What are Real Estate Mechanics Liens?

30 Jan What are Real Estate Mechanics Liens?

A mechanic's lien is a security interest in the title to property real estate, usually used by individuals who have supplied labor or materials to the owner that have improved the property. Mechanic lien’s exists for both real property and personal property. In the realm of real property or real estate, it is called by various names, including generically a construction lien. It also can be called a materialman's lien or supplier's lien when referring to those supplying materials.

For individuals or companies that supply labor the mechanics lien may be called a laborer's lien or a design professional's lien when referring to architects or designers who contribute to a work of improvement. In the realm of personal property, it is also called an artisan's lien. The term “lien” comes from a French root (via William the Conqueror), with a meaning similar to link; it is related to “liaison.” Mechanics liens on property in the United States date from the 1700s.

Mechanic Liens are severe liens that are commonly used when a mechanic or handyman works on a house and the owner fails to pay him, so the mechanic or handyman puts a lien against the house and any other property of the owner’s in that county. The buyer or title company would have to pay this person off before the seller gets the difference and the house is sold. Now this could be a deal-killer if you are looking to invest in a $10,000 property but there’s a $50,000 lien against it. In this case even though the lien might be wiped out you might face the anger of the person who put that lien up and they might challenge this in court. So better make sure that the numbers work and if they don’t stay away from properties with high mechanics liens.