Knowledge and regular practice of mechanic’s liens should be a part of every construction professional’s general business practice. By way of background: a lien is a recorded interest on a real or personal property. Under the law, real property is essentially land and real estate and personal property are basically personal possessions. All that said, within the context of construction, a mechanic's lien is a legally enforceable statement to the rest of the world that you have a right of ownership to a piece of land or a car, for example, due to the fact that you helped improve the value of that property.
The practical import for a construction business in regularly engaging in lien practice is that it ensures the construction business will maintain a source of payment for their work in the event the customer does not pay up. That is, by timely recording one’s interest on an item of real or personal property, the lien-holder can pursue litigation in court and have the property sold to compensate it for its work.
As an independent contractor, subcontractor, laborer, or journeyman you are entitled to file a Mechanic’s lien under Indiana law for the construction/improvement you have done on your job. Based on the type of structure you built or otherwise contributed labor and materials to, there are different time-frames you have in which to bring a mechanic’s lien from the last day you worked on the job. Generally, for industrial/commercial construction you have 90 days and for all other types, such as a residential home, you have 60 days in which to file your lien with the county recorder where the job site is. While seemingly arbitrary, this time-frame is strictly adhered to by Indiana Courts. That said, it is vital for you as a contractor/worker to keep record of your last day worked and when your 60 or 90 days expires. A good way to keep track of this is to set 60 or 90 days from the date you or a construction professional/employee acting on your behalf completed a punch-list of the job.
A person or entity filing a Mechanic’s Lien must take great care in doing so as there are specific requirements which a mechanic’s lien must contain in order to perfect it. Perfecting a lien basically means that you have filed a lien which fully complies with the statutory requirements. Requirements under Indiana Law for filing a valid mechanic’s lien range from a verification requirement to including a full legal description of the property in the documents you file with the county recorder. Failure to meet these requirements can result in your Mechanic’s Lien being rejected by the Recorder’s Office—even if you are within the allowable time-frame with which to file. Rejection of your lien or failure to perfect your lien means that you cannot force the property owner to sell the property you build and/or otherwise improved to compensate you for your work. Moreover, because some of these requirements take some time to obtain information to meet, such as obtaining the legal description of a property, it is unwise to wait until the last day, or even week to file your lien. Thus, good record keeping practices is essential to having an effective and fluid mechanic’s lien practice.
While this article is not intended in any way to provide any specific legal advice, Attorney Nicholas A. Podlaski of Beers, Mallers, Backs, & Salin LLP 110 W. Berry Street, Suite 1100 Fort Wayne, IN 46802 would be happy to help you if you believe you need help in setting up an administrative policy that covers obtaining all the necessary information for a mechanic’s lien as part of your regular construction contract practice, and/or need help preparing and perfecting a mechanic’s lien.