Scenario: What if you are hired to do work at a construction site, do a great job (of course you do a great job), and the contractor (or owner) who hired you does not pay you for your work?
You may think that the only remedy is a costly lawsuit. But there is a statutory remedy that could prove to be a more efficient option – the filing of a mechanic’s lien.
A mechanic’s lien is a security interest which attaches to the real estate and improvements to real estate on which the work was performed. If you don’t get paid, you can foreclose on your lien – which typically gets the attention of the person responsible for your bill.
Because a mechanic’s lien is a creature of statute, it is important to strictly follow the statutory requirements. A few key points:
Who can get a lien?
A lien is available to anyone who meets all of the following three criteria:
- A contractor, a subcontractor, a mechanic, a lessor leasing construction and other equipment and tools, whether or not an operator is also provided by the lessor, a journeyman, a laborer, or any other person, so long as the person
- performing labor or furnishing materials or machinery, for
a) the erection, alteration, repair, or removal of either (a) a house, mill, manufactory, or other building, or b) a bridge, reservoir, system of waterworks, or other structure, or
c) the construction, alteration, repair, or removal of a walk or sidewalk located on the land or bordering the land, a stile, a well, a drain, a drainage ditch, a sewer, or a cistern
Ind. Code § 32-28-3-1 provides:
What property does the lien attach to?
Your properly filed lien attaches to: “the house, mill, manufactory, or other building, bridge, reservoir, system of waterworks, or other structure, sidewalk, walk, stile, well, drain, drainage ditch, sewer, cistern, or earth. . .”
What do you need to do to obtain a lien?
First, make sure your contract does not contain a no-lien clause.
Second, if there is not a valid no-lien clause, timely file your lien with the County Recorder, including the following information:
- Amount you claim to be owed;
- Your name and address;
- The property owner’s name and address (Who is the current owner of the premises? In order to determine current owner, you must use the latest entry in the transfer books of the county auditor (Ind. Code § 6-1.1-5-4) or if Ind Code § 6-1.1-5-9 applies, the transfer books of any township assessor or the county assessor. You must fully state the owner’s address for purposes of a copy of the lien being mailed for notification purposes.);
- Identify the work performed and/or the supplies provided; and
- Describe the premises (the legal description available through the county recorder’s office as you will find on the deed. An address for the property is also necessary, if there is such at the time of filing).
Ind. Code § 32-28-3-3
When do you have to file the lien?
If the property is a single or double family dwellings, referred to as a Class 2 structure, the lien must be filed within 60 days. For all other projects, the lien must be filed within 90 days.
The deadlines are strict – once the deadline passes, there is nothing you can do to resurrect your right to a lien.
Additional requirements for owner-occupied properties
There is an additional requirement regarding properties that are Class 2 structures and will be occupied by the owner of the property (most commonly seen with single-family home construction).
In those cases, you must send a pre-lien notice to notify the owner that you are providing materials or labor. The purpose of this pre-lien notice is to put the owner on notice of all outstanding debts owed to the general or prime contractor that has or is being incurred during the repair/construction of the home.
If you are repairing or altering a dwelling, then you must send the pre-lien notice within 30 days from the first date of supplying materials or performing work.
If you are working on new construction, then you must send the pre-lien notice within 60 days from the first date of supplying materials or performing work.
Reminder that this notice must be provided to the occupying owner
The time limits for the pre-lien notice, are separate from the 60-day time limit for filing a lien after the date of last material supplied or work performed. So, send the pre-lien notice to the owner after you start, then file the lien with the Recorder after you finish (meeting the two different deadlines).
If there is additional work performed and/or materials supplied, the 60/90 days would start over from the last day work was performed and/or materials supplied. The work performed and/or materials supplied must be substantial; updating a report is not sufficient to start the 60/90 days over.
The mechanic’s lien process, though a useful alternative to litigation, has some strict timing requirements and the KGR attorneys are experienced in this area and would be happy to help you with your needs.
Tammy Froelich is a paralegal at KGR. She has more than two decades of experience assisting clients through the mechanic’s lien process. Contact Tammy at TFroelich@kgrlaw.com or any of our KGR attorneys.