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A mechanic's lien is a type of lien that contractors use to ensure that they are paid for their work. A mechanic's lien is usually against a home or a commercial building. The contractor is the lien holder.
When to File
If you have been unable to obtain payment for your services, your only recourse may be to file a mechanic's lien on the property. You also could try using a debt collection agency.
Effects
When a mechanic's lien is placed on a property or building, the property owner can't sell the property without paying the lien holder what is owed. Lien holders will give a letter of satisfaction to the property owner once the debt is paid.
Filing a Lien
Filing requirements vary, but the general steps are to notify the property owner of intent to file a lien, which gives them a period of time to pay the debt. After that period is up, the contractor can file a lien with the county court. The contractor must file a court action to enforce the lien.
Releasing a Lien
Once the debt is paid, the lien holder files a legal lien release form with the county recorder to have it removed.
Considerations
Filing a mechanic's lien can be confusing and cumbersome, but lawyers can help you file the forms. Hiring an attorney may be worth the expense if you are having difficulty understanding the requirements of filing the lien.
Source:
Federal Deposit Insurance Corp.
California Contractors State License Board
Resource:
Types of Home Liens
Colorado Mechanic's Lien Information
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