Mechanic’s Liens Help Contractors and Sub-Contractors Get Paid
In Maryland, a mechanic’s lien statute gives contractors and subcontractors a powerful tool to obtain payment for materials and services. A mechanic’s lien is a means by which a person or company that provides labor or materials on a construction project can place a lien against improved real property, for the value of the unpaid labor or materials – but only if the requirements of the mechanic’s lien statute are strictly adhered to.
Maryland’s mechanic’s lien statute is complicated, and there are some important aspects to this legal remedy that contractors and subcontractors should always keep in mind: Any person or company that furnishes work or materials to a construction project under a contract potentially may establish a mechanic’s lien. Contractors, subcontractors and suppliers all can claim such a lien, regardless of whether they have a contract directly with the owner of the property, as long as the particular labor was performed for or about the subject building, and as long as the particular materials were for the subject building project.
A mechanic’s lien is only available for certain types of construction projects, however. Newly constructed buildings are subject to mechanic’s liens, though what exactly constitutes a “building” is sometimes an issue, because not every type of structure on land constitutes a building for these purposes. For construction projects that involve repair or renovation of existing buildings, a mechanic’s lien is only available if the project involves the repair, re-building or improvement of the building to the extent of 15% of its value. Condominium units and the common elements of condominiums are also subject to mechanic’s liens, but special notice requirements apply to condominiums.
A very important aspect of Maryland mechanic’s liens is a requirement to give written notice of an intention to seek a lien, in some circumstances, and strict time limitations apply to giving notice and bringing suit.
Anyone seeking a mechanic’s lien who does not have a direct contractual relationship with the property owner – for example, subcontractors, and in many cases material suppliers – must comply with notice provisions set forth in the mechanic’s lien statute. When this type of notice is required, it must be mailed by the lien claimant to the property owner within 120 days after the claimant performed the work or furnished the materials. There are a lot of nuances regarding when this 120-day period begins to run, and many court cases addressing this issue.
Separate and apart from giving any required notice of an intention to claim a mechanic’s lien, the actual petition seeking to establish the mechanic’s lien must be filed in the appropriate Circuit Court no later than 180 days after the work has been finished or the materials furnished. The correct parties must be named as defendants in the suit, and there are detailed requirements for what must be included in the petition that is filed with the court.
After a petition is filed with the court, there is a two-step process by which the court first reviews the papers that have been filed, and holds an initial show-cause process and proceeding to determine if there is sufficient cause to establish an interim mechanic’s lien. The court typically will set a bond for entry of an interim lien. If an interim lien is established, then in a second stage the court will hold a trial on the merits of whether the mechanic’s lien should continue thereafter, until satisfied. At any time after a petition to establish a mechanics lien is filed, the property owner can file a petition to have the property released from the lien upon the filing of a bond sufficient to protect the lien claimant. Once a lien is established, the lien claimant then has one year to file a petition to enforce the lien.
Mechanic’s liens can be a very powerful means for contractors, subcontractors and suppliers to ensure payment, but they are complicated. The Maryland mechanic’s lien statute differs from those of other states, and very strict time limitations apply to Maryland mechanic’s lien claims.
If you are a contractor, subcontractor or supplier seeking payment for labor or materials provided in Maryland, or if you are a Maryland property owner that has received notice that someone intends to assert a mechanic’s lien against your property, or has already petitioned the court for a mechanic’s lien, our firm can answer your questions and provide legal guidance. We have the depth of experience to provide detailed guidance related to Maryland mechanic’s liens, the Maryland trust fund statute, the Maryland Prompt Payment Act, and the Maryland Little Miller Act. Please contact us at [email protected] or (410) 489-1996.