Payment problems are too prevalent in the construction industry. With complex pay apps, pay-when-paid clauses, and too many disputes along the payment chain, it seems like the obstacles standing between construction companies and the payment that they have earned and deserve are nearly endless. Fortunately, though, there are legal tools to help construction participants get paid fairly for the labor and material they furnish. These devices – mechanics liens – are powerful, and work to get construction companies get paid fairly.
There are many different ways mechanics liens can get you paid, but the most important thing to remember is that they work. By giving the claimant an interest in the improved property itself, the mechanics lien empowers construction participants to recover the money they’ve rightfully earned.
If you have decided to file a mechanics lien in Indiana, this guide will give you step-by-step details of how to go about it. It’s important to keep in mind that there may be preliminary notice and timing requirements that must be met prior to filing a valid Indiana mechanics lien, and it can be a complicated and time consuming task to file a mechanics lien all by your lonesome. But, if you want to do it alone, and you’re ready to file, you can follow the steps below to start the lien process.
Make Sure Your Indiana Mechanics Lien Has the Required Information
It is important to make sure that your Indiana mechanics lien is compliant with Indiana mechanics lien law. The first step in doing so (provided any preliminary notice requirements have already been met) is making sure your lien contains all of the necessary information. Failing to provide the required information on the lien claim isn’t just an oversight with no consequences – it can invalidate the entire lien. It’s obvious, then, that great care should be take make sure the proper information is obtained, and is included on the lien document.
Indiana mechanics liens are required to be sworn to or verified (see below) must contain the following information:
- the amount claimed;
- the name and address of the claimant;
- the owner’s:
- name; and
- latest address as shown on the property tax records of the county; and
- the:
- legal description; and
- street and number, if any; of the lot or land on which the house, mill, manufactory or other buildings, bridge, reservoir, system of waterworks, or other structure may stand or be connected with or to which it may be removed.
Indiana law requires that the lien claim must be a “sworn statement” when prepared by the claimant. But, the lien statement may be verified and filed on behalf of a client by an attorney. If the statement is prepared and filed by the claimant’s attorney, it need not be a sworn statement and notarized, but only must be verified by the preparing attorney.
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Special Note Regarding Owner’s Name and Address on Indiana Mechanics Liens
Note that Indiana is very specific regarding the identity of the owner on the mechanics lien statement. Unlike some other states, the lien claimant must find the actual property owner, and not just the reputed owner if there is some confusion. The lien law actually requires the owner as stated in the “latest entry in the county auditor’s transfer books.”
How To File an Indiana Mechanics Lien
Now it’s time to get your Indiana mechanics lien filed with the county recorder for the county in which the liened property is situated.
- Prepare duplicate lien forms, taking care to include the necessary information as set forth above, and sign the document in the presence of a notary.
- Send both original notarized copies to the office of the county recorder for the county in which the project occurred.
- – Some counties in Indiana allow for documents to be recorded electronically. If you wish to do that, you will likely need to register with an electronic filing service, and will need to scan your lien claim so that it can be electronically submitted.
– The lien may be delivered to the proper county recorder via mail or FedEx, or personally “walked in” to be recorded (either by you or a courier).
– If you have decided to personally deliver the lien for recording, or if you mail/FedEx the lien to the appropriate county recorder, the proper recording fees must be included with the lien. Lien are often rejected for improper fees (even if you provide too much money). Any delay caused by needing to resubmit the lien for recording takes time – and since liens are time sensitive documents, it can possibly result in a missed deadline. Accordingly, it’s best practice to make sure you have the proper fees the first time. Recording fees can be determined by calling the county recorder, checking on the recorder’s office’s website, or asking in person if you physically bring the lien for filing. The fees are often set at one amount for the first page with an additional, smaller, amount for each additional page.
– Note that your lien document must also comply with any specific margin requirements that particular county recorder may have – these can also be determined by calling the recorder’s office. - Note that if you mailed your lien to the county for recording, or sent it via a courier, along with the proper fees for recording with the document, you will must include a self-addressed stamped envelope with return instructions to receive a copy of the recorded lien for your records.
- Indiana requires that the lien must be served on the property owner by mail within only 3 days – but this is to be taken care of by the county recorder, see below.
How To Serve an Indiana Mechanics Lien
As noted above, Indiana requires the lien to be served on the property owner within a very short time frame – BUT also mandates that it is the job of the recorder to do so. Specifically, Indiana notes that the recorder shall “mail, first class, one (1) of the duplicates of the statement and notice of intention to hold a lien to the owner named in the statement and notice not later than three (3) business days after recordation.”
An original contractor who performed work or supplied materials to an owner-occupied single-family residence must give the owner written notice within 10 days of recording a lien on the property. This notice is considered served when sent or personally delivered. If the notice is not timely given, and the owner suffers damages before the notice is given (recordation of a lien does not constitute damages), the lien is extinguished to the extent of the damages.
Note – This requirement does not apply to subcontractors.
Just because the service of the lien is not statutorily required in all circumstances doesn’t make it good idea to rely on the filing of the lien without other notice to the owner, however. Since the point of the lien is to get you paid, it is always best practice to make sure the property owner (and everybody else up the chain from you) is served a copy of the lien itself.
Congratulations! Once the above steps have been successfully completed, your Indiana mechanics lien is ready to get you paid what you’ve earned. While this is a powerful tool to get you paid, this may not be the end of the road – it is still possible for the lien to be challenged, or even determined invalid. Or, you may be forced to enforce your lien claim through a foreclosure action. Remember that just because a lien is recorded doesn’t necessarily make it valid, and likewise, just because a property owner (or their attorney) may make a claim that it is improper and needs to be removed doesn’t make it invalid.
Finally, an Illinois mechanics lien stays effective for 1 year from the date the lien was received for recording unless the lien claimant receives a 30-day Notice to Foreclose from the property owner, in which case the time period to initiate an action to enforce is shortened to that period.
Recording a mechanics lien can be a powerful tool in making sure you are paid what you earned. This Indiana How-To guide can empower you to take that step when and if it becomes necessary, and make sure you are treated fairly.
