Do you Have to Cancel a Mechanics Lien, or Will It Expire?
This article, “Do you Have to Cancel a Mechanics Lien, or Will It Expire?“ was written by Peter Menge and reproduced here courtesy of zlien. Don’t forget to visit the Shasta Builders’ Exchange portal at zlien.
“Expire” and “Disappear” Are Not the Same Thing
In my younger days, it was a pretty regular occurrence to hang on to a carton of milk for so long that it expired. Discovering the expired milk in the deepest recesses of my fridge – and then getting rid of it – could be an unpleasant experience, especially when the offending carton of milk was weeks or even months past the date.
Aside from the foul smell and the chunky texture, what happens when a mechanics lien expires is kind of like that expired jug of milk.
To be clear, a mechanics lien can expire, just like a carton of milk. But just because a mechanics lien expires, that does not mean that it automatically disappears as well. When milk expired in my fridge, it remained there until I finally got around to taking it out. And the same is true for a mechanics lien — in order for it to go away, you have to make it go away…it requires action on your part.
Please read on to learn what you should do with an expired mechanics lien.
Was the Expiration Unintentional?
First things first: there is no such thing as a mechanics lien that remains valid indefinitely. This means that mechanics liens expire according to a specific, set timetable in every single state nationwide. The exact timing and other requirements vary from state-to-state, but the fact that liens expire is a universal aspect of mechanics liens across the country.
If you are a mechanics lien claimant with a mechanics lien that has already expired, unfortunately, there is very little you can do to resurrect the expired claim. Once the lien has expired, it’s no longer valid and thus, is unenforceable.
However, if the mechanics lien is approaching but hasn’t passed yet, you may be able to file a mechanics lien extension. This is not a sure-fire solution however, since mechanics lien extensions are only allowed in 6 states.
What If the Lien Expiration Date Is Approaching and You Still Haven’t Been Paid?
So, what should you do if your lien expiration date is fast-approaching but you still haven’t been paid? Liens are very powerful tools to be sure, but sometimes people don’t want to listen to even the most persuasive of arguments. In this case, we have a document that we call a “secret weapon” – the Notice of Intent to Foreclose. Follow the link to see why even the most stubborn payer will have a hard time avoiding this document.
If You’re Okay With the Expiration
If you’re like most of the people that end up filing a mechanics lien, chances are that just the act of filing the lien was enough to prompt payment on your project. This is a testament to the power of a mechanics lien – once a valid lien has been filed, the impacted parties on a project will do just about anything to resolve the dispute and make the mechanics lien go away.
However, just like an expired lien doesn’t automatically disappear, the fact that you received payment doesn’t automatically make the mechanics lien disappear either. If you filed a mechanics lien and allowed that lien to expire without further action taken, it’s likely that your lien is still just sitting there in the property records encumbering the property (or at least looking like it).
So what should you do with in the situation where you filed a mechanics lien on a project, finally ended up getting paid, and now have an expired lien that’s still “sitting there.”
Release the Lien Once You’ve Been Paid
As we wrote in a recent article, once you’ve been paid, the best thing (and the right thing, the smart thing, and probably even the legal thing) to do is to release the lien.
And the reason why you should go to the trouble is the same thing that we’ve been talking about for this entire article: recorded mechanics liens don’t automatically disappear when they expire. Therefore, anyone doing a title search on the property in question will stumble upon the mechanics lien filing, even if it is expired.
So, the property owner will – at some point or another – need that mechanics lien document off the books. The property owner may ask nicely that you do this, or they may file a lawsuit to have the mechanics lien document formally released…and when they do file this lawsuit, it will be against the lien claimant and allege that since the lien is still of record and formally expired, it is “frivolous” and “slandering title.”
You’ll lose this court battle and you may be responsible for costs, attorney fees, and possibly statutory penalties! It’s a terrible situation to be in and one very, very easily avoided. If you’re giving up on a mechanics lien claim and not pursuing it, release the mechanics lien.