Martin Silver is a practicing attorney with offices in Hauppauge, N.Y. He was a flooring installer before and during the time he went to law school and has since represented numerous industry people and companies. To contact him, call 631-435-0700.
It is important to note the concept of the mechanics lien is "created by law." This means the legislature of each state has passed its own lien law with its own requirements, which differ from state to state. It is important you become familiar with the requirements, particularly the time and place of filing, of the law in both your home state and any other state in which you do business. In most jurisdictions, if these filing requirements are not exactly met, there will be no lien.
But just what is a mechanics lien? In its definition- given by a federal judge- it is called a claim for work or material, furnished to improve real property that "attaches to the land." This concept of an attachment to the land is what turns the claim into a lien on the real property.
This distinction is important. A claim against the owner of the property merely gives you the right to sue him, and, if you win, the right to try to collect.
Real property, however, cannot be moved and so once the lien "attaches," payment of the claim, in theory, becomes secured. This is true even if the owner sells the property after the lien has been filed. The proper filing of the lien is intended to put the entire world on notice that this piece of real property has a lien against it for the amount claimed in the filing. Therefore, anyone who subsequently buys it, or accepts it as collateral for a mortgage loan, does so subject to this lien.
It is this concept that often gives the mechanics lien its greatest force. For obvious reasons a buyer of a piece of property that has a lien on it will most likely insist the lien be removed before he pays the purchase price to the seller.
Likewise, a bank or other lender will almost always insist a lien be omitted before it will accept that piece or property as collateral. In many of these situations the amount of the lien is insignificant when compared to the amount of the lien or loan, and the owner of the property will often, pay it off to eliminate it completely.
As we all know, in many cases it is not the owner of the real property that has contracted for the floor covering but rather a tenant. In many of these cases since, as contemplated by the lien law, the property itself has been improved; a mechanics lien may be filed. Since this lien is against the property itself, it is really a claim against the owner, or landlord, and not the tenant who actually owes the money. Most commercial leases contemplate this problem arising at some point and make the filing of such a lien an act of default by the tenant.
Under these leases then, if a mechanics lien is filed by a flooring contractor who has, pursuant to a contract with a tenant, improved the property but not been paid, the landlord may send a default notice to the tenant telling him he will face evection proceedings unless the lien is removed immediately. In these situations often the quickest, and sometimes the least expensive, method of removal is to pay off the contractor.
The above examples represent those things that we hope will happen when we file a mechanics lien. Next time we'll look at some of the requirementsof filing and see what can be done if it's not paid after it's filed.