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Mechanics Lien FAQ
A Tennessee mechanics lien is an effective tool that can help make sure you will be paid for the construction materials and/or labor you supplied. It is a legal claim that guarantees payment for contractors and suppliers.
This means that if you file a valid mechanics lien on a project you worked on in Tennessee and weren’t paid for your work, you have the right to enforce the lien through a lawsuit. This enforcement action can either prompt the client to settle or force the sale of the property. The proceeds of the sale will be used to settle your unpaid bill.
With a valid Tennessee mechanics lien, you have an interest in the improved property. When a mechanics lien is filed on the property you worked on, the property becomes collateral for uncollected payments.
In Tennessee, eligibility to file a mechanics lien depends on the type of project¹.
In owner-occupied residential projects with 1 to 4 units, only the general contractor and other parties with a direct contractual relationship with the property owner can file a mechanics lien.
If the property owner is the acting general contractor and the property is a single-family residence, laborers and suppliers with a direct contractual relationship with the general contractor and first-tier subcontractors have lien rights.
In all other projects, contractors, subcontractors, suppliers to any construction participant, laborers, surveyors, engineers and architects are covered by lien rights.
All parties allowed to file a mechanics lien other than the general contractor should file a mechanics lien within 90 days of project completion or abandonment.²
General contractors are technically not required to file a mechanics lien in Tennessee. They only need to file a lawsuit to enforce a lien within 1 year of last providing labor or materials.
However, with no lien recorded, general contractors risk being cut off by third parties before they can file a lawsuit to enforce their lien. This is why it’s best practice for general contractors to follow the 90-day rule and file a Notice of Lien and Sworn Statement within 90 days of the completion or abandonment of a project.
A Tennessee mechanics lien is effective during its enforcement period. General contractors must file a lawsuit within 1 year of work completion to enforce a lien. However, property owners can serve general contractors with a written demand to enforce. In this case, general contractors must take a foreclosure action within 60 days of receiving the demand letter.
All other parties must enforce their lien within 90 days of filing. This period can be shortened to 60 days too if the property owner serves a lien claimant with a written demand for enforcement.³
A Tennessee mechanics lien must contain the following pieces of information:
- The name of the claimant
- The name of the person who hired the claimant
- The date of first providing labor or materials
- The date of last providing labor or materials
- The amount of the claim
- The name of the property owner
Contractors working on home improvement for an owner-occupied residential property with 1 to 4 units must be licensed to do the work to be eligible to file a mechanics lien in Tennessee.
Other project types have no specific requirements for license.
Tennessee has no legislatively designed lien waiver forms. You may use any such form.
A Tennessee mechanics lien must be canceled within 30 days of satisfaction.
Pay if paid clauses are enforceable in Tennessee if clear and unambiguous. Pay when paid clauses are enforceable as a timing mechanism.
Preliminary Notice FAQ
A Tennessee preliminary notice is a letter sent by a contractor or supplier to the property owner at the start of a construction project. In many states, a preliminary notice is required to be sent in order to secure the right to lien.
All construction parties are required to send a preliminary notice in Tennessee. General contractors must send the owner a Notice to Owner before work commencement.⁴
All other parties must send a Notice of Non-Payment to the property owner and general contractor within 90 days of the last day of each month that labor or materials were provided.
If a general contractor fails to send a Notice to Owner, the lien claim becomes invalid.
The Notice of Non-Payment by subcontractors, laborers and suppliers may be sent late at times, but it is effective only for the months that it was sent in a timely manner.
Intent To File FAQ
A Tennessee notice of intent to lien is sent before the filing of a mechanics lien becomes necessary. Although only a number of states require that this notice be sent, many construction participants send a notice of intent to lien as an uncostly way to have payments for invoices settled.
It is not required to send a notice of intent to lien in Tennessee. However, it is advisable to send one as it serves as a reminder to the property owner that you have not been paid.
Send a notice of intent to lien at least 10 days before your planned date of mechanics lien filing in order to give the property owner enough time to process your payment.
Not sending a notice of intent to lien will not affect your lien rights since it is not required in Tennessee.