Sunday, January 07, 2007

Dissolving the Mechanic's Lien

I have received numerous inquiries from homeowners who have had mechanic's liens placed on their property by contractors or subcontractors. They need to have the lien removed because they are trying to sell their property, refinance or obtain other loans. What can a homeowner do in this situation?

If the lien is not legitimate:

I received a recent e-mail from a homeowner who had a subcontractor place a lien on the property. The homeowner did not have a contract with the sub. His contract was with the general contractor only, and the contract specified that the GC was responsible for paying all subs.

In this case, the homeowner would have to file an action against the sub to dissolve the lien and probably bring in the GC as well. It may be possible to file an emergency application to dissolve the lien, but I assume that a court would only grant this if the lien were not properly perfected (proper steps were not taken).

If the basis for dissolving the lien comes from common law (homeowners are not liable for contractor's failure to pay subcontractors), then the homeowner would need to file a motion for summary judgment (the case could be decided on the law when the facts are not in dispute) in order to end the suit.

This is all clearly a huge hassle and expense for the homeowner. In addition, the homeowner would not be able to recover attorney's fees unless a statute provides for it. For that reason, the homeowner may end up negotiating with the sub, or posting a bond, in order to have the lien removed in the most expedient fashion possible.

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