What Are Mechanic’s Liens?
Mechanic's liens are legal ways to help the vendors and laborers assure that they will be paid for their services from the owner of the property. This is especially significant for big construction projects that can cost thousands of cash.
Due to the high costs of construction projects which cause some property owners to neglect paying their construction bills on time, the mechanic's lien is used by the laborers to ensure that they won't be cheated.
When the owner of the property fails to pay for the workers' services rendered, the contractor or the group of workers may submit a 20-day notification to the project owner, telling him that there will be a mechanic's lien that will be issued if the bill is not fully paid on a specified date. This schedule is determined by the state's mechanic's tax lien laws.
When a mechanic's lien is laid on the said property, it will then ensure that the debts will be paid off right away when the property is sold. A mechanic's lien can indeed gravely limit what the property possessor can do with the said property until the debt is fully paid. In some cases, lenders refuse financing in the future when there are still liens that remain on the said property.
Just a reminder though, filing a mechanic's lien still not fully ascertains that the vendor will be paid off. A property can have as many liens as it can and if a property is multi-liened and is sold by the property holder's mortgage company for back taxes, the liens will then be paid off in the arrangement in which they're filed. When money runs out, other lien bearers remain unpaid still. But there are also some states that do require all debts acquired by the new landholder to be paid during the time of sale. In any way, these methods prevent the current landowner from making any income on the said property without first paying off old debts.
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