What Is Mechanic's Lien?
A mechanic's lien gives unpaid contractors, subcontractors, or material suppliers a claim against your property. If you don't pay—or if your general contractor doesn't pay the subs—they can file a lien that clouds title and blocks sale or refinance. Filing deadlines vary by state (often 30–120 days after work ends). Many states require preliminary notices before a lien can be filed. You can remove a lien by paying, negotiating a release, bonding it off, or challenging it in court. Prevention: use lien waivers and joint checks. The classic trap: you pay the GC in full, but the GC doesn't pay the electrician—the electrician liens your property anyway.
A mechanic's lien is a lien that unpaid contractors, subcontractors, or material suppliers can file against your property to secure payment for labor or materials.
At a Glance
- What it is: A lien filed by unpaid contractors, subs, or suppliers against the property.
- Why it matters: Clouds title; blocks sale and refinance until resolved.
- Filing deadline: Varies by state—typically 30–120 days after last work or delivery.
- Prevention: Lien waivers at each payment; joint checks for subs when possible.
How It Works
Who can file. General contractors, subcontractors (electricians, plumbers, framers), and material suppliers (lumber yards, HVAC distributors) can file mechanic's liens if they weren't paid for work or materials that improved the property. The lien attaches to the real estate—not just the person who hired them.
Preliminary notice. Many states require subs and suppliers to send a preliminary notice (or "notice to owner") within 20–30 days of first work or delivery. If they don't, they may lose lien rights. As the owner, you want to receive and track these—they tell you who might lien if not paid.
Filing deadline. Each state sets a deadline (often 30–120 days after last work or material delivery). Miss the deadline and the lien right expires. Once filed, the lien becomes an encumbrance on title.
Lien priority. Mechanic's liens typically relate back to when work started—they can prime your mortgage in some cases. That's why lenders require lien waivers at draw disbursements.
Removal. Pay the claim and get a lien release. Negotiate a discount if the claim is inflated. Bond off the lien (post a bond so the property clears; the claimant sues the bond instead). Or challenge the lien in court if it's invalid (wrong amount, wrong property, missed deadline).
Real-World Example
Sub files a lien because the GC didn't pay—investor paid the GC in full.
Rachel does a $85,000 rehab on a flip in Memphis. She pays the general contractor in full at completion: $85,000. The GC never pays the HVAC subcontractor—$12,400 for the new system. The sub files a mechanic's lien 45 days after last work (Tennessee allows 90 days).
Rachel's buyer's title company finds the lien at closing. The sale stalls. Rachel has no leverage against the GC—he's dissolved his company. She negotiates with the sub: $9,200 (75% of the claim) in exchange for an immediate lien release. She closes 3 weeks late and eats the discount. Next flip: she uses joint checks for subs over $5,000 and requires lien waivers at every draw.
Pros & Cons
- Subs and suppliers have a way to get paid when the GC goes rogue.
- Preliminary notices give you visibility into who's working on your property.
- Lien waivers and joint checks are effective prevention tools.
- Bonding off preserves your timeline when you're disputing the claim.
- You can get liened even when you've paid the GC—the sub's claim is against the property.
- Liens block sale and refinance until resolved.
- Resolving liens costs time and money; negotiated discounts still hurt.
- State rules vary—deadlines, notice requirements, and priority are different everywhere.
Watch Out
- Execution risk: Require lien waivers (conditional, then unconditional) at each payment. Don't release the final draw without a final waiver from the GC and all subs.
- Compliance risk: Preliminary notice requirements vary by state. In California, subs must serve notice within 20 days of first work or they lose lien rights. Track who's on the job.
- Modeling risk: Factor lien risk into your rehab budget. Hold 5–10% until all waivers are in. Joint checks add admin but protect you.
- Exit risk: A lien clouds title and kills a sale. Resolve before listing—or at least before the buyer's title search runs.
Ask an Investor
The Takeaway
A mechanic's lien lets unpaid contractors, subcontractors, or suppliers put a claim on your property. You can get liened even if you paid the GC—the sub's remedy is against the property. Prevent with lien waivers and joint checks. Resolve by paying, negotiating, or bonding off. Don't close a rehab without final waivers from everyone.