Home renovation fever continues to sweep across America, with homeowners investing more than ever in upgrading their living spaces. According to a recent survey by Houzz, the median spend on home renovations skyrocketed by 60% in just three years, reaching $24,000 in 2023.
However, if you plan to join this renovation trend, you need to be aware of a potential pitfall that could turn your dream project into a legal nightmare: a mechanic’s lien.
What is a mechanic’s lien?
A mechanic’s lien is a legal claim that workers can put on your property. The word “mechanic” here can include anyone who works on your property or provides materials to improve it. This could be general contractors, carpenters, plumbers, electricians and material suppliers. Any worker or professional working on your home renovation project can file this claim if they believe they have not received full payment for their work or materials.
This lien becomes attached to your property’s title, potentially affecting your ability to sell, refinance or obtain a home equity loan. It also creates a cloud on the title, which may discourage potential buyers or lenders until you resolve the lien.
What can you do if you have a lien?
As a homeowner, receiving a preliminary 20-day notice from potential lienholders before work begins is standard procedure. In this case, communicating with the lienholder may clear up the issue since some liens result from misunderstandings or errors.
However, if they formally file a mechanic’s lien, carefully review its details. Check if the information is accurate and that they filed it within the legal timeframe, which is usually 120 days after work completion. You can challenge an invalid lien or negotiate a settlement if you dispute the amount.
Don’t let your dream home turn into a nightmare
While you can resolve some mechanic’s liens through direct communication and negotiation, others may lead to complex legal proceedings that can be challenging to navigate on your own. If you find yourself in this situation, seeking professional guidance can help you understand your options and rights.