There are times when invalid or unenforceable Liens are filed, causing project delays and other problems. Other times a Lien that was valid when filed becomes unenforceable because the debt was paid or because the contractor did not try to enforce the lien after you exercised your statutory right to make him do so. Liens can also interfere with the sale, financing or refinancing of your property. If there is an invalid Lien on your property and you are required to file a lawsuit to have the Lien removed, in certain circumstances we can help you recover an award of $2,500 from the contractor or subcontractor plus your legal costs to file a lawsuit.
The Mechanics Lien Act permits any party who has an interest in real estate upon which a Lien was recorded and any party who has any interest in the Lien itself, or the resolution of the Lien claim, to require a Lien Claimant to file a lawsuit to enforce the Lien within thirty (30) days. If a lawsuit is not timely filed, the Lien is forfeited and unenforceable. The idea behind this is to provide a method to force the issue of a Lien’s validity. This tool is particularly useful in the case of small Liens, where it may not be economically feasible to file a lawsuit, or Liens which, for any number of reasons, cannot in all likelihood be settled. The Statute prescribes the manner of serving a demand that triggers the thirty (30) day period and language that must be included in the demand.
In the absence of a contractual provision allowing for the recovery of attorney’s fees in the event of a dispute between the parties, is there any remedy besides defending the claim when a Contractor files suit to foreclose its Lien when the Lien is unenforceable because i) the Contractor was paid what it was due, ii) the statute of limitations expired or iii) it filed suit more than thirty (30) days after being served with a demand? The answer, as in many aspects of the law, is maybe. As between an owner and a general contractor only, if a lawsuit to enforce a Mechanics Lien is filed without just cause, the owner may recover its costs and attorneys fees in defending the lawsuit. “Without just cause” means more than simply failing to prevail in the lawsuit. The courts have said that there must be an element of bad faith. Specifically, The Act states:
“If the court specifically finds that lien claimant has brought an action under this Act without just cause or right, the court may tax the claimant the reasonable attorney’s fees of the owner who contracted to have the improvements made and defend the action, but not those of any other party.
So what does “without just cause or right” mean? A frequent standard cited by the courts in interpreting this language is that the Claimant’s lawsuit is not well grounded in fact or warranted by existing law or a good faith argument for the extension, modification or reversal of existing law. In other words, it means the lawsuit was not brought in good faith based on the facts and the law.
If someone has filed a Lien against your property or is claiming a Lien as a result of having supplied materials or having worked on your property, we can assist you by analyzing the validity of the Lien and taking the necessary action for its removal.