Value of Mechanics Lien

#4 of the Top 10 Misconceptions about Mechanic's Liens

The value of a mechanic's lien is equal to the contract balance owed to the claimant at the end of the project

Very often yes, however...

The value of a mechanic's lien is limited to the labor and/or materials and/or equipment etc. that are actually incorporated into the property. A lumber supplier who supplies $10,000 of lumber to a framing subcontractor for use on a particular property will only have mechanic's lien rights for the quantity of lumber that is incorporated into the property.

Further, the value of a mechanics lien is equal to the lesser of:
  • 1) the value of labor and/or materials and/or equipment etc. provided to the project or
  • 2) the contracted price of the labor and/or materials and/or equipment etc. provided to the project

A lawsuit on a mechanics lien will require the claimant to prove more than a lawsuit on a contract claim

In regards to the value of a mechanics lien, the claimant must show:

  • 1) that either a valid Preliminary Notice was served or that no Preliminary Notice was required;
  • 2) that the mechanic's lien was timely recorded;
  • 3) that the lawsuit was filed within 90 days of the date that the mechanic's lien was recorded; and
  • 4) the value of labor and/or materials and/or equipment etc. provided to the project or the contract price owed to the claimant, the portion of this value that remains unpaid, and that the labor and/or materials and/or equipment etc. were actually "incorporated" into the project.

Inclusion of the labor and/or materials and/or equipment etc. on the project

It is important to note that the entirety of labor and/or materials and/or equipment etc. does not need to actually be "included" in the building.

For example, a framer will cut pieces of lumber but not all of those pieces will actually become part of the building. Cutting off end pieces of lumber is a necessary part of the process and the value of the mechanics lien includes the whole stick even though the end pieces are scrap and as such are discarded.

Likewise, equipment used on the project will not be included or "incorporated" in the building; the claimant need only show that the equipment was used to improve the project and therefore is part of the value of the mechanics lien.


More Information:The BEST Place To Purchase Downloadable Construction Forms:

Above article written by:
David J. Barnier,
Partner at Barker Olmsted and Barnier, APLC


Disclaimer -
This article presents a discussion of general laws, rules, and strategies related to mechanic's liens and other construction issues and is intended to provide background information that will assist the reader in understanding the general laws and rules that apply. Examples and hypotheticals are described in this article for the purpose of illustrating these general rules, however no information within this article should be relied upon when analyzing a specific real-life situation.

For each real-life situation that the reader experiences, it is necessary that the reader consult with an experienced construction law attorney to ensure that the reader's specific situation is evaluated. The laws and rules affecting mechanic's liens and construction are extremely complex and no attorney can provide in a writing an explanation that will empower the reader to use only the information in an article to evaluate how the law will apply to a specific real-life situation. In other words, the reader should not rely on the information in this article when addressing a particular real-life situation.