When contractors or suppliers go unpaid on a construction project in Maryland, they have the option to file a mechanics lien to safeguard their right to payment. A mechanics lien serves as a legal claim, granting the unpaid party a secured interest in the property. This tool ensures a stronger chance of receiving the compensation they are owed. However, to file a valid mechanics lien Maryland, specific rules, procedures, and deadlines must be carefully followed to establish a mechanics lien.
At CRM Lien Services, we specialize in ensuring that you get paid quickly and reliably. We can prepare and file mechanics liens for you in accordance with Maryland law, taking into account Maryland construction lien law and state-specific rules and regulations, including the need for an adequate and ascertainable description of the real estate.
Key Takeaways
- Mechanics Lien Eligibility: Contractors, suppliers, and design professionals—such as architects and engineers—are eligible to file mechanics liens in Maryland. However, corporations must be registered with the state, and interior designers must hold certification to claim lien rights.
- No Preliminary Notice Required, But Notice of Intent Is Essential: While Maryland doesn’t mandate preliminary notices, sending one can improve communication and visibility on a project. However, a Notice of Intent to Lien must be sent before filing the lien to notify the property owner.
- Strict Filing and Court Enforcement Deadlines: Mechanics liens must be filed within 180 days of the last date of labor or material provision. Enforcement action must follow within one year from the initial petition filing to keep the lien valid.
- Reasonable Attorney’s Fees for Bad Faith Payment Disputes: In cases where a court finds that a contractor or owner has acted in bad faith regarding the payment of undisputed amounts, it may award reasonable attorney’s fees to the claimant. This reinforces the importance of the Maryland Prompt Pay Statute in protecting the rights of contractors and subcontractors.
What is a Mechanic’s Lien in Maryland?
A mechanics lien in Maryland is a legal claim against a property that acts as security for unpaid labor, materials, or construction services. This powerful tool ensures that contractors, subcontractors, and suppliers can secure payment for their contributions to a construction project. In Maryland, a mechanics lien can be filed by a wide range of professionals, including general contractors, subcontractors, material suppliers, engineers, architects, surveyors, and certified interior designers.
By filing a mechanics lien, these parties can protect their financial interests and enhance their chances of receiving the compensation they are owed for their work and materials.
Who Is Eligible to File a Maryland Mechanics Lien?
In Maryland, all individuals or entities supplying labor or materials at any level of a construction project are granted mechanics lien rights. This entitlement extends to design professionals, including architects, engineers, surveyors, and certified interior designers.
Important Note: For projects involving the repair or enhancement of an existing structure, the cumulative cost of the repairs and/or improvements must reach a minimum of 15% of the building’s value. For tenant improvement projects, this threshold increases to 25% of the building’s value.
Can an Unlicensed Contractor Legally File a Mechanics Lien in Maryland?
In Maryland, obtaining a license is generally not a prerequisite for asserting lien rights. Nonetheless, undertaking work that legally requires licensure without proper certification may result in fines and other legal consequences.
Important: Interior designers must be certified to qualify for lien protection. Additionally, corporations intending to file a lien must be officially registered to conduct business in the State of Maryland to be eligible for mechanics lien rights.
Is a Legal Property Description Required for a Maryland Mechanics Lien?
A full legal property description is not mandatory in Maryland. Instead, a description of the land is required, including any mention that the land spans multiple counties and details sufficient to identify the building.
Although a complete legal description isn’t essential, the Maryland lien statute specifies that providing more specific information increases the likelihood of meeting requirements. Referencing the deed or incorporating the full legal property description will certainly suffice. Alternatively, other forms of identification—such as the property’s street address with a zip code, tax map parcel number, or even photos of the property—can often meet the necessary standards.
Where Should a Maryland Mechanics Lien Be Filed and Recorded?
To establish a mechanics lien Maryland, the petition must be submitted to the circuit court within the county where the property, or any portion of it, is situated.
Can Reasonable Attorney’s Fees, Collection Costs, or Additional Charges Be Included in the Lien Amount?
In Maryland, lien amounts are generally limited to cover only the unpaid costs of labor, materials, and equipment provided for the project, with the total contract value serving as the upper limit.
However, if the contract allows, interest may be included in the lien claim. Additionally, attorney’s fees can be granted by the court at its discretion in a successful claim. Lien claims cannot include consequential damages or general overhead costs.
What is the Deadline to Enforce a Maryland Mechanics Lien, and How Long Does it Remain Valid?
After filing a petition to establish a mechanics lien in Maryland, a hearing to show cause is typically set within 45 days. If the lien is approved, the claimant must file an action to enforce the lien within one year from the petition’s filing date. Enforcing the lien requires submitting a Petition to Enforce a Lien.
To streamline the process, claimants often combine both steps into a single Petition to Establish a Mechanics Lien. This approach helps avoid complications if the lien is not officially established within the one-year timeframe, as missing this deadline could prevent the claimant from enforcing the lien, even if the court later validates the claim. The court must issue a final order establishing the lien for it to be enforceable.
Who Cancels the Maryland Mechanics Lien When I Get Paid?
According to Maryland mechanics lien statute, when a contractor and property owner reach settlement or full payment, the contractor must provide the owner with a signed lien release on behalf of lower-tier parties. Since establishing a mechanics lien requires court involvement, it is ultimately the court that decides on the lien’s cancellation upon confirmation of payment.
Who Needs to Send a Preliminary Notice for Private Projects in Maryland?
In Maryland, sending a preliminary notice is not mandatory to secure lien rights at the start of a construction project. However, parties involved may choose to send one to enhance project visibility, foster communication, and encourage prompt payment.
That said, Maryland does require a Notice of Intent to be sent before filing a mechanics lien, ensuring the property owner is informed of the claimant’s intention to pursue legal action.
When Do I Need to Send a Maryland Written Notice?
Since preliminary notices are not mandatory in Maryland, there is no strict deadline for sending one. However, if you choose to send a preliminary notice, doing so early in the project is highly recommended. Establishing visibility and fostering communication from the start can facilitate smoother payment processes and help avoid delays.
Requirements for a Maryland Mechanics Lien
Maryland mechanics lien law outlines specific steps and criteria that unpaid contractors and suppliers must follow to secure payment through a lien claim.
Overview of Mechanics Lien Rights
In Maryland, anyone providing labor or materials to a construction project, including architects, engineers, surveyors, and certified interior designers, can file a mechanics lien. There are no strict limitations on eligible parties based on their role in the project, but there are specific conditions. For instance, mechanics liens for property repairs or renovations are only permitted if the improvements amount to at least 15% of the property’s value. Additionally, corporations filing a lien must be registered to do business with the state of Maryland.
Filing Deadlines
Maryland mechanics liens must be filed within 180 days of the last date labor or materials were supplied. To establish the lien, a court action must be initiated in the county where the property is located, with notice provided to all relevant parties.
Notice Requirements
While general contractors are exempt from notice requirements, subcontractors, suppliers, and others without direct contracts with the property owner must send notice before filing a lien. This notice must be sent within 120 days of their last contribution to the project. For single-family residential properties, additional requirements apply: notice must be given before the property owner completes full payment to the general contractor. Lien claims on owner-occupied residential properties are also limited by the amount due under the contract at the time notice is received by the property owner. Sending early notice ensures participants safeguard their mechanics lien rights.
Lien Amounts
Attorney fees, collection costs, and similar charges are generally excluded from Maryland mechanics liens. However, lien claims can include unpaid labor, materials, and equipment, with the total lien amount capped by the original contract value. If the contract allows, interest may also be included, and courts may award attorney fees to successful claimants.
How to Record a Lien
In Maryland, filing a lien requires the claimant to initiate mechanics lien proceedings through the circuit court where the property is located. Along with the lien form, the claimant must submit an affidavit and supporting documentation. Since filing a mechanics lien involves legal proceedings, claimants may need to work with an attorney unless they represent themselves.
Lien Priority Rules
Maryland mechanics liens do not take precedence over mortgages or loans that existed before construction began. Any prior encumbrance on the property will hold priority over a mechanics lien. The lien itself only becomes enforceable once approved by a court order. When multiple mechanics liens are involved, available funds are distributed proportionally among claimants based on the amount due.
This guide ensures you understand the essential steps for securing and enforcing a Maryland mechanics lien, helping construction professionals protect their right to payment.
How to File a Mechanics Lien in Maryland?
Payment delays are a common issue in the construction industry, with challenges such as pay-when-paid clauses, disputes over workmanship, and complicated payment applications. Fortunately, mechanics liens serve as a powerful legal tool to help contractors and suppliers secure compensation for their work and materials. Filing a mechanics lien in Maryland provides a security interest in the property, helping claimants recover payments owed.
This guide outlines essential steps and key considerations to help you understand the filing process, including requirements, deadlines, and court procedures.
Essential Requirements for a Maryland Mechanics Lien
A valid mechanics lien in Maryland requires specific information to be included. Missing or incomplete details can invalidate your lien, as this process involves initiating a court action.
Claimants must prepare a detailed petition that contains:
- Claimant’s Name and Address
- Owner’s Name and Address
- Description of the Work or Materials Provided
- Date the Work or Materials Were Supplied
- Name of the Party Who Ordered the Work or Materials
- Total Amount Due, Minus Any Credits
- Land Description (and indication if part of the land spans multiple counties)
- Subcontractor Notice (if applicable)
The petition must also include an affidavit from the claimant, along with relevant supporting documents such as contracts or invoices. If the lien involves multiple buildings on separate parcels, the petitioner must specify the amount due for each building to avoid losing lien priority.
Filing a Mechanics Lien in Maryland
Mechanics liens Maryland must be filed in the circuit court of the county where the property is located. Because lien claims require formal legal action, court rules must be carefully followed. Individual claimants may represent themselves, but businesses, such as LLCs or corporations, generally need to hire an attorney to proceed.
Key Steps to File a Lien:
- Prepare the lien form with all required information and notarize it if necessary.
- Gather supporting documents, including affidavits and relevant contracts.
- File the petition with the circuit court in the appropriate county, paying any applicable fees.
- Verify compliance with specific court requirements, such as formatting or margin rules, to avoid delays.
Serving and Enforcing the Lien
After filing the petition, the court will issue an order directing the property owner to respond within 15 days. This order requires the owner to either submit a counter-affidavit or appear in court to contest the lien. If the owner fails to respond, the court may accept the claim as valid, allowing the lien to attach to the property.
Claimants typically file petitions to establish and enforce the lien simultaneously to avoid timing issues. Since enforcement must occur within one year of the original filing, combining these actions ensures that the lien remains valid, even if the court takes time to process the claim.
Important Considerations
- No Preliminary Notice Required: While Maryland does not mandate preliminary notices, sending one can increase project visibility and encourage timely payment.
- Lien Priority: Maryland mechanics liens do not take priority over pre-existing mortgages or construction loans.
- Court Action is Essential: Filing a mechanics lien in Maryland requires initiating a formal legal proceeding, making the process more complex than in other states.
Filing a mechanics lien in Maryland can be a powerful tool for contractors and suppliers to secure payment. However, the process is more complicated than in other states due to the requirement for court involvement. Following the proper steps—such as preparing accurate petitions, filing in the correct court, and adhering to deadlines—can significantly improve the chances of successfully recovering payment.
For businesses, consulting an attorney is often the best route to navigate Maryland’s complex lien laws. With careful planning and adherence to legal requirements, filing a mechanics lien can protect your right to fair compensation and ensure that you are paid for your hard work.
Sale or Foreclosure of Property with a Mechanics Lien
When a property with a mechanics lien is sold or foreclosed, the lien can be significantly impacted. In Maryland, the sale of a property typically extinguishes all lien rights unless the lien has already been established by a court. If the lien is court-established, the lien claimant may still pursue collection from the property owner or the new buyer. However, if the property is sold before the lien is established, the buyer may acquire the property free and clear of the lien. This underscores the importance of timely filing and court action to secure and enforce lien rights.
Bankruptcy and Mechanic’s Liens in Maryland
The filing of bankruptcy by a property owner can complicate the process of establishing a mechanics lien. In Maryland, when a property owner files for bankruptcy, an automatic stay is imposed, preventing the lien claimant from proceeding to establish the lien. Until the court establishes the lien, the claimant is considered an unsecured creditor. The bankruptcy stay halts any further action to establish lien rights, and there is no known provision for obtaining relief from the stay to pursue the lien. This situation highlights the need for lien claimants to act swiftly and be aware of the potential impact of bankruptcy on their claims.
Lien Waivers in Maryland
In Maryland, lien waivers must be “clearly and unambiguously expressed” to be valid. This means that any waiver of lien rights must be explicit and leave no room for doubt. The Maryland Code does not permit mechanic’s lien waivers in construction subcontracts, ensuring that subcontractors retain their lien rights. However, a general contractor can waive its lien rights in the general contract with the property owner. This provision protects subcontractors while allowing general contractors to negotiate terms directly with property owners.
Property Owner’s Rights and Responsibilities
Property owners in Maryland have specific rights and responsibilities regarding mechanic’s liens. Owners have the right to receive written notice of a subcontractor’s intent to claim a lien. This notice allows the owner to withhold payment to the general contractor if a subcontractor has filed a lien claim. Additionally, property owners are responsible for ensuring that subcontractors are paid if the general contractor fails to do so. If the owner does not pay the subcontractor, the subcontractor may establish a lien against the property. Understanding these rights and responsibilities helps property owners navigate the mechanics lien process and avoid potential legal complications.
Get in Touch
Filing a mechanics lien in Maryland is a powerful way for contractors, suppliers, and design professionals to safeguard their payment rights. By following the correct procedures, such as preparing detailed petitions, adhering to filing deadlines, and understanding the legal requirements, claimants can significantly improve their chances of securing payment.
Although the process may be complex, especially with the involvement of the court system, mechanics liens offer crucial protection against non-payment. Consulting with legal professionals can further streamline the process and help claimants navigate Maryland’s lien laws with confidence.
At CRM Lien Services, we have been serving customers across the country with required reference documentation for lien claims since 1986. We assist property owners in navigating the mechanics lien process, informing them about their rights and responsibilities, including providing notices, securing payment, and releasing mechanic’s liens.
We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a mechanics lien, give us a call or shoot us an email.
