What is a Mechanic's Lien?

Contrary to what their name may suggest, mechanic’s liens are generally used by suppliers and subcontractors. These liens are legal claims against a property which has been remodeled or otherwise improved, and essentially allow the supplier or subcontractor to hold the property owner responsible for the contractor’s failure to pay for labor or materials.

You Can Be Responsible for a Contractor’s Failure to Pay

Mechanic’s liens are allowed based on the rationale that the supplier/subcontractor has a right to be paid for the items they supplied or work they performed. As the person who stands to benefit from the work performed, you will be ultimately responsible for paying the supplier or subcontractor.

Although you do have the right to sue the contractor to recover the money you were forced to pay, this can take a fairly long time, and it can be particularly difficult to get money from someone who doesn’t pay their bills. In the meantime, you will be forced to pay off the supplier to avoid having your house sold to satisfy the mechanic’s lien.

How You Can Avoid Mechanic’s Liens

1. Use Joint Checks to Ensure Suppliers Get Paid

The easiest way to ensure that suppliers and subcontractors get their money is to pay the contractor with joint checks. These checks are made out to both the contractor and the subcontractor/supplier, and require endorsement from the ultimate beneficiary before they can be deposited or cashed

2. Get a Lien Waiver

Relatively recent law changes have made it much harder to shield yourself from a lien through the use of a waiver, but it may still be possible in certain circumstances. For more information about whether or not the new statutory forms will help you, contact our Plano business attorney today.

3. Pay the Suppliers and Subcontractors Yourself

As a last resort option, you may be able to avoid these mechanic’s liens by paying the subcontractors and suppliers directly. There are many complications with this, however, because you may then be viewed as an employer for the purposes of withholding income tax and Social Security. If this is an option you are interested in pursuing, it is crucial to discuss your situation with an attorney first.

Learn more about mechanic's liens in our frequently asked questions page.

For counsel regarding mechanic’s liens, contact our Allen business lawyer today at (972) 200-3078.

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