INDIANA MECHANIC LIEN FOR RESIDENTIAL REAL ESTATE
Anyone who deals with the construction or remodeling of a new home in Indiana should have a basic understanding of Indiana’s mechanic lien law. When contractors, suppliers, or equipment rental companies provide labor, material or equipment for the construction or improvement of a residential property, they may have lien rights. If they do not get paid, they may file a lien against the property. The filing of a lien against any real estate will in most cases prevent the owner from selling or refinancing their home, and it may also be construed as a breach of the terms of a promissory note and mortgage on the property. Consequently, a properly filed mechanic lien can be a powerful tool for a contractor, supplier or equipment rental company to collect money due them for the project.
The actual filing of a mechanic lien requires the contractor, supplier or equipment rental company prepare and record duplicate copies of a written notice to the owners of the property that they intend to hold a lien on the owner(s)’ real estate. According to the Indiana Mechanic Lien statute, the holder of the lien must provide a written notice to the owners which contains the name and address of the lien holder, the amount of the lien, the last date labor, materials or services were provided to the job site, a statement that the lien is being filed within 60 days of the last date labor, services, or equipment was provided to the job site, a brief description of the labor, materials or services provided. The notice must be signed and notarized and recorded with the county recorder in the county where the property is located. The recording of the notice must be technically accurate and timely filed, or the lien may be invalid. Real estate attorneys are generally very well equipped to make sure the liens are perfected, which is to say filed in accordance with Indiana law.
Once a Indiana mechanic lien for residential real estate is perfected, the holder of the lien has one year in which to file a lawsuit to foreclose on the lien. Failure to file a lawsuit within the one year period, will cause the lien to become void and unenforceable. If the holder of the lien fails to foreclose on the lien before the one year expiration date, he or she may still have the right to sue the general contractor or the property owner under a theory of breach of contract or unjust enrichment, but unless there is a contract that gives them the right to recover attorney fees, they will not be able to recover attorney fees, as they might when suing to foreclose on a mechanic lien.
Contractors who work under other contractors rather than the property owners must record a “Pre-Lien Notice” with the county recorder’s office within 60 days of the first day they provided labor, materials or services to the job site. Failure to record and send the owners a copy of the pre-lien notice will invalidate any subsequently filed mechanic lien on a residential property. The purpose of this notice is to give the property owner sufficient notice that someone other than the contractor they contracted with is working on their home and may ultimately file a lien on the property, if they are not paid. By having notice of the identity and the scope of the work being performed by subcontractors, the homeowner can take steps to insure the subcontractors are properly paid and, accordingly, no liens are filed. Obtaining lien releases or putting every contractor’s name on the check may help guard against the filing of a mechanic lien.
If the contractor contracts directly with the homeowner then no pre-lien notice is required. However, the lien notice on a residential property must be recorded within 60 days of the last day labor, material or equipment was provided to the website, whether a pre-lien notice is required or not. For commercial projects, no pre-lien notice is ever required and the lien notice must be filed within 90 days of the last date labor, materials or equipment was provided to the job site.
This article is a general overview of Indiana’s mechanic lien statute (sometimes referred to as Indiana’s Mechanic’s Lien Statute). There are many technicalities to the statute and property owners and contractors would be well advised to hire a qualified real estate lawyer to assist them where a mechanic lien is an issue.
For more information on mechanic lien resolution recording and enforcement see our real estate page.
