A mechanics lien is a claim for unpaid labor or supplies against the title of a commercial property, upon which work has been performed or materials supplied. Mechanics liens may be filed by contractors, laborers and materialmen - but unfortunately not mortgage brokers. A materialman is someone who provides building materials to a building site, such as lumber or bricks. For example, suppose a developer is building an office building, and you are the heating and air conditioning subcontractor. You perform your contract to install the HVAC system in a workmanlike manner; in other words, like a competent, HVAC professional would do. You submit your invoice to the developer for the agreed $35,000; and he tries to stiff you. "Yeah, your work was fine," he says, "But I'm only gonna pay you $20,000. Take it or leave it. I'm a big contractor, with attorneys on staff. It will take you years to get paid, if you try to sue me, and it will cost you $40,000 in attorneys fees to collect your $35,000. So you can either take $20,000 now or you'll get nothing at all." This kind of stuff used to happen so often that all of the states passed loans that allowed workman and materialmen to file a lien against the property. A lien (pronounced "lean") is a claim for money. You can think of a lien like a mortgage. If the borrower doesn't pay the lien, the lienholder can actually foreclose on the property. Now if the big shot developer refuses to pay you, you can simply file a mechanics lien against property. Then, the next time the developer tries to draw down on his construction loan, the title company will refuse to issue title insurance to the construction lender. The construction lender will then tell the developer that he won't get any more money to finish his project until he pays you. You can apply to hundreds of commercial construction lenders in just four minutes using C-Loans.com. |
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