As most contractors know, if they are not paid for their work, they are entitled to file a mechanic’s lien against the property where the work was performed. While the main purpose of a mechanic’s lien is to provide security for the debt, it can be a powerful tool in helping contractors receive payment. However, the reasons why filing a mechanic’s lien can result in a contractor receiving payment are not widely understood, and, for that reason, contractors may inadvertently waive all or some of their rights.

A mechanic’s lien is an attachment to “real property,” which is similar to but not exactly the same as a mortgage. Like a mortgage, a mechanic’s lien is recorded on the land records. Unlike a mortgage, however, a mechanic’s lien’s “priority” may not be based upon the date it is recorded. Thus, a property owner may need to discharge a mechanic’s lien to refinance, to avoid a default on its mortgage and/or to convert a construction loan into a regular mortgage. Therefore, an owner’s potential need to obtain a lien discharge may result in a contractor receiving payment.

Generally speaking, mortgages and liens (other than mechanic’s liens) take effect on or have “priority” from the date they are recorded.