What Is a Mechanic’s Lien?
If you are in the construction industry, you already understand that even a simple project typically has several different companies working on different aspects of the project at any given time. Ultimately, all of those sub-contractors must report to the general contractor who, in turn, reports to the property owner. Payment for services rendered trickles down from the property owner to the general contractor, and eventually down to the sub-contractors and sub-sub-contractors. What happens if payment doesn’t trickle down, though? Fortunately, the law does offer a remedy in the form of a mechanic’s lien.
At its most basic, a mechanic's 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. Imagine, for example, that you operate a drywall business and that you were contracted by company XYZ to install drywall for a new home being built. XYZ is the general contractor. Everything goes well on the project and you finish ahead of schedule; however, when it comes time to collect payment, company XYZ starts to dodge phone calls and does not return e-mails. Since your contract is with the general contractor, not the homeowner, what recourse do you have to ensure that you are paid? Filing a lawsuit against company XYZ is always an option; however, a lawsuit will cost you time and money, and it could take months, even years, before you get a judgment against the company —and then you still need to collect on the judgment! The concept of a mechanic’s lien was developed to provide a better option for someone in just that position.
A mechanic's 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. In Pennsylvania, a mechanic’s lien actually has a high priority compared to other liens because it “relates back” to when the work commenced on the property. The right to file a mechanic’s lien also extends to both sub-contractors and sub-sub-contractors. Furthermore, a mechanic’s lien in Pennsylvania will usually survive not just the sale of the property, but foreclosure as well, at least in most cases.
If you are a contractor and you are having trouble securing payment for work performed on a project, you may have the right to file a mechanic’s lien. Consult with a Pennsylvania construction law attorney as soon as possible to discuss your options. Contact the construction law attorneys at Curley & Rothman, LLC by calling 610-834-8819 today to schedule your free consultation.