The Mechanics' Lien law provides special protection to contractors, subcontractors, laborers and suppliers who furnish labor or materials to repair, remodel or build your home. If any of these people are not paid for the services or materials they have provided, your home may be subject to a mechanics' lien and eventual sale in a legal proceeding to enforce the lien. This lien can be recorded even when full payment for the work or improvement has been made by the homeowner, but contractor failed to pay the subcontractors, suppliers, or laborers. Thus, in the worst case, a homeowner may actually end up paying twice for the same work.

The theory is that the value of the property has been increased, and the homeowner is required to act as the ultimate guarantor of full payment to the persons responsible for this increase in value. In practice, a homeowner faced with a valid mechanics' lien may be compelled to pay the lien claimant and then pursue conventional legal remedies against the contractor or subcontractor who initially failed to pay the lien claimant after being paid by the homeowner.

Even if a mechanics' lien is recorded against your property, you may be able to resolve the problem without further payment to the lien claimant. This possibility exists if the proper procedure for establishing the lien was not followed. While it is true that mechanics' liens may be recorded by persons who have provided labor, services, or materials to a job site, there is a well-established procedure that must be followed in order to create a valid mechanics' lien.

In the event you discover that a lien has been recorded but no effort has been made to enforce the lien, a title company may decide to ignore the lien. However, be prepared to be presented with a positive plan to eliminate the title problems created by this type of lien. This may be accomplished by means of a recorded mechanics' lien release from the person who created the lien, or other measures acceptable to the title company.

The best protection against these claims is for the homeowner to employ reputable firms with sufficient experience and capital and/or require completion and payment bonding of the construction work. The issuance of checks payable jointly to the contractor, material men and suppliers is another protective measure, as is the careful disbursement of funds in phases based upon the percentage of completion of the project at a given point in the construction process. The protection offered by mechanics' lien releases can also be helpful.