In Tennessee, contractors and suppliers who aren’t paid for their work on a construction project have the option to file a mechanics lien to ensure they receive payment. A mechanics lien gives the unpaid party a legal claim on the property. Serving a notice of right to file a mechanic’s lien is a crucial first step in protecting lien rights, and this preliminary notice must typically be given to the owner, general contractor, and sometimes the construction lender to ensure maximum protection.

At CRM Lien Services, we specialize in ensuring that you get paid quickly and reliably. We can prepare and file mechanics liens for you, taking into account Tennessee construction lien law and state-specific rules and regulations, including the need for an adequate and ascertainable description of the real estate.

This guide explains the essential rules, requirements, and deadlines to help you successfully file a mechanics lien Tennessee.

Key Takeaways

• Broad Eligibility for Lien Rights: In Tennessee, contractors, subcontractors, laborers, and material suppliers generally have lien rights, while prime contractors are the only ones with lien rights on owner-occupied residential projects (1-4 units). Design professionals may also have lien rights if they contract directly with the property owner.
• Strict Notice and Filing Requirements: To secure lien rights, Tennessee requires specific notices to be sent. Prime contractors must provide a Notice to Owner, while subcontractors and suppliers must send a Notice of Non-Payment. Deadlines for filing a lien vary, but in most cases, liens must be filed within 90 days of project completion. Consulting Tennessee construction attorneys for guidance in navigating these legal processes effectively is recommended.
• Lien Priority Over Mortgages: A Tennessee mechanics lien can take priority over a pre-existing mortgage if the contractor provides written notice to the mortgagee before work begins. Laborers’ liens take top priority, and all other mechanics liens share equal priority, splitting sale proceeds if the property is sold.

Understanding Mechanics Liens in Tennessee

Mechanics liens are a crucial tool for contractors, subcontractors, and suppliers in Tennessee to secure payment for their work on construction projects. A mechanics lien is a legal claim filed against a property to ensure payment for labor, materials, and services provided. In Tennessee, mechanics liens are governed by Title 66, Chapter 11 of the Tennessee Code. Understanding the key provisions, requirements, and deadlines involved in the process is essential for anyone involved in the construction industry.

Mechanics liens serve as a powerful incentive for property owners to ensure that all parties involved in a construction project are paid. By filing a mechanics lien, contractors and suppliers can protect their financial interests and increase the likelihood of receiving payment. This legal claim attaches to the property, making it difficult for the property owner to sell or refinance until the lien is resolved.

In Tennessee, mechanics liens are available to a broad range of parties, including contractors, subcontractors, laborers, and material suppliers. Design professionals, such as architects and engineers, may also have lien rights if they contract directly with the property owner. However, specific rules and requirements must be followed to ensure the validity of a mechanics lien.

Who Can File a Tennessee Mechanics Lien?

In Tennessee, the types of parties eligible for mechanics lien protection vary based on the nature of the project.

In general, Tennessee offers broad lien rights that extend to contractors, subcontractors, laborers, and equipment or material suppliers at any level. Additionally, design professionals, such as surveyors, architects, and engineers, have lien rights if they have contracted directly with the property owner.

For owner-occupied residential properties with 1 to 4 units, lien rights are limited to the prime contractor or those who have a direct contract with the owner. However, if the property owner serves as their own prime contractor on a single-family residence, laborers, and suppliers under the prime contractor, as well as first-tier subcontractors, also gain mechanics lien rights. Design professionals do not have lien rights on these types of projects.

A lessee can act as an agent of the fee owner under certain conditions, and the legal rights tied to improvements made on the fee owner’s property are established through contractual relationships and responsibilities.

It’s important to note that Tennessee grants strong lien rights to providers of specially fabricated materials, even if the materials are never delivered to the job site.

Can an Unlicensed Contractor File a Tennessee Mechanics Lien?

It varies. For single-family residential construction or home improvement projects, contractors in Tennessee must be licensed to file a valid mechanics lien. If a contractor is unlicensed, they will not have lien rights. On other types of projects, there is no direct licensing requirement for lien filings. However, it’s always recommended to have the proper license when performing any work that requires one.

Tennessee residential contractors should also note that new continuing education requirements were introduced on January 1, 2020.

When Is the Deadline to File a Tennessee Mechanics Lien?

In Tennessee, general contractors are not strictly required to file a mechanics lien statement to protect their mechanics lien rights. They only need to file a lawsuit to enforce the lien within one year of the last labor or materials provided on the project.

However, relying on this approach can be risky, as third parties may cut off the general contractor’s rights before the lawsuit is filed if no lien statement or contract is recorded. To secure lien rights effectively, it’s common practice for general contractors to file a Notice of Lien and Sworn Statement, similar to remote contractors. This means the general contractor should follow the same 90-day deadline that applies to remote contractors to safeguard lien rights against third parties.

Subcontractors or others with lien rights must record their lien within 90 days after project completion or abandonment to protect their interests against future purchasers or encumbrances.

Keep in mind that these deadlines can be shortened if a Notice of Completion is filed and served.

Here’s a summary of key deadlines:

General Contractors:

• Residential (Notice of Completion Filed and Served): File a lien and respond to the notice within 10 days of the filing date.
• Residential (No Notice of Completion Filed): File the lien and response within 90 days of actual project completion.
• Commercial (Notice of Completion Filed and Served): File a lien and respond within 30 days of the Notice of Completion filing date.
• Commercial (No Notice of Completion Filed): File the lien and response within 90 days of project completion.

Subcontractors:

• Residential Projects: No mechanics liens allowed.
• Commercial (Notice of Completion Filed and Served): File a lien and respond within 30 days of the filing date.
• Commercial (No Notice of Completion Filed): File a lien and response within 90 days of project completion.

What Information Should Be Included in a Tennessee Mechanics Lien?

A Tennessee Notice of Lien must closely follow the format outlined in Tenn. Code §66-11-112(d) and should contain the following details:

• Information about the claimant
• Information about the property owner
• Details of the party who hired the claimant (including their role)
• The date when labor or materials were first provided
• The date when labor or materials were last provided
• The total amount of the lien is claimed
• A clear description of the property

Can Attorney Fees, Collection Costs, or Other Amounts Be Included in the Lien Total?

According to Tennessee mechanics lien law, a lien cannot include amounts such as interest, service charges, late fees, attorney fees, or other contractual or legal charges that do not directly contribute to improvements on the property.

However, the law specifies that the party recording the lien must cover filing fees, and the receipt for those fees can be included in the lien amount. Therefore, the only additional cost permitted under Tennessee lien statutes is the fee for filing the lien with the recorder’s office.

Can a Tennessee Mechanics Lien Be Filed on a Condominium Project?

Lien rights may apply to a condominium project in Tennessee, allowing a lien to be filed. If the improvements were contracted by the condominium association, the lien typically attaches to all units within the common interest. However, if the association informs the lien claimant at the time of the contract that the lien should only apply to specific units benefiting from the improvements, the lien will be limited to those individual units.

Does a Tennessee Lien Have Priority Over Pre-existing Mortgages or Construction Loans?

In Tennessee, whether a mechanics lien takes priority over a mortgage depends on certain conditions. A mechanics lien can have priority if the lien claimant sends written notice to the mortgagee via certified or registered mail before starting to furnish labor or materials. If the mortgagee consents or does not object within 10 days of receiving the notice, the lien will have priority.

Any objection from the mortgagee must also be sent by certified or registered mail. If no notice is sent or the mortgagee properly objects, the lien will not take precedence over the mortgage.

Regarding competing mechanics liens, all liens—except those filed by laborers—hold equal priority and share proceeds from a property sale on a pro-rata basis if there isn’t enough to cover all claims. Laborers’ liens take priority over other mechanics liens.

Who Needs to Send a Tennessee Preliminary Notice on Private Projects?

In Tennessee, most parties involved in private construction projects must send a preliminary notice to secure lien rights.

For residential projects, prime contractors are required to deliver a Notice to Owner. Additionally, home improvement contracts must include specific notice language, as outlined in Tenn. Code §62-6-508, to ensure the protection of lien rights.

Subcontractors, laborers, and suppliers must send a monthly Notice of Non-Payment to preserve their lien rights. However, if the only outstanding payment is retainage, the Notice of Non-Payment might not be required.

It’s important to note that only prime contractors on owner-occupied residential projects with 1-4 units have lien rights, so a monthly notice is not needed in such cases.

Is the Tennessee Preliminary Notice Considered Served When Sent or When Received?

In Tennessee, most parties working on private construction projects are required to send a preliminary notice in order to protect their lien rights.

For residential projects, prime contractors must provide a Notice to Owner. Home improvement contracts must also include specific notice language, as mandated by Tenn. Code §62-6-508, to ensure lien rights are maintained.

Subcontractors, laborers, and suppliers are required to send a monthly Notice of Non-Payment to safeguard their lien rights. However, this notice may not be necessary if the only unpaid amount is retainage.

It’s important to remember that only prime contractors on owner-occupied residential properties with 1-4 units have lien rights, so a monthly notice is not required for these projects.

5 Essential Things to Know About Tennessee Mechanics Liens

Contractors and suppliers in Tennessee have strong lien rights. If they aren’t paid on a project, filing a mechanics lien can expedite payment and protect their interests. However, there are specific rules and requirements to follow. Here are five important things to know about Tennessee mechanics lien law.

1. Eligibility Depends on the Type of Project

The right to file a lien in Tennessee varies by project. For most construction projects (excluding 1-4 unit owner-occupied residential buildings), nearly everyone involved has lien rights. This includes contractors, subcontractors, laborers, suppliers, architects, engineers, and surveyors.

On owner-occupied residential buildings with 1-4 units, only the prime contractor or those who have a direct contract with the owner have lien rights. If the owner serves as the prime contractor, first-tier subcontractors, laborers, and suppliers contracted by the owner also have lien rights. For residential projects, contractors must be licensed to file a lien.

2. Notice Is Crucial in Tennessee

Tennessee has specific notice requirements.

• General contractors must provide a “Notice to Owner” before starting work on a project. For owner-occupied residential projects, this notice must be included in the contract between the general contractor and the owner.
• Subcontractors, suppliers, and others must send a Notice of Non-Payment within 90 days of the last day of the month in which labor or materials were provided but unpaid.

Notice must be sent via certified mail with return receipt requested. Failing to provide timely notice can invalidate the lien.

3. Lien Deadlines Vary for Contractors and Subcontractors

Tennessee’s mechanics lien deadlines can be complex. General contractors are not required to file a lien statement to preserve their rights, but they must file a lawsuit to enforce the lien within one year from the last date of providing labor or materials. However, it is advisable to file a lien statement within 90 days of project completion to avoid losing lien rights.

For other parties, including subcontractors, a lien must be filed within 90 days of project completion or abandonment. These deadlines may change if a Notice of Completion is filed.

• General contractors and subcontractors may have shorter filing deadlines depending on whether a Notice of Completion is recorded and served.

4. Mechanics Lien Priority in Tennessee

In Tennessee, laborers’ mechanics liens take first priority over other mechanics liens. All other mechanics liens share equal priority and will divide proceeds from a sale of the property if there isn’t enough to cover all claims.

A mechanics lien can also take priority over a pre-existing mortgage if the contractor provides written notice by certified or registered mail before starting the project. If the mortgagee does not object within 10 days, the mechanics lien takes priority over the mortgage.

5. Extra Fees Are Not Included in Tennessee Mechanics Liens

Mechanics lien in Tennessee cannot include interest, late fees, service charges, or attorney fees. The only additional amount allowed is the cost of filing the lien at the recorder’s office, which can be added to the lien total.

Tennessee Lien Law: Key Provisions and Updates

Tennessee lien law is complex and technical, with specific requirements and deadlines that must be followed to ensure the validity of a mechanics lien. Some key provisions of Tennessee lien law include:

• Pre-lien notices: Contractors and suppliers must serve pre-lien notices to the property owner and general contractor to preserve their lien rights. This notice informs the property owner of the potential for a lien if payment is not made.
• Notice of nonpayment: Subcontractors and suppliers must serve a notice of nonpayment to the property owner and general contractor within 90 days of the last day of work. This notice is crucial for preserving lien rights and must be sent via certified mail, return receipt requested.
• Mechanics lien deadlines: Contractors and suppliers have 90 days from the last day of work to file a mechanics lien. Missing this deadline can result in the loss of lien rights.
• Reasonable rental value: Contractors and suppliers can claim reasonable rental value for equipment and materials provided to the project. This ensures that they are compensated for the use of their resources.

Staying up-to-date with the latest updates and changes to Tennessee lien law is essential for compliance and avoiding potential issues. Regularly reviewing the law and consulting with legal professionals can help ensure that all requirements are met.

How to File a Mechanics Lien in Tennessee?

Tennessee’s mechanics lien laws are among the more complex in the U.S., and navigating them can be challenging for contractors, suppliers, and others in the construction industry. It’s important to be cautious when trying to handle the mechanics lien process without assistance.

If you’re dealing with a payment issue on a Tennessee construction project, this guide will help you understand the basics of filing a mechanics lien.

Tennessee Is an “Unpaid Balance” State

In Tennessee, mechanics liens only secure the unpaid balance that the property owner owes the general contractor at the time the lien is filed. If the owner has already paid the general contractor in full, you may need to pursue a breach of contract lawsuit against the party who hired you to recover unpaid funds.

If the general contractor hasn’t been paid in full, follow these steps to secure your lien rights.

Who Is Eligible to File a Mechanics Lien in Tennessee?

Anyone performing work or supplying materials for permanent property improvements is generally eligible to file a lien. To qualify, the work must have a lasting impact on the property, not something that can be easily removed (such as furniture).

Tennessee offers two types of lien claims: direct liens and indirect liens. Each has specific steps and limitations to secure and enforce the lien.

Types of Mechanics Liens in Tennessee

1. Direct Liens

Direct lien claimants are those who have a direct contract with the property owner. They have one year from the last day of providing labor or materials to enforce their lien rights. Although direct lien claimants are not required to record a notice of lien, it’s often a smart move to protect their rights against third-party purchasers or creditors. Filing a Notice of Lien at the county register’s office ensures the lien’s enforceability.

2. Indirect Liens

Indirect lien claimants include subcontractors and suppliers who do not have a direct contract with the owner. To secure their lien rights, indirect lien claimants must follow additional steps, such as sending preliminary notices and monthly Notices of non-payment.

Mechanics Liens on Residential Properties

For residential properties with 1-4 owner-occupied units, only the general contractor and those contracting directly with the property owner have lien rights. If the owner acts as the general contractor on a single-family residence, first-tier subcontractors may still have lien rights. Additionally, if the property is not owner-occupied, indirect liens can be filed.

Mechanics Liens on Commercial Properties

Indirect lien claimants can file liens on commercial properties, but they must send a Notice of Nonpayment within 90 days of their last provision of labor or materials.

This notice must include:

• Claimant’s name and address
• Description of labor or materials provided
• Date of last furnishing labor or materials
• Description of the property

If a notice is not sent, the lien rights for that month will be lost. However, lien claimants can still file for any unpaid retainage.

Step-by-Step Process for Filing a Lien in Tennessee

To file a lien, claimants must submit a sworn statement outlining the lien amount and provide a legal description of the property. Filing fees apply, so it’s best to contact the recorder’s office to confirm the exact amount.

The Tennessee mechanics lien law provides a specific format for the Notice of Lien, which includes the lienor’s details, description of the work or materials provided, dates of work, and the amount claimed.

Sending Notice After Filing

Indirect lien claimants are required to notify the property owner of the lien filing via registered or certified mail. This notice must be sent before the lien filing deadline.

What Happens Next?

Once the lien is filed, the property owner or general contractor may reach out to discuss payment. If discussions stall or are unsuccessful, claimants can send a Notice of Intent to Foreclose, warning the owner that the lien may be enforced through legal action.

Enforcing a Tennessee Mechanics Lien

For direct lien claimants, a lawsuit must be filed within one year after the work is completed. Indirect lien claimants have only 90 days to initiate a lawsuit after filing the lien. If the property owner issues a Demand for Enforcement, both deadlines are reduced to 60 days.

Post-Payment Steps

When a lien is settled or has expired, Tennessee law requires claimants to file a Release of Lien within 30 days with the county Register of Deeds. Failing to do so could result in liability for damages or costs related to the delay.

Get in Touch

Filing a mechanics lien in Tennessee is an effective way for contractors, suppliers, and others in the construction industry to secure payment for their work. However, the process involves navigating complex rules and deadlines. By following Tennessee’s mechanics lien laws, including providing proper notice and meeting filing deadlines, you can protect your lien rights.

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.