February 2019
Level With Me By JeremyWyatt
Avoiding Pitfalls on the Way to Mechanics’ Liens in Maryland
When used effectively, mechanics’liens can turn a nasty payment dispute into a“cash the check”situation.
Mechanics’ Lien Benefits
Why do construction lawyers and savvy contractors care so much about mechanics’liens? Two benefits lead the pack: leverage and availability of money to pay your claim. To understand howmuch leverage mechanics’liens generate, it’s helpful to remember that liens are designed to foreclose upon a property and sell that property at auction to pay you, the construction contractor, for your work. Even before a foreclosure sale, a mortgage bank may require the property owner to get an expensive surety bond protecting the property from your lien. All of that — the foreclosure, the bond, and the expense —means that property owners listen when someone mentions a mechanics’lien. Having a claim on real property and the property owner’s attention also means that there may be a lot more money available to pay your claim than in a“typical”payment dispute. For example, which of us has not been told by someone up the chain,“I can pay you as soon as I get paid by the owner/general contractor/upstream sub.”Well, when using a mechanics’lien, you don’t have to rely on whomever you have a direct contract with. With the lien’s generated leverage, the project’s owner (and even sometimes the owner’s bank) is suddenly interested in getting rid of your lien—which often means getting you paid. And if all else fails, the project’s property is still available to be sold to pay out anyone that may have a lien on the property, including you.
Pitfalls
The other side of the mechanics’lien coin in Maryland, however, is that liens are scrutinized very carefully by courts, and you can lose your right to a lien with a single misstep. Here are three top pitfalls to avoid when using mechanics’liens in Maryland. First , Maryland law is crystal clear that a petition for a mechanics’lien must be filed within 180 days of the last day you worked on the project for which you are seeking a lien. To revise an idiom, if you are a day late, you are going to be more than a dollar short because your lien will be thrown out. Anyone that does not have a direct contract with the project’s owner has an additional deadline in that they must submit a written notice to the owner that they intend to lien the project within 120 days of the last day worked. Second , Maryland law requires“material papers”to support a mechanics’lien from the moment a petition is filed. Unlike most lawsuits, you have to“prove it”from day one by attaching to your petition the papers or affidavits that show the nature of your work, the date of your work, and the cost or price of your work. Failing to attach those material papers can be just as fatal to your mechanics’lien as missing a deadline.
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jwyatt@harrisonlawgroup.com
www.HarrisonLawGroup.com
(410) 832-0000
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