How do I get rid of a mechanic's lien that is not owed?
Full Question:
Answer:
By virtue of express statutes in most states, mechanics and
material men or persons who furnish materials for the erection of houses
or other buildings, are entitled to a lien or preference in the payment
of debts out of the houses and buildings so erected and to the land, to
a greater or lesser extent, on which they are erected. It is used to
enforce payment in order to clear the title to the property, because
property with a lien on it cannot be easily sold until the lien is
satisfied (paid off). The filing requirements and statutes of limitation
for these liens vary according to the law of each state. Liens can
generally be removed by the payment of the amount owed. This payment can
occur at any time up to and including the stage at which the closing
documents for the sale of the property are signed.
The priority of liens on a construction project does not depend upon the
time of completion of the particular job, but rather everything relates
back to the first visible commencement of the work. This stipulation
means the final work, such as painting, is equal in priority to the
initial work of laying a cement foundation. Therefore, during the entire
work of construction, the owner must obtain lien releases or waivers of
lien from each subcontractor and material supplier. Without these
waivers or releases the real estate is subject to liens of all the
subcontractors, even if the general contractor, though paid in full,
fails to pay the subcontractors. People having a home built can require
contractors and subcontractors to provide lien releases or waivers as
part of a written project contract. The contract can mandate a lien
release be issued before the contractor receives payment for services,
in which case it is called a lien waiver. Although the terms lien waiver
and lien release seem to be interchangeable, a release demonstrates
completion and payment, so as to prove any claim has been satisfied,
while a waiver demonstrates a relinquishment of a known right. Waivers
are typically obtained prior to commencement of any work, whereas
releases are subsequently obtained. Waivers of lien must be in writing,
give a sufficient description of the real estate, and be signed by the
one with authority to file or claim a lien. No payment needs to be made
in advance if the subcontractor agrees to release the land from the lien
and rely only on the credit of the owner or general contractor for
payment of the debt. If payments are made to a general contractor in
stages for work performed by subcontractors, the homeowner can obtain
lien releases from the various subcontractors as their part of the
project is completed. In addition to signed lien releases, those
building homes should keep records of what has been paid to contractors,
which contractors worked on the job site and when. Unfortunately,
unethical contractors can easily file fraudulent liens for incorrect
amounts. Accurate record keeping can help the homeowner ensure lien
releases from all necessary parties.
Liens can be discharged after a certain length of time. Therefore, if a
property owner is in no hurry to sell the property, and the lien holder
is not seeking to foreclose, it may make sense to do nothing and wait
until the lien expires. If the lien is not renewed, the cloud on the
title will no longer exist. If a person pays and satisfies a lien in
order to have it discharged, a written, legally sufficient release or
satisfaction must be obtained and recorded in the appropriate government
office to clear title to the property.
