What is a Mechanic's Lien?
A Mechanic's Lien is a guarantee of payment to a person providing work, materials or services to improve real property.
Who can file a Mechanic's Lien?
In addition to contractors and constructions workers who perform the work, deliverymen, lumberyards, surveyors, inspectors and others can file such a lien.
How does a Mechanic's Lien work?
The claim of the lien starts when the work is commenced or when the goods or services are delivered. For example, if the materials are delivered before the construction loan deed of trust is recorded, then the Mechanic's Lien is actually senior to that deed of trust. If the Mechanic's Lien was not paid and the lien foreclosed, the deed of trust would be wiped off and that loan would no longer be secured by the real property. As a title company insuring a construction loan, we would inspect the property before recording the deed of trust to assure ourselves that no work has been commenced or delivery of any goods or services accomplished.
How a title company will handle each instance of a recorded Mechanic's Lien will vary depending upon the individual situation. Some options may include requiring a bond holding money pending resolution of the claim, or various indemnity agreements. Each case must be evaluated individually.
For further information on this subject or when faced with a Mechanic's Lien, a legal counsel should be obtained.