Legal Definitions - construction lien

A construction lien, sometimes also known as a mechanic's lien, laborer's lien, or artisan's lien, is a legal claim placed on a property by someone who has provided labor, services, or materials for its improvement or construction but has not been paid. It acts as a security interest, meaning the person or company owed money (the lienholder) has a legal right against the property itself. This ensures that if the property owner or general contractor fails to pay for the work or materials, the lienholder may eventually be able to force the sale of the property to recover the unpaid debt. Construction liens are typically established by state law and are a powerful tool to protect contractors, subcontractors, and suppliers in the construction industry.

• Example: Unpaid Kitchen Renovation

  A homeowner hired a general contractor to completely remodel their kitchen. After the work was finished and the homeowner was using their new kitchen, they refused to pay the final installment of the agreed-upon price, claiming dissatisfaction with minor details that were not part of the original contract. To secure payment for the completed work, the general contractor filed a construction lien against the homeowner's property. This legal action puts a claim on the house, indicating that the contractor is owed money for the improvements made, and could potentially lead to a forced sale of the property if the debt remains unpaid.

• Example: Supplier Not Paid by Subcontractor on Commercial Project

  A large commercial office building was under construction. The general contractor hired a plumbing subcontractor, who then purchased specialized piping and fixtures from a local supplier. The general contractor paid the plumbing subcontractor for their work, but the subcontractor, facing financial difficulties, failed to pay the supplier for the materials. The supplier then filed a construction lien against the entire commercial property. Even though the property owner had paid the general contractor, and the general contractor had paid the subcontractor, the supplier still has a right to place a lien on the property because their materials were incorporated into the building and they were not paid for them.

• Example: Landscaper's Unpaid Work on a New Home

  A developer completed construction on a new residential home and hired a landscaping company to install the lawn, trees, and garden beds. The landscaping company finished all the work, transforming the property's exterior. However, before the developer could pay the landscaping invoice, the developer declared bankruptcy. To protect their investment in labor and materials, the landscaping company filed a construction lien against the newly built home. This lien ensures that even with the developer's bankruptcy, the landscaping company has a legal claim against the specific property they improved, which could allow them to recover their costs from the sale of the house.