Mechanic's Lien
Also known as: Construction Lien, Materialman's Lien, Contractor's Lien
A legal claim filed against a property by a contractor, subcontractor, or material supplier who was not paid for work done or materials provided. In new construction, this can affect the buyer if the builder did not pay their subcontractors.
Detailed Explanation
When a subcontractor installs plumbing in your new home but the builder does not pay them, that subcontractor can file a mechanic's lien against your property — even though you had no direct relationship with them.
A mechanic's lien is a cloud on your title. It must be resolved before (or at) closing, or you could inherit the builder's unpaid debts.
Title searches and title insurance are your primary protections against mechanic's liens. The title search should reveal existing liens, and title insurance protects you against liens that were not discovered.
In Your Contract
Your contract may address mechanic's liens in the closing conditions section. Title insurance provisions are your key protection.
Key Points
- 1Filed by unpaid contractors or suppliers against your property.
- 2You can be affected even though you had no relationship with the subcontractor.
- 3Title searches should reveal existing mechanic's liens.
- 4Title insurance protects against undiscovered liens.
- 5Mechanic's lien risk increases if the builder is financially distressed.
Related Content
Have a new construction contract? Scan it for $49 at fineprint.homes
Scan Your Contract