Having a lien on your property can cause significant difficulties if you plan to sell your home or refinance your loan. The method for extinguishing the lien will depend on the kind of lien on your property and the state laws pertaining to that lien. It is important to know whether the lien will be enforced. This determination involves evaluating several factors including whether the lien is valid, properly filed within the lawful period of time, and asserted against the proper parties. An attorney experienced in real estate can make this evaluation.
Is the lien lawful? It is important to first determine if the lien is lawful and proper. A recorded lien that is forged, groundless, contains a material misstatement or false claim, or is otherwise invalid can be removed under Arizona law. A.R.S. § 33-420 states that a penalty can be imposed upon any party who wrongfully records such a lien against your property.. The penalty for an unlawful lien is $5000 or triple the amount of actual damages caused by the recording, whichever is greater, plus reasonable attorney fees and costs.
What are the time limitations for a mechanic’s lien? We addressed mechanic’s liens (or construction liens) in a previous post, but here we address the time limitations for filing them. A.R.S. § 33-992.01 provides that a claimant must provide a 20-day preliminary notice to the homeowner prior to filing a lien. However, if the contractor files a Notice of Completion with respect to the project, the deadline to file a lien is 60 days from the filing of the Notice of Completion. Alternatively, the deadline is 120 days from the project completion if a Notice of Completion has not been filed. The claimant must file a lawsuit within 6 months after the date the lien was recorded to enforce the lien. Once the 6-month period passes, the lien has expired and the claimant is barred from bringing a lawsuit. It is important to ensure that the contractor or worker has fully complied with these filing deadlines.
Who has filed the lien? Not every worker who provides labor is entitled to file a lien. While the law covers any person, who provides “labor, materials, professional services, fixtures, or tools, in the construction, alteration, repair, or improvement of any building,” there are other relevant requirements. For example, the laborer must have a written contract for repairs with the homeowner. In addition, suppliers who provide material to other suppliers are not permitted to file mechanic’s liens. You may be able to avoid a lien by asserting that the worker is not statutorily covered under the lien law.
Chernoff Law handles business and real estate litigation matters throughout Arizona. Contact us by calling 480-719-7307 to discuss your legal matter.