant remains unpaid after the lien is filed.
To enforce a mechanic’s lien, the contractor initiates the enforcement of the lien. So don’t worry: you will not accidentally start a lawsuit by simply filing a mechanics lien! However, it’s not uncommon for an owner or another higher-tiered party to threaten a suit against a lien claimant when a lien is filed. If this happens to you, you can read more about what you should do if your mechanics lien is challenged.
Lien Foreclosure Lawsuits Are Rare
It is RARE to initiate a lawsuit because filing a mechanics lien is usually enough to prompt payment (or bring attention to the non-payment). So, the enforcement of a mechanics lien is not a commonly required step.
Yet nevertheless, in some (very rare) instances, a lien enforcement lawsuit — a lien foreclosure — might be required. If that lawsuit is successful, that typically means that the sale of the property will be mandated in order to satisfy the claimant’s debt. The lawsuit process includes some of the following steps such as drafting, filing and serving the lawsuit according to rules of your state. In other words, it’s a full-blown lawsuit and NOT a legal action that can take place in small claims court. Thankfully, in most instances, your payment issue will never reach the lawsuit stage.