Artisans' and Mechanics' Liens
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"Artisans" include laborers, mechanics, repairpersons, tradespersons, dry cleaners, and launderers. Maryland law automatically provides an artisan possessing any property for repair, mending, improving, dry cleaning, laundering, or other work with a lien on that property for the cost of the work done. A lien is a legal claim against a particular property for some debt.
If the artisan is not paid the full value of the artisan's work within 90 days, then the artisan can enforce the lien by selling the property.
- The artisan must give the property owner at least 30 days notice before any sale or disposal.
- The proceeds of the sale are first applied to the expenses of the sale.
- The proceeds are next applied to the amount of the lien claim (i.e., the cost of the work done).
- Any remaining proceeds go to the property owner.
- The lien continues until the debt has been satisfied.
Before selling or disposing of a customer’s property, an artisan must give the customer at least 30 days notice by mailing the notice to the owner at the owner’s last known address. If the artisan does not know the owner’s address, then the artisan may give notice by:
- Posting it on the door of the courthouse or on a bulletin board in the immediate vicinity of the door of the courthouse of the county in which the work was done;
- Publishing it once a week for two successive weeks in one or more newspapers of general circulation in the county in which the work was done; OR
- BOTH posting it at the artisan’s place of business in a plain and prominent manner, on a sign that is clearly visible and states that the goods may be sold on or after 90 days from the day the work is completed AND printing the notice on the receipt or invoice given to the owner.
Dry cleaners and launderers may throw away any clothing that a customer fails to pick up for over 6 months. Dry cleaners and launderers must post a sign in their shop warning customers that clothing left for 6 months will be thrown away.
EXAMPLE: A clockmaker performs a $150 repair on a customer’s clock. Maryland law automatically gives the clockmaker a $150 lien on the clock. If, within 90 days, the customer pays the clockmaker only $50, the clockmaker can sell the clock and keep the proceeds necessary to complete the payment.
- The clockmaker must provide the customer with at least 30 days notice that the clockmaker is going to sell the clock.
- If the clock sells for $125, the artisan may keep $100 of those proceeds (i.e., the difference between the amounts the customer owed ($150) and the amount the customer paid ($50) the clockmaker).
- The remaining $25 in sale proceeds must be paid to the customer.
- The clockmaker recovers the amount owed, but no more.
- If the clockmaker incurred expenses from the sale of the clock, then clockmaker can apply the proceeds from the sale to the incurred expenses.
A mechanics’ lien is a way for contractors and subcontractors who supply labor or materials for construction to get paid for their work. Using a mechanics' lien, a contractor or subcontractor who has performed work on a property can sell the property to recover any amount owed but not paid by a customer.
Read the Law: Md. Code, Real Property, Title 9, Subtitle 1
Read the Rules: Md. Rules, Title 12, Chapter 300
A contractor or subcontractor can establish a mechanics' lien on new buildings and some older buildings on which they perform work that increases the building’s value.
- A building includes any unit of a nonresidential structure that is leased or sold separately as a unit.
- Several types of work result in the automatic statutory creation of a mechanics' lien, including landscaping, digging a well, constructing a pool or fence, and leasing equipment for use on the property.
- A contractor or subcontractor can establish a lien for the value of unfinished or finished projects, regardless of the amount of the debt. If unfinished, the value will attach to the work done or material that has been furnished.
- To establish a lien on an older building, the work must increase the building’s value by at least 15%.
- A tenant may also establish a lien on a building in which the tenant lives, but only if the tenant performs work that increases the building’s value by at least 25%.
Normally, a building owner is not required to pay a subcontractor directly because there is no contract between the owner and the subcontractor. A mechanics' lien allows a subcontractor to recover amounts owed but not paid by the owner to the subcontractor. For a lien to arise in favor of a subcontractor, there must be a contract between a contractor and the owner on which the subcontractor works and between the contractor and the subcontractor. The contract can be any agreement for goods or services, and it need not be written down.
When Mechanics' Liens Do Not Arise. There are various situations under which a mechanic's lien is not available.
- Mechanics' liens do not arise for work on public buildings.
- If a new owner purchases the land or building before a lien on the property is established, then no lien will arise even if the worker provides services that increase the property’s value.
- Separate rules apply to certain subcontractors working on a single-family home.
- A subcontractor cannot get a lien on a property if the owner has already paid the contractor.
Time Limits. To establish a lien, a contractor or subcontractor must file a petition in the circuit court for the county where the property is located within 180 days after completing work on the property or providing materials. It can be difficult to determine the work completion date.
Read the Law: Md. Code, Real Property § 9-105(a)
Notice For Subcontractors. Subcontractors must give the owner written notice of their intent to claim the lien. Subcontractors must give this notice within 120 days after they complete work or provide materials. Upon receipt of a notice from a subcontractor, the owner may withhold from the contractor the amount owed to the subcontractor to pay the subcontractor directly. However, this amount may not exceed the amount that the owner owes under the contract at the time the notice is given.
Read the Law: Md. Code, Real Property § 9-104
How to Establish A Lien
To establish a mechanics' lien on land or a building, a contractor or subcontractor (known as a “petitioner” or “plaintiff”) must file a complaint in a circuit court of a county in which at least part of the property is located within 180 days of the work being completed or the materials furnished.
The contractor's/subcontractor's filing with the court must include:
- The complaint setting forth facts supporting the plaintiff’s claim that the contractor/subcontractor is entitled to a mechanics' lien. The complaint also must include:
- the name and address of the plaintiff;
- the name and address of the land owner;
- the kind of work done or the materials provided, the time the work was done or materials provided, the name of the customer, and the amount due, less any credit recognized by the plaintiff;
- a description of the land or building, adequate enough to identify, including whether some of the property is located in another county;
- for liens on multiple buildings, the amounts owed for work on each building;
- for older buildings, a statement that the work increased the building’s value by at least 15 percent;
- if the plaintiff is a subcontractor, a statement that the owner was given proper notice;
- a sworn statement listing facts showing the plaintiff is entitled to a lien on the property; and
- any other documents necessary to support the claim.
A contractor or subcontractor may amend a complaint, but subcontractors may do so only before the deadline for providing notice of the lien or filing the lien. However, the plaintiff may not use an amendment to increase the amount of the claim or alter the description of the land or building at issue.
Read the Law: Md. Code, Real Property § 9-105
Show Cause Hearing. After the complaint is filed, the court will review the documents filed in the case and may ask the petitioner for explanations or supplemental information. If the court determines that the conditions for a lien have been met, the court will enter an order providing 15 days for the property owner to “show cause” why the conditions for a lien have not been met. If the owner provides an answer showing cause as to why a lien should not be established is provided, a hearing will be set.
In the order, the court will also notify the owner that the owner may appear at a hearing or file a sworn statement responding to the plaintiff’s claim. The court will also warn the owner that if the owner does not appear at the hearing or file a sworn statement, then the facts alleged by the plaintiff will be treated as admitted by the owner (i.e., treated as if they are true). In that case, the court may rule on the lien application without a hearing.
At the show cause hearing, both the plaintiff and the owner may present evidence in support of their arguments. If there is no dispute over the facts supporting the plaintiff’s lien claim, then the court will enter a final order establishing the lien. Alternatively, if there is a dispute over important facts, but the court finds there is probable cause that the plaintiff has a right to the lien, the court may issue an interlocutory (or “non-final”) order. The interlocutory order will:
- establish the lien;
- describe the land and the buildings to which the lien attaches;
- state the amount of the lien;
- specify the amount of a bond the owner must pay to cancel the lien, which includes reasonable attorney's fees; and
- set a date for trial within six months.
Read the Law: Md. Code, Real Property § 9-106
Read the Rule: Md. Rule 12-304
Trial. The trial's purpose is to resolve any remaining disputes over important facts. At the end of the trial, based on all of the documents, testimony, and other evidence presented, the court will issue an order either granting or denying the plaintiff’s request to establish a lien.
Read the Rule: Md. Rule 12-304
Release Of The Lien. Any time after the plaintiff files a petition for a lien on land or buildings, the property owner may ask the court to release the lien. There are two ways in which the owner may obtain an order releasing the lien:
- the owner may file a bond in the amount of the lien; OR
- the owner may pay the amount of the lien to the plaintiff.
Enforcing The Lien. Within one year after a plaintiff files a petition to establish a lien, the plaintiff may file a motion to enforce the lien. If the court grants the motion, it will issue an order setting a deadline for the owner to pay the amount of the lien and providing that, if the owner fails to meet the deadline, the land will be sold and the proceeds used to pay the plaintiff.
If there are multiple liens on the land or building and the proceeds from the sale are not enough to pay them all, then each lien holder will receive a share of the proceeds proportional to the value of their lien. The court may appoint a trustee to sell the property and an auditor to review any proposed sale and file a report that the court will use to decide whether to approve the sale.
Alternatives To Mechanics' Liens
Mechanics' liens are not the only way for a contractor or subcontractor to collect a debt. A contractor or subcontractor may also bring an action for breach of contract.
Read the Law: Md. Code, Real Property § 9-111