If you own a business in Missouri that contracts with property owners to supply construction, equipment, supplies, or laborers, you should become familiar with the mechanic’s lien, a legal document that could affect your operations, and even your profitability.
A mechanic’s lien is a claim made for payment against a homeowner’s property by a contractor – the lien claimant – who performed construction work on the property but was not paid.
1. The subcontractor must file an “Intent to Lien” within 10 days prior to filing of the mechanics lien. The subcontractor must obtain consent from the contractor, signed by the property owner. If such consent is not obtained, lien rights are forfeited.
2. The contractor must provide notice prior to receiving any monies from the property owner, or 5 days prior to the date of any proposed transfer (intended sale on a residential property). The mechanic’s lien must be filed within 6 months of the last day services or materials were provided. Equipment lessors working on commercial properties where the rental exceeds $5000 must provide the property owner with notice within 5 business days of the removal of equipment from the property.
3. Mechanics liens must be notarized. Non-notarized claims cannot be filed. File your lien at the Recorder of Deeds office in the county which serves the property location.
4. Fees (interest, attorney’s fees, damages) cannot be included in your claim. You may request payment only for unpaid labor, material, and/or equipment, and routine profit and overhead.
5. Any liens related to mortgages or pre-existing loans take priority. However, if no liens were filed on the property prior to the start of the project (“pre-existing encumbrances”) the lien claimant takes priority. In Missouri, mechanic’s liens take priority over construction loans, even when the mortgage or deed of trust is filed prior to the start of construction.
When filing a mechanic’s lien in Missouri, many laws apply, based on a variety of circumstances. The right experience and guidance can make all the difference. Please contact Quinn Estate & Elder Law and ask for Brian Quinn.