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Perfecting Mechanic’s Lien Claims

On Behalf of | Jan 8, 2015 | Home Owners' Association News

A mechanic’s lien is a process created by the Maryland legislature to allow subcontractors who have not been paid for work they have performed to expeditiously pursue collection of their delinquent accounts.  Mechanic’s liens are typically asserted by subcontractors who have not been paid by general contractors.  However, sometimes the property owner is also the general contractor.  In other situations, the general contractor may have a right to assert a mechanic’s lien directly against the owner.

The mechanic’s lien statute contains specific rules and deadlines for properly preserving the right to assert a claim.  A lien can be asserted for new construction or repairs/renovations which exceed 15% of the value of the property.  Most importantly, a subcontractor must give notice to the owner of the property of their intent to claim a mechanic’s lien within 120 days of last performing work on the job.  This date can often be something of a moving target.  Many cases have been litigated over what constitutes “work.”  Visiting the job site or generating paperwork has generally been viewed as not extending the time when work is performed.  The mechanic’s lien statute sets forth in great detail the information which must be contained in the notice and how it is to be properly served on the property owner.

Assuming that the notice requirement is met, a Petition to Establish Mechanic’s Lien can be filed in the Circuit Court within 180 days of the last date on which work is performed.   Initially, a Show Cause Order will be issued by the court which must be served on the respective defendant or defendants and will schedule a show cause hearing where preliminary determinations regarding the case will be made.  Oftentimes, companion counts for a breach of contract, unjust enrichment and violation of the Maryland Prompt Pay Statute are included with a Petition to Establish Mechanic’s Lien.  The Prompt Pay Statute is particularly important as it contains provisions for the recovery of attorneys’ fees even if they are not called for in the underlying contract.  A formal mechanic’s lien hearing, essentially the trial, is supposed to be heard within six (6) months of filing.  Given the normal time line for civil litigation in most counties, this is remarkably fast.

Should a mechanic’s lien be entered, it can be executed on like any other lien.  In essence, the property in question may be attached and sold at auction so that the proceeds of the property may be used to satisfy any indebtedness.  This is often not necessary as cases regularly settle or lien amounts are satisfied through other sources after entry of the lien.

The ability to prevail in a mechanic’s lien action, like many forms of litigation, is dependent upon the quantity and quality of recordkeeping done by the client from the beginning of the construction relationship.  Executing contracts, maintaining records of the construction project and properly invoicing for work that was performed is essential in order to establish the legal requirements and convince a court that one is entitled to the requested relief.

It is wise to have competent legal representation throughout the construction project regardless of the party’s role in the job.  An attorney can assist with the selection and the negotiation of appropriate contract documents and advise clients throughout the construction process on issues pertaining to the performance of the contract and payment thereunder.  Most importantly, should the client not be paid, an attorney can calculate the appropriate deadlines and marshal the necessary documentation to file and preserve the client’s mechanic’s lien rights.

The attorneys at SMLH have years of experience pursuing and defending mechanic’s liens and other legal action associated with construction projects.

For more information, please contact Kevin Mahoney at (410) 893-7500 or [email protected].