Know The Law: Mechanic’s Lien – 12/2010

December 13, 2010

Published in the Union Leader

This question was answered by Joel Emlen of the McLane Law Firm

Q: I am scheduled to perform work on a construction project and want to take all necessary steps to get paid. What are my options?

A:  You likely qualify for a mechanic’s lien if the project is on private real property. In general, under New Hampshire RSA Chapter 447, any person who, by himself or with others, performs labor or furnishes materials to improve real property may have mechanic’s lien rights. A mechanic’s lien is “created” as soon as a contractor or supplier performs work. That person must have a direct contractual relationship with: (1) the owner of the private real property; (2) the general contractor; or (3) a first-tier subcontractor of the general contractor.

The lien has no legal effect until it is “perfected.” The first step to perfect a mechanic’s lien is by the contractor or supplier providing written notice to the owner either before or after providing labor or furnishing materials. The amount of the lien may be adversely affected if notice is provided after performing labor or supplying materials. The notice should identify the project, the contractor, the entity with which the contractor has its direct contract, the date of the contract, and that the contractor or supplier is asserting its mechanic’s lien rights under RSA Chapter 447.  Contractors and suppliers also must provide the owner with a written accounting of the labor performed or materials furnished.

If an owner fails to make payment in full, the second step to perfect a mechanic’s lien is by filing suit and recording the attachment with the registry of deeds in the county in which the property is located. Before filing suit, a party should review any contract that governs its relationship on the project to status whether it contains any provision affecting the filing of a lien.  For example, some contracts require that parties submit to arbitration or mediation as an alternative, or a preceding condition, to litigation. If such a provision exists, a party may file a lawsuit to act as a “place holder” in order to establish and protect its mechanic’s lien rights.

If a party decides to bring suit, it must do so within 120 days after the last date that it performed labor or furnished materials.  A party may not attempt to extend the 120-day deadline by performing work that is not part of the original contract or that is merely repair work.  Simply stated, meeting this deadline is critical to secure your mechanic’s lien rights.

Finally, contractors and suppliers who work in multiple states must be aware that mechanic’s lien requirements, including filing deadlines, differ from one state to another, so it is important to consult with an attorney licensed in that particular state before taking any action.

Know the Law is a bi-weekly column sponsored by The McLane Law Firm.
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