There are many legal aspects to a construction project that aim to ensure that the parties to the project are paid what they are owed.
For example, contractors and subcontractors can file mechanic’s liens to ensure they have the right to pursue compensation if they are not paid. This is especially important if the property owner is foreclosed upon or goes bankrupt. Still, enforcing a mechanic’s lien in Tennessee can be complicated.
What is a mechanic’s lien?
A mechanic’s lien is a document filed with the county Register of Deeds office in the county where the construction project is located that preserves a contractor’s or subcontractor’s right to pursue compensation for work done and materials purchased if the property owner goes bankrupt, is foreclosed upon or otherwise does not pay what is owed.
The lien lasts the entire construction period and until all those associated with it are paid what they are owed. A property owner cannot sell the property if there is a lien against it.
Enforcing a mechanic’s lien
Enforcing a mechanic’s lien in Tennessee can be complicated.
First, there are deadlines for enforcing a mechanic’s lien, which differ based on whether the project is residential or commercial in nature and whether the party seeking to enforce the lien is a contractor or subcontractor. If these deadlines pass, it might not be possible to purse a claim.
Second, a Tennessee Notice of Lien must include specific information as laid out in Tennessee statutes. One piece of information it must contain is a description of the property. Ensuring the description is legally accurate is essential. Sworn statements must be recorded and there are filing fees as well.
If any of these requirements are not met, it can slow down or prevent lien enforcement.
Tennessee has some of the most complex mechanic’s lien laws in the nation. Contractors and subcontractors who want to enforce a mechanic’s lien often take all the steps they can to ensure they do so within the confines of the law to best protect their rights to payment.
