Talk:Mechanic's lien
From Wikipedia, the free encyclopedia
 |
This article is within the scope of WikiProject Law, an attempt at providing a comprehensive, standardised, pan-jurisdictional and up-to-date resource for the legal field and the subjects encompassed by it. |
| B | This article has been rated as B-Class on the assessment scale. |
| Low | This article has been assessed as Low-importance on the assessment scale. |
Contents |
[edit] Apostrophe needed in title
"Mechanics lien" wants an apostrophe. I don't like to say I'm right and everybody else is wrong, but in any reasonably standard English the possessive case does require an apostrophe. For example, Revised Code of Washington Chapter 60.04 is entitled "Mechanics' and Materialmen's Liens" with correct use of the apostrophe for the plural possessive cases of "mechanic" and "materialman." The fact that a certain spelling appears on a document filed in court somewhere does not make it correct English; it just means it probably passed Microsoft's spellchecker. There was a time when legislators, lawyers, and judges cared about the correct and eloquent use of language, when they considered it essential to their legal arguments and prescriptions, and even argued over the fine points of the phraseology of this or that law, but that time is long past. The current general standard of poorly worded, gratuitously verbose, and decidedly ineloquent statutory law (the example from RCW notwithstanding) has a way of making lawyers rich and facilitating legislation from the bench.
Please move this article back to "Mechanic's lien" or to "Mechanics' and materialmen's liens" or even the rather banal "Construction lien." 130.94.162.64 07:00, 9 November 2005 (UTC)
- Construction Lien is not "banal" - it's accurate and accords with common English. I bet that most laypeople and even some lawyers would misunderstand the expression "mechanics' lien" and assume that it applies to a tradesperson who fixes engines. That's why in Ontario, for example, the staute was renamed the Construction Lien Act in 1983. User:70.24.109.9 04:30, 20 March 2006 (UTC)
[edit] Draft Article
In response to the need for expert attention tag, I'm proposing to substitute the following draft article for the current one. It uses some of the current article but it has been fairly completely reorganized and substantially expanded. If there is no significant negative commentary within the next two weeks, I'll make the substitution.Anoneditor 03:01, 12 February 2007 (UTC)
-
- -------------------------------------------------------------
A mechanics' lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property. In the realm of real property, it is called by various names, including, generically, construction lien. It is also called a materialman's lien or supplier's lien when referring to those supplying materials and a laborer's lien when referring to those supplying labor. In the realm of personal property, it is also called an artisan's lien. The term "lien" comes from a French root (via William the Conqueror), with a meaning similar to link; it is related to "liaison." Mechanics liens on property in the United States date from the 1700's.
[edit] Reasons for existence
Mechanic's liens exist because of the imbalance of power between many workers and material suppliers, and the property owner (or direct contractor with that owner) who has agreed to pay them. Without the mechanic's lien, the personal property artizan, or the real property contractor or material supplier has a limited number of options to enforce payment of the amounts owed. They can attempt to remove the improvements they have made, but this may be fraught with legal difficulties, especially if removal will do significant damage to the property improved. Moreover, removing the improvements will not get them paid, and there is little economic utility in it. They can sue, but this takes time and money and often the artizan or contractor has no legal relationship to the person with the financial resources. In the real estate context, they can threaten to withhold future services until payment is made. However, this may not be too successful in markets with a surplus of building contractors and material suppliers exist.
[edit] Creation
Mechanic's liens exist to secure payment for services, labor and material on both personal and real property. However, the creation and enforcement mechanisms differ depending on whether real or personal property is involved. The law of mechanic's liens on real property governs the creation and enforcement of these liens on items of personal property that has been attached to real property in such a way as to be a fixture.
[edit] Creation and Enforcement - Personal property
The English common law recognized mechanic's liens respecting only personal property. The lien was created by the fact of the artizan working on the personal property item or attaching additional material to it. However, to maintain the lien, the artizan had to retain possession of the article until he or she was paid. If the property were returned to the owner before that time, the lien was lost. The lien was enforced by a sale of the property and applying the sale proceeds to payment of the amount owed for the workmanship. The sales were non-judicial, i.e., they were held in the same way as a sale of property pawned for a debt.
Some 34 states now appear to have statutes providing for mechanic's liens on personal property[1]
[edit] Creation, Perfection, Priority and Enforcement - Real property
Mechanic's liens on the title to real property are exclusively the result of legislation. Each state has its own laws regarding the creation and enforcement of these liens, but, overall, there are some similar elements among them.
Real property of the government is ordinarily not subject to the claims of private parties. Therefore, unless the state specifically so provides, mechanic's liens do not attach to the title owned by the state or its administrative subdivisions, such as cities. Similarly, mechanic's liens under state law are invalid on federal construction projects. To protect subcontractors and suppliers on these projects, where the contract price exceeds $100,000.00, the Miller Act (40 U.S. Code 3131) requires general contractors to provide a surety bond which guarantees payment for work done in accordance with the terms of the contract. Many state and municipal governments also require contractors on public works projects to be bonded.
[edit] Creation and perfection
Under the statutes, the lien is usually created by the performance of labor or the supplying of material that improves the property. Just what type of contribution counts as a valid basis for a mechanics lien varies, depending on the particular state statute that applies. Some common examples are:
-
- Laborers, carpenters, electricians, and plumbers working on the project site;
-
- Lumber yards, plumbing supply houses and electrical suppliers;
-
- Architects and civil engineers who drew up the construction plans and specifications; and
-
- Offsite fabricators of specialty items that are ultimately incorporated into the project.
Often, no simple dividing line that is useful in every state, or even in every case for determining this elegibility. Deciding whether a party has a legitimate lien right may depend on examining court cases that have either upheld or rejected lien claims in the same state.
Unlike other security interests, in most states, mechanic's liens are given to contractors and material suppliers who have no contractual agreements with the owner of the land. In fact, this is often the norm because in most cases, the owner of the land contracts only with a general contractor. It is the general contractor, in turn, hires subcontractors ("subs") and material suppliers ("suppliers") to perform the work. These subs and suppliers are entitled to liens on the owner's property to secure their payment from the general contractor.
However, to have an enforceable lien, it usually must be "perfected." This means that the holder of the lien must comply with the statutory requirements for maintaining and enforcing the lien. These requirements, which contain time limits, are generally as follows:
-
- Providing required notices to the property owner disclosing the entitlement to the lien (some states).
-
- Filing notices of commencement of work (some states).
-
- Filing notices in the required public records offices of the intention to file a lien if unpaid (some states).
-
- Filing the notice or claim of lien in the required public records offices within a specified period of time after the materials have been supplied or the work completed (all states). The law varies from state-to-state on both the triggering event and the timing of this. Some states require the filing within a period measured from the time when the claimant completes its work, while others specify the event as being after all work on the project has been completed. The filing time periods after the triggering event vary, with 4-6 months being common.
-
- Filing a lawsuit to foreclose the lien within a specified time period.
[edit] Priority respecting other interests
The statutes creating mechanic's liens usually give them a higher priority with respect to other interests in the title than the law gives most real property security interests. Among other things, priority is the attribute that determines which of several competing security claims will have the first claim to the funds of a foreclosure sale. In this context, the priority of a mechanic's lien is determined either by the time the lien attaches to the title to the property or by the point in time to which it "relates back." With some exceptions, the lien attaches or relates back to a time prior to the time that any notice of it appears in the public records. In many states, this is specified as the time when the first visible construction commences on the building site. In others, it is when the contract is executed for the work to be done. In still others, each contractor or supplier's lien attaches at the time when it commences its own work. Therefore, persons dealing with the owner of the title to the property risk having their interests unexpectedly subject to mechanic's liens of which they had no knowledge.
Special provisions are made in some states for determining the priority between a mechanic's lien and the lien of a mortgage that is financing the construction on the land. For instance, in the State of New York, the appearance of specified language in the mortgage to the effect that it is a construction loan preserves its priority over mechanic's liens arising out of the construction, as long as subsequently filed lien claims that are legitimate are not ignored. In other states, such as Florida, it is an all or nothing proposition. There, the recording of the construction mortgage before the filing of a statutory notice of commencement of construction provides the mortgage with absolute priority over mechanic's liens arising out of the construction. Still other states, such as California, provide priority for a construction loan mortgage recorded before the visible commencement of construction where the lender is obligated to disburse the funds. In the State of Illinois, there is a statutory funds disbursing scheme that, if followed, provides construction loan mortgage priority. In other states, there are still other arrangements and some states, such as Colorado, provide almost no practical means for a construction loan mortgage to obtain priority at all.
[edit] Enforcement
Mechanic's liens are enforced exclusively through judicial foreclosure sales, i.e., through court proceedings similar to mortgage foreclosures. The court must determine whether the requiements of the statute have been met and, if so, the priority of the mechanic's lien being foreclosed relative to the other liens or encumbrances on the title. Once that is determined, the court will order the property sold and the proceeds of the sale applied to the liens in the order of their priority.
[edit] Notes
- ^ See research of the Automotive Service Association at http://www.asashop.org/legis/lien.htm Retrieved February 26, 2007.
[edit] See also
[edit] Substituted draft article
As there was no commentary within the last two weeks, I substituted the above draft article for the existing one and removed the needs-an-expert tag. References for the article will be forthcoming soon. Anoneditor 22:05, 27 February 2007 (UTC)
[edit] Reasons for existence
The second, third and fifth sentences of the prior revision have been deleted because they are irrelevant to the reason for the existence of these liens. The sixth sentence has been deleted because the "public policy" argument it propounds is misleading; the assumption against gratuity runs through all of the law of commerce and is not in any way specific to the mechanic's lien laws. Anoneditor 01:02, 6 July 2007 (UTC)
