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What impact does a mechanic’s lien have on an owner?

On Behalf of | May 22, 2022 | Construction Law |

When there is a disagreement between a contractor who does work on a house and the person who owns the property, the dispute can delay payments for the project. Frustrated service providers and also those who deliver materials for a project may go to the Texas civil courts to ask for a lien against the property. 

A mechanic’s lien helps an unpaid service provider prompt a property owner into full payment for the services already rendered or the materials delivered for the work. How does a mechanic’s lien have on a property owner? 

It limits what they can do with their property

Whether the construction project was to redesign an office building or to completely upgrade the kitchen in an older home, the project may cost thousands of dollars and will have an impact on the resale value of the property. 

Once there is a mechanic’s lien in effect, the homeowner cannot complete transactions without paying the lien in full. If they try to refinance, sell or transfer the property, they will need proof that they paid the lien before they complete the transaction. (Alternatively, they can pay the lien off as part of the transfer or sale, but that obviously reduces their proceeds and can be more complicated.). 

In other words, a mechanic’s lien effectively secures someone’s claim to repayment and prevents the property owner from liquidating the property and leaving the contractor still unpaid. 

For those who do work on construction projects, securing a mechanic’s lien can be a powerful way to compel the other party into full payment. For those who own properties, knowing about the risk of a mechanic’s lien might motivate them to make full payment in a timely manner or to dispute one in court. 

Understanding the possible consequences of impending construction litigation will help you better prepare for your day in court.

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