Fundamentals of Mechanics' Liens

A mechanic’s lien is a statutory right to ex parte place a lien, i.e., create a security interest, for the value of unpaid work, materials, or improvements to real property and improvements thereto. Ala. Code §35-11-210 through §35-11-234 (1975).

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The statute must be strictly followed. The lien will extend to the entire parcel if the property is within the city limits or to one (1) acre in addition to the actual improvements for property lying outside city limits. Mechanics’ liens survive death of the parties and may be assigned. The mechanics’ liens take priority over mortgages and encumbrances created after the mechanic commences work.

Who is a mechanic?

A “mechanic” is any person who performs work, provides materials, leases equipment, repairs, remodels, improves, or beautifies real property or buildings. General contractors, residential home builders, subcontractors, suppliers of materials or equipment, as well as laborers are mechanics.

The mechanics’ lien statute applies to private commercial and residential work. It does not apply to work performed on government-owned property. For public works projects, see Ala. Code §39-1-1 (1975). If you are dealing with collection on a commercial project, you will additionally use the Prompt Pay Act which provides for 12% interest and the recovery of attorney fees. Ala. Code §8-29-3 (1975). A mechanic’s lien does not allow for recovery of attorney fees.

When and where must a mechanic's lien be filed?

Before filing a mechanic’s lien, all subcontractors, material suppliers, and laborers must serve a notice of intent to lien on the owner of the property and should copy all interested parties, to include contractors and all persons with an interest in the property at any time the claimant was performing work or attempting to collect for work performed. Ideally, the notice should be sent by certified mail and include a legal description of the property, what work was performed, when it was performed, the amount owed, and from whom the debt should have been paid.

Although contractors are not required to give a notice of intent to lien, it is a good practice to do so, as it often causes unknown defenses to surface early. Following the notice of intent to lien, the mechanic must file in the probate court where the improved property lies a verified statement of lien which includes all the information in the notice of intent to lien and a direct statement that a lien is declared on the described property. The verified statement is essentially an affidavit of the mechanic or a person within the organization who has first hand knowledge of the work performed and balance due.

How to perfect a mechanic's lien in order to execute on it.

Mechanics have an extremely short window of opportunity to give notice, file a verified statement of lien, and begin the process to perfect their lien. Perfection of the lien begins after the filing of the verified statement with the filing of a lawsuit in the circuit court where the property lies where the amount in controversy exceeds $50.00. For contractors, this means that the lawsuit must be filed within six (6) months after maturity of the indebtedness. Where date of maturity is unclear, suits should be filed within six months (6) of the last work performed or last day materials were provided. Laborers only have 30 days to file their suits. Subcontracts must file within four (4) months.

The lawsuit may contain other theories of recovery but must include a separate count to enforce the lien. The verified statement of lien should be attached to the complaint. The lawyer filing the suit should have a copy of the deed to the property in hand and must name all parties with an interest in the matter.

The final order in the matter, or the finding of the jury, should include a statement that the lien is established, due to be enforced, and that the property shall be condemned for the satisfaction of the amount of the lien proven, plus interest thereon. Collection on the perfected lien begins with a writ of execution and ends with a sheriff’s sale of the property.

With great privileges come great responsibilities. Failure to strictly follow the statute may result not only in the loss of the lien, which may be the only avenue of collection for your client, but in a counterclaim for slander of title. Read the statute at every juncture of the process.

About Rennie Moody:

Rennie Moody, a solo practitioner in Florence, Alabama, is insured by AIM and represents the N-N/W district of AIM’s Local Advisory Council Member. Rennie has practiced in many areas of the law but now focuses primarily on commercial litigation and business transactions. She currently serves as a bar examiner for the Alabama State Bar.