Money & Debt

The following question was originally submitted to John Roska, a lawyer Someone who represents clients in courts or who gives legal advice and writer for the weekly column "The Law Q&A" in the Champaign News Gazette. The article has been updated to include changes in the law and additional information.

Question

I had someone put a deck on my house. I paid the amount of the estimate, plus some extra for work needed to complete the job correctly. I paid less for the extra work than the contractor wanted. But there was nothing in writing besides the original estimate. When I tried to refinance my mortgage A loan given by a bank that is used to help someone buy a home , I found out they filed a mechanics lien A claim against property that may be used to repay a debt on my house. It was for the amount that I refused to pay. Is that legal? How do I get rid of it?

Answer

If your house is owner-occupied and single family, they should have told you about the lien. This should've been done within 10 days of recording it. The law says they’re supposed to, but not doing that doesn’t make the lien invalid. To undo the lien you’ll have to resolve the charge being disputed. 

The Mechanics Lien Act has been around since 1825. It helps contractors get paid for making improvements to property. A mechanics lien provides security, or collateral Property a person promises to give up if they do not repay a loan , for a debt.

The lien makes the property that was worked on collateral for the debt. If the owner doesn’t pay for work or materials, the contractor could go after the property. In theory, a mechanics lien can be foreclosed upon just like a mortgage. That is why allowing a lien claim on your title likely is a breach of your mortgage.

In practice, it doesn’t often go that far. Usually, the issue is resolved because of the threat of foreclosure A forced sale of property when a person doesn't make payments on a loan , and the “cloud on title” created by the lien.

A contractor has 2 years from completing their work to record a lien or to sue to foreclose. But they only have 4 months to either record a claim or to sue to be able to have a superior claim on the property than the mortgage or later purchasers. The contractor also has let you know before your first payment that they will submit a sworn statement about any subcontractors performing work.

The contractor has to "put up or shut up" by suing for the lien claim within 2 years of completing work. If they don’t, they lose the lien.

You can speed things up by sending the contractor a written demand to sue. If they don’t sue within 30 days of getting that demand in proper form, the lien is lost.

In any court case, the contractor must prove you agreed to the extra work, and that you agreed to its price. Regular court rules apply to that case.

If you settle To resolve a case before finishing a trial , you need to get from the contractor a Final Satisfaction and Release in recordable form to record on your title. Then all can see the lien no longer exists.

If the contractor wins in court, you’ll have to pay off the judgment An official decision by a court that ends the dispute between parties plus 10% interest to release the lien. If he loses, the Court will enter judgment expunging the lien.

You can sue the contractor for $2,500 in damages and attorney fees if they:

• Fail to release a paid-off lien,
• Refuse to release a lien after failing to sue within 2 years, or
• Refuse to release a lien after failing to sue within 30 days of a written proper demand.