In most states – including New Hampshire and Vermont- a person who furnishes materials or performs work erecting or repairing a building or similar structure has a priority over other creditors. This priority is known as a materialman’s or mechanic’s lien, and applies to both contractors and subcontractors. By completing the necessary steps in court to “perfect” such a lien, a contractor or subcontractor (the “lienor”) can prevent the property from being sold or transferred until the debt is paid. This puts tremendous pressure on a homeowner or a general contractor to pay an overdue bill. A creditor can eventually obtain possession of the property and sell it to satisfy the judgment if the debt remains unpaid.
Mechanic’s liens are created and governed by state statute. The requirements of every such statute are very exact, and a person who fails to precisely comply with the statute takes a chance on being denied the lien.
The first trap is timing. Unless the necessary paperwork is filed within a certain number of days after the last day labor was performed, materials were furnished, or the bill was due, the lien will not be granted. Timing is also important because a mechanic’s lien can be defeated by the sale of the real estate to a bona fide purchaser who purchases property in good faith and without knowledge that there is a problem affecting the property. If appropriate notices have not been recorded in the appropriate county Registry of Deeds and the property is sold to a bona fide purchaser, the lienor’s rights are preempted and he or she will be unable to obtain a mechanic’s lien. Finally, a court hearing must be held before the lien can be “perfected” (or enforceable) against the homeowner or other creditors. Therefore, a potential lienor who waits until the last minute before trying to obtain the lien takes a chance on losing out.
Before granting the request, a judge will require complete and full information as to the basis for and the amount of the claim, why the attachment should be granted, and a detailed description of the premises to be attached. After the judge has approved the attachment, the lien must be recorded in the land records. After the court’s order approving the lien has been recorded in the land records, any member of the public who buys the property is legally charged with the knowledge that there is a lien recorded and a cloud on the title, and they will be held responsible for the debt. This effectively stops any sale of the property.
This law office has been aggressively pursuing mechanic’s liens to aid contractors and subcontractors who have not been paid for their work for nearly 30 years. If your company is in need of legal assistance to collect a debt and you think that a mechanic’s lien would be helpful, call our office at 800-909-LAWS (5297) or submit an online questionnaire through this website. Because mechanic’s lien rights expire after a relatively short period, please call right away to ensure that you do not waive your right to this very powerful collection tool.