A valid and enforceable Claim for a Mechanics Lien gives the contractor or sub – contractor (called the “Lien Claimant”) an “interest” in the property where his or her work was done. In other words, one might say that the Claimant becomes a co – owner of the property, along with the property owner and any bank that has a mortgage on the property.

The practical effect of a valid and enforceable Mechanics Lien is that the property owner may not sell or refinance the property without either paying the Claimant or somehow making sure that there is money available to pay the contractor.

If the owner does not pay the Claimant after the lien is recorded, the Claimant may file a lawsuit to foreclose on the property, just like a bank does when its mortgage is not paid. Depending upon the facts of the case, many times the contractor’s Mechanics Lien will trump a mortgage, even if the mortgage was recorded prior to the Claim for Lien.

In the event that a property owner (or if you are a sub – contractor, the general contractor) declares bankruptcy, the Lien Claimant will be classified as a secured creditor by the Bankruptcy Court. This means that the Claimant will be at or near the top of the list to get paid when the Bankruptcy Court settles the debts of the bankrupt owner (or general contractor).

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