Construction Lien Law Basics Reference

Why this matters

A construction (or mechanic's) lien gives a contractor, subcontractor, or material supplier the legal right to claim against a property when they're not paid. Knowing how to preserve lien rights - and the deadlines that apply - is the difference between getting paid and absorbing a bad-debt loss. Every state has its own lien law, but the general principles are consistent. This is the field card for the business side.

What a construction lien does

A construction lien (also called mechanic's lien) is a legal claim against real property. When properly filed:

• Property cannot be sold without the lien being resolved (paid off or released)
• Lien attaches to the property's title
• After foreclosure proceedings, the property can be sold to satisfy the lien
• Liens are a form of "secured" debt - much stronger than an unsecured invoice

The mere THREAT of a lien (a notice of intent) often gets a slow-paying customer to pay. The actual filing of a lien gets results.

Who can file

Most state lien laws allow these parties to lien:

• General contractor (with direct contract with the owner)
• Subcontractor (with contract to the GC)
• Sub-subcontractor (one tier below sub)
• Material supplier (delivers materials to the project)
• Design professional (architect, engineer)
• Laborer (worker hired directly)

Each level has its own notice requirements. The deeper down the food chain, the more procedural notices are required.

Key concepts

Preliminary notice (also called preliminary 20-day notice):

• Filed at the start of work
• Notifies the owner that this contractor or sub is on the project
• Required in many states by sub-tier and material suppliers
• Time-sensitive: typically 20 days from first delivery / first work
• Failure to file = loss of lien rights

Notice of intent to lien:

• Filed before the actual lien
• Often a "warning shot" - gives the owner a chance to pay
• Typically required 30-60 days before the lien itself
• State-specific timing

Mechanic's lien:

• The formal lien filing
• Filed with the county recorder where the property sits
• Includes: amount owed, property description, who owes
• Has a deadline - typically 60-180 days from last work
• Lien filing itself has cost (modest filing fee + attorney fees)

Lien release / waiver:

• Counter-document to a lien claim
• "Conditional" (releases lien IF payment is received) or "unconditional" (releases lien regardless)
• Owners ask for these as condition of payment to GC; GC asks subs for them
• Be very careful signing unconditional releases without payment in hand

Timeline (typical state)

Example (California is one of the more procedural states):

Day 1: Contractor or sub starts work or delivers materials Day 1-20: Sub-tier files preliminary 20-day notice Last work: Contractor's last day on the job Day 60-90 after last work: Window to file lien (typically 90 days in California for direct contractors) Day 90-180 after lien: Window to file lawsuit to enforce lien

Miss any deadline and lien rights are lost.

Each state has different windows; this is just illustrative. Always check your state's specific lien law.

Why deadlines matter

A late lien is invalid. The property owner can simply ignore it. The unpaid amount becomes unsecured debt with no priority on property.

Calendar every job:

• 10-day notices (or shorter, per state)
• Preliminary notices (often 20 days from start)
• Lien filing window (often 60-180 days from last work)
• Lien enforcement window (often 90-180 days after filing)

What a lien proves vs what it doesn't

A filed lien proves:

• Contractor was on the property
• An invoice was issued
• The amount is claimed
• Procedural notice requirements were met

A filed lien does NOT prove:

• The work was done correctly
• The customer agreed to the price
• The materials were as specified

For disputes about quality or scope, the owner can defend against the lien. Liens get most powerful when work was clearly performed and clearly invoiced.

Special cases

Bonded jobs (commercial):

• General contractor often required to post a bond
• Bond covers subs/suppliers if they aren't paid
• Bond claim filed instead of (or in addition to) lien
• Bonded jobs have separate procedural requirements

Public projects:

• You CAN'T lien government property
• "Public works" bond claims replace lien rights
• Different procedures; often very strict timing
• Specialized expertise common

Owner-occupied residential:

• Most states allow lien filing
• Owner has homestead protections in some states
• Foreclosure proceedings are more complex
• Often the lien threat alone gets payment

Mortgaged property:

• Lien holders are typically secondary to existing mortgages
• "Junior" position; collection in foreclosure is uncertain
• Still worth filing because property can't sell with lien outstanding

When to file vs when to negotiate

File a lien when:

• Payment is significantly past due (typically 60+ days)
• Customer is unresponsive to invoice or collection attempts
• Customer has disputed work but won't engage to resolve
• You're at or near your lien filing deadline

Negotiate first when:

• Customer is responsive and discussing payment
• Customer has legitimate dispute that might be resolvable
• Customer's financial situation suggests inability to pay (lien won't help if they're broke)
• Relationship matters and a lien would damage it

Sometimes a notice of intent to lien is enough; sometimes the actual filing is required.

Common lien mistakes

• Miscalculating "last work" date. Last work doesn't include warranty work or punch-list items; it's substantial completion.
• Filing too late. Missed the deadline → lien is invalid → unsecured creditor.
• Wrong property description. Lien doesn't attach to the right parcel; invalid.
• Wrong owner name. Lien against wrong party; can be attacked.
• Not serving preliminary notices. Sub-tier loses lien rights without proper preliminary notice.
• Signing unconditional release before receiving payment. Now you've released the lien; if check bounces, you have no recourse.
• Trying to lien public property. Use bond claim instead.

State-specific resources

Each state's Construction Lien Statute is the governing law. Key sources:

• Your state's licensing board - often has plain-language summaries
• State contractor association (e.g., AGC, NECA chapters) - legal resources
• State Bar Association - sometimes "consumer" guides
• Construction lien attorney - for complex situations or first lien

Working with attorneys

References

• State-specific Construction Lien Statutes (varies; consult your state)
• AGC (Associated General Contractors) legal resources
• ABA Forum on Construction Law
• NACM (National Association of Credit Management) - credit and lien resources
• Construction Financial Management Association
• State Bar Association consumer construction guides