Securing Payment for Construction and Repair Work – Mechanic’s and Artisan’s Liens

This description is for information purposes only.  For additional material, consult the Maryland Code and the List of Helpful Books at the end of this section. Anyone who has questions about the best legal strategy to pursue should get the advice of an attorney.

Background
Under certain conditions, contractors, subcontractors, certain laborers, and drycleaners can get a lien to make sure they get paid. A lien is a claim on the building or item worked on for the cost of the work. The owner must pay the cost of the lien or the building or item will be sold to pay for the work. 

Artisan’s Liens
An artisan’s lien is automatically created when someone takes an item to work on for someone else. Artisan’s liens also allow a laborer to retain an item he has created for someone until he has been paid. If the owner does not pay, then the worker can sell the property in 90 days. After selling the property, he can keep the amount due. Any extra money has to go to the owner . Md. Code Comm. Law §16-301 and §16-302 covers artisan’s liens.

For example, if a clockmaker fixes a clock for someone, the clockmaker has a lien on the clock until the owner pays the clockmaker. If the owner does not pay the clockmaker within 90 days, the clockmaker can sell the clock to someone else.

Before selling the item, the worker must give notice to the owner before the sale. The worker can give notice by:

1. Mailing a notice to the owner;

2. Posting a notice on the courthouse door or a bulletin board near the courthouse door in the county where the work was done;

3. Publishing the notice the newspaper once a week for two weeks; or 

4. Posting a sign at the worker’s business and on the receipt or invoice for the work.

Special Note for Dry Cleaners and Launderers
Dry cleaners and launderers can also just throw away any clothing left with them for more than 6 months. Shop owners must - put a sign in their shop warning customers that clothing left for 6 months will be thrown away.
Md. Comm. Law §16-302

Mechanic’s Liens
A mechanic’s lien is a way for contractors and subcontractors who supply labor or materials for construction to get paid for the work that they do. Using a mechanic’s lien, a contractor or subcontractor who has done work on a property can force property to be sold if the owner does not pay what they owe. Md. Real Property §§ 9-101-9-114 and Md. Rules 12-301-12-308 cover mechanic’s liens. 

A contractor or subcontractor can get a mechanic’s lien for every new building and some older buildings. Older buildings must be improved by 15 % of its value. For tenants of a building, the building must be improved by 25 % to get a lien. Buildings include separately leased units of nonresidential buildings, landscaping, digging of wells, construction of pools and fences, and leasing equipment for use on the property. Contractors or subcontractors can get a lien for unfinished as well as finished projects.
Md. Real Prop. § 9-101(b), Md. Real Prop. § 9-102 (a), Md. Real Prop. § 9-103(c).

Normally, a subcontractor would not be able to get payment from the owner of the building because the subcontractor does not have a contract with the building owner. Mechanic’s liens make it so that subcontractors to get payment from the owner. But, before a lien can be created, there must be a contract between a contractor and an owner of a property. There also needs to be a contract between the contractor and subcontractor. A contract can be any agreement for services or supplies on a building. The contract does not have to be written down.
Md. Real Prop. § 9-101(c)

When Mechanic’s Liens Are Not Allowed
Mechanic’s liens cannot be created for work on a public building. Also, the court will not make a lien if a person buys the property before the lien is created. A purchaser gets the property without a lien, even if the work is not finished, unless the purchaser is just buying the property to avoid a lien.
Md. Real Prop. § 9-102 (d)

There are also a couple special rules for subcontractors working on a single-family house that the owner plans to live in. In this case, subcontractors cannot get a lien for more than the amount that the owner owes the contractor. Also, a subcontractor cannot get a lien on a property if the owner has already paid the contractor.
Md. Real Prop. § 9-104

Time Limits
A contractor or subcontractor who wants to get a lien needs to file a petition within 180 days of completing work on the building. Sometimes determining the last workday is hard. The deadline should count from the last day of major work. Small repairs done after a gap in time will not extend the deadline.
Md. Real Prop. § 9-105(a)

Notice For Subcontractors
Subcontractors need to officially give owners written notice that they intend to get a lien before filing a petition. Subcontractors need to give notice within 120 days of the last workday. The notice requirement and the filing deadline start on the same day.  Sending notice does not affect the filing deadline. (For more on the filing deadline, see below.) The notice alerts the owner that the money that he may have paid to the contractor has not been paid to the subcontractor. Once he receives notice, the owner can hold on to the amount due the subcontractor from any future payments to the contractor. 
Md. Real Prop. § 9-104

Filing to Make A Lien
In order to get a lien, a contractor or subcontractor (also known as the “petitioner”) must file a complaint. The complaint should be filed in a circuit court in a county where any part of the land is located. A filing must include:

1. A petition to create the mechanic’s lien. The petition must include:

   • The name and address of the petitioner;
   • The name and address of the owner;
   • The kind of work done or the supplies delivered, the time when the work was done, the name of the person the petitioner worked for, and the amount due.
   • A description of the land and the building. The petition should also say if part the land is in another county. If the petitioner wants a lien on more than one building, the petition should say how much is due from each building.
   • A statement that if the building is not a new building, that it was improved by 15 percent;
   • If the petitioner is a subcontractor, a statement that the owner was given proper notice;
2. A sworn statement that gives all the facts necessary to show that the petitioner has a right to a lien on the property; and
3. Any original or sworn, certified or photostatic copies of papers necessary to the claim.

The complaint may be amended as long as the time for notice (if the petitioner is a subcontractor) or filing has not passed. However, the petitioner cannot increase the amount of the claim or the description of the land by amendment.
Md. Real Prop. § 9-105, Md. Rule 12-302, Md. Rule 12-303

Show Cause Hearing
After the complaint is filed, the court reviews the complaint and may ask the petitioner to explain some of the documents or add more documents to support the claim. It the court determines that there should be a lien; it will enter a “show cause” order. The show cause order tells the owner of the building to show why the lien should not be created. The owner has 15 days to respond.
Md. Real Prop. § 9-106, Md. Rule 12-304

The order, complaint and any exhibits are sent to the owner by certified mail. The order will set a date for a hearing to be held within 45 days of the date of the order. It will tell the owner that he may come to the hearing or file a sworn statement responding to the contractor’s claim. The order will also tell the owner that if he does not respond the facts in the petitioner’s documents will be assumed to be true. If the owner does not respond within the time allowed the court may rule on the lien application without a hearing.
Md. Real Prop. § 9-106, Md. Rule 12-304

At the show cause hearing, both petitioner and owner may present evidence in support of their claim. After the hearing, if the filed documents and the evidence agree on all of the relevant facts, then the court will enter a final order either creating or denying the lien. If the documents filed reveal that there is a dispute on the facts, but the court feels that there is probable cause to believe the petitioner has a right to the lien, the court may issue an interlocutory (or, “non-final”) order. The interlocutory order:

1. Creates the lien;

2. Describes the land;

3. States the amount of the lien;

4. Gives the amount of a bond the owner must pay to have the land released from the lien; and

5. Assigns a date for trial within six months.

Trial
If a trial is necessary, the court will set a date to try all relevant facts in the case. At the end of the trial, the court will make a judgment either creating or denying the lien. If the court creates the lien and the land extends into another county, the petitioner can get the lien to extend to that land.  To get the lien to attach to the land in the adjoining county, the petitioner must send a certified copy of the docket entries, of the court order, and of any required bond to the clerk of the court for that county.
Md. Real Prop. § 9-106, Md. Rule 12-304, Md. Real Prop. § 9-107

Release Of The Lien
Any time after the filing of the petition to get the lien, the owner may move to have the land released from the lien. The lien may be released either by filing a bond or paying the amount of the lien to the petitioner. To obtain a release of the lien by bond, the owner must make a motion asking that the court set a bond amount. After a hearing, the court will set the amount for the bond, and enter an order releasing the land when the bond is filed. If the lien has already been made, the owner may get the lien released by paying the amount due. After payment, the petitioner must file an “order of satisfaction” with the court. The clerk of the court will then enter the judgment satisfied. If the petitioner fails to file the order of satisfaction, the owner may move for entry of an order of satisfaction. The motion must be served on the petitioner before the motion is granted.
Md. Rule 12-307, Md. Rule 2-626

Enforcing The Lien
A lien is enforced through a motion made to the court. When the lien is enforced, the building is sold to pay the amount of the lien. The motion for enforcement may be filed at the same time as the petition to create the lien. The petitioner must file the motion to enforce the lien within a year of the date he first filed the petition to create the lien. If the judge grants the motion, he will set a deadline for the owner to pay the amount of the lien, or the land will be sold. The deadline he sets must be within 30 days. 

If there are other liens on the land and the amount the land sells for is not enough to pay every lien, each lien holder will get a part of the whole amount. Each part will be in proportion to the total amount of all liens on the property. A trustee appointed by the court will sell the property. An auditor will review the sale and then file a report with the court to approve the sale.
Md. Real Prop. § 9-109, Md. Rule 12-305, Md. Real Prop. § 9-108, Md. Rule 12-306, Md. Rule 2-543, Md. Rule 14-303

Alternatives To Mechanic’s Liens
Mechanic’s liens are not the only way for a contractor or subcontractor to collect a debt. The mechanic’s lien statute is not intended to take the place of other legal remedies. A contractor or subcontractor may also have a case for breach of contract. Anyone who has questions about the best legal strategy to pursue should get the advice of an attorney. 
Md. Real Prop. § 9-111

List of Helpful Books
These books can be found at many Circuit Court Libraries. There are no official court forms for petitioning for a mechanic’s lien. Any potential petitioner who is not clear on what to do should consult an attorney. Circuit Court Clerks cannot give legal advice. A Clerk will not review a petition and acceptance by a Clerk does not mean that the petition meets all of the requirements of the law.

James D. Fullerton, Mechanic’s Liens in Maryland, http://www.fullertonlaw.com/10MarylandMechanicsLiens.php

2 Robert D. Klein, Maryland Civil Procedure Forms Title 12: Chapter 300 (3d ed. 2000).

Paul Mark Sandler & James K. Archibald, Pleading Causes of Action in Maryland 552 (4th ed. 2008).  

Eliot M. Wagonheim, The Art of Getting Paid : The Business Owner's Guide to Managing Receivables and Collecting Debts in Maryland (2003).

15 Md. L. Ency., Mechanics’ Liens.

Source:  Maryland State Law Library (MSLL).

Last review date: 10/30/2009 (PLL)