The best way to increase your leverage in a payment dispute in construction is to file a valid mechanics lien. A mechanics lien is publicly available for potential investors to see, and they are less likely to fund or buy a property if it is riddled with outstanding debts.
This is why mechanics liens are very effective in recovering payment from delinquent clients. Owners would rather release your payment than deal with a mechanics lien that reduces the value of their property.
The key, however, is to file a valid mechanics lien by following all the rules and requirements in the state where a project is located. Deadlines are very important, and so is writing the correct information on your mechanics lien form.
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This guide explains the procedure for filing a mechanics lien in Maryland and shares important tips to ensure compliance. Filing a Maryland mechanics lien is done in court, so keep in mind that you need to follow the proper legal procedures when you go through the mechanics lien process in the state.
- Who can file a mechanics lien in Maryland?
- Preliminary notice in Maryland
- When do you file a Maryland mechanics lien?
- How to file a mechanics lien in Maryland
- Important deadlines to remember when filing a mechanics lien in Maryland
- Best practices when filing a mechanics lien in Maryland
Who can file a mechanics lien in Maryland?
Before you file a mechanics lien, you first have to know if you are qualified to do it or not.
In Maryland, parties who work on the construction of a new building have lien rights. These parties include but are not limited to general contractors, subcontractors, and material suppliers.
Those who are working on repairs or improvements on an existing property have lien rights too as long as the worth of the repairs is 15 percent of the property’s value.
Preliminary notice in Maryland
In most states, potential lien claimants are required to “preserve” their lien rights before they can file a mechanics lien. Preserving your lien rights typically entails serving or filing a preliminary notice to inform a property owner about your participation in a project.
In Maryland, the preliminary notice requirements are quite unique. Usually, preliminary notices are sent at the beginning of a project, but Maryland’s preliminary notice is actually more similar to a Notice of Intent to Lien. A Maryland Notice of Intent to Lien may be served after a claimant’s work on a project has been completed and payment issues have arisen.
Who must serve a Maryland Notice of Intent to Lien?
All parties who have no direct contractual relationship with the property owner are required to serve a Maryland Notice of Intent to Lien. Subcontractors and material suppliers are some of the parties who are obligated to serve this preliminary notice.
What must be included in the Notice of Intent to Lien?
Maryland Property Code states that the following information must be on your Maryland Notice of Intent to Lien form:
- Your name
- A description of the property location
- The total amount of the services performed
- The unpaid amount
- A brief description of the services performed
- The dates when the services were first and last performed
- The name of the party who hired you
When do you serve a Notice of Intent to Lien?
The deadline for serving a Maryland Notice of Intent to Lien is within 120 days of the date you last furnished labor or materials to a project.
For parties working on single-family owner-occupied residential projects, the day when you serve the Notice of Intent to Lien also determines the extent of the amount that you can claim with the mechanics lien. You are advised to serve the Notice of Intent to Lien before the property owner disburses the full payment to the party who hired you; otherwise, you may not be able to recover any amount directly from the owner.
What happens if you do not serve a Notice of Intent to Lien?
Failing to file a Notice of Intent to Lien when required will prohibit you from filing a mechanics lien in Maryland. If you do not have a direct contract with the owner, ensure that you serve a Notice of Intent to Lien so you can exercise your lien rights.
When do you file a Maryland mechanics lien?
Note that for those without a direct contract with the owner, serving the Notice of Intent to Lien does not extend this 180-day deadline.
How to file a mechanics lien in Maryland
1. Prepare your Maryland mechanics lien form
According to the Maryland Property Code, you need the following details for your Maryland mechanics lien template:
- Your name and address
- The name and address of the owner
- The nature or kind of work done or the kind and amount of materials furnished
- The time when the work was done or the materials were furnished
- The name of the person for whom the work was done or to whom the materials were furnished
- The amount or sum claimed to be due, less any applicable credit
- A description of the land, including a statement of whether part of the land is located in another county, and a description adequate to identify the building
If required to send the notice, you also need to provide facts showing that you have served the Notice of Intent to Lien. You must include a statement saying that the preliminary notice has been properly mailed or served upon the owner.
Other than the mechanics lien form that contains the basic details stated above, you also need to include an affidavit setting forth the basis for your mechanics lien claim. Additionally, you must include original or sworn, certified or photostatic copies of material papers, if any, that proves the basis of this claim. If you do not have these proofs, you may explain so in the required affidavit above.
You are technically not required to have your Maryland mechanics lien notarized before filing the documents in the office of the clerk of the county circuit court.
Note, however, that a Maryland mechanics lien is filed in court following standard civil procedures. This means that some businesses may not be eligible to record a mechanics lien without hiring a lawyer. LLC corporations, for instance, may need to hire legal representation as they may not be allowed to let a regular employee represent them in court.
2. Record the Maryland mechanics liens
Once your documents are ready for filing, file them with the clerk of the circuit court for the county where the project is located. You need to personally bring these documents to court and pay filing costs.
Filing a mechanics lien in Maryland is essentially initiating a petition in court. After filing your petition, the court determines whether your mechanics lien shall attach to the property’s records or not. If the court decides on attaching the lien, the property owner will be given 15 days to present their counter-evidence or file a counter-affidavit.
Remember that the deadline for filing a Maryland mechanics lien falls on the 180th day from the date you last furnished services to a project. You may not initiate a petition to file a mechanics lien in Maryland beyond this 180-day deadline.
3. Enforce/release the mechanics lien
Once your Maryland mechanics lien has been successfully attached to the property’s records, all you need to do is wait for your payment.
When contractors get paid, they must serve the owner a signed lien waiver release form. The court will subsequently determine the release of the mechanics lien records once payment has been made.
Unfortunately, it is also possible that you do not receive your payment at all. If negotiations fall through and you think the owners are not inclined to pay up, the next step is to enforce your Maryland mechanics lien.
Enforcing a mechanics lien is done by filing a Petition to Enforce within 1 year after the petition for attaching the mechanics lien was filed. Take note that the deadline is based not on when the mechanics lien is established but on when the mechanics lien is filed.
Maryland courts may take some time to decide on establishing a lien or not. If, for some reason, the court establishes your mechanics lien 1 year after you have filed your claim, you will not have enough time to enforce it as the deadline for filing the Petition to Enforce falls right on the same date.
It is expert advice to file both your mechanics lien and your Petition to Enforce the Lien at the same time. This way, you are able to ensure that you can establish and enforce your Maryland mechanics lien if necessary.
Important deadlines to remember when filing a mechanics lien in Maryland
Best practices when filing a mechanics lien in Maryland
1. Do not forget to serve the Notice of Intent to Lien
For parties who have no direct contract with the property owner, serving the Notice of Intent to Lien is a very important requirement. Not only is it mandatory, but it can also help you avoid the entire mechanics lien process. Serving a Notice of Intent to Lien on the owner may be enough to get them to release your payment. Once you get paid, you do not have to go through the legal processes required to file Maryland mechanics lien.
2. Do not inflate the amount in your mechanics lien claim
A Maryland mechanics lien is a petition that you file in court, so the details must be accurate and reasonable. The amount that you claim via a mechanics lien must be entirely related to the contract amount of applicable interests. The court may decide later on to award you the attorney fees and other lien-related costs, but these amounts are generally not calculated into your lien claim.
3. File the mechanics lien and the Petition to Enforce at the same time
A Petition to Enforce a Mechanics Lien in Maryland must be filed within 1 year of the date the mechanics lien was filed. It may take the same span of time before the mechanics lien gets attached, so if you want to ensure that you can enforce a mechanics lien regardless of when it gets established by the court, it is best practice to file the Maryland mechanics lien and the Petition to Enforce at the same time.