How to Remove an Arizona Mechanic’s Lien
A mechanic’s lien, or materialman’s lien, is a mechanism designed to help contractors and those who provide labor services and materials for a property get paid. Without mechanic’s liens, contractors would have very little leverage in collecting on outstanding invoices. That said, mechanic’s liens are often abused, misfiled, and inappropriately aimed at homeowners and commercial building owners. Getting an invalid mechanic’s lien removed can provide tremendous leverage in settling and eliminating any underlying debt.
Protections from Invalid Mechanic’s Lien Found in A.R.S. § 33-420.
As a result, Arizona law has evolved over the years to provide a very intricate set of hoops a contractor must jump through in order to record a valid mechanic’s lien against a property. Too often, they miss a step and the lien can be invalidated. In fact, Arizona law strongly disfavors invalid mechanic’s liens and punishes those who record invalid liens with a $5,000 fine or treble (triple) the actual damages amount, whichever is greater. This is found in A.R.S. § 33-420.
Requirements for a Valid Arizona Mechanic’s Lien
Preliminary 20 Day Notice
Arizona law requires that the contractor or material provider send a preliminary notice to the property owner within 20 days of starting work on the property. This notice must be mailed to the property owner and proof of mailing is required, among other procedural requirements. If the contractor or supplier fails to do this, that’s it, the end of the road. Do not pass Go, do not collect any money. Without a proper preliminary 20 day notice, the contractor has no lien rights, and recording a lien will be an invalid act, in violation of A.R.S. § 33-420.
However, the 20 day time period is a rolling time period. In other words, the notice could be mailed late, after work has begun, but lien rights will only attach to work done on or after the mailing.
For example, assume a contractor works on a property beginning September 1st and work is completed October 31st. The contractor forgets to mail the preliminary 20 day notice on September 1st. But as he finishes the project he remembers and gets it mailed out October 31st. The lien rights would only attach to the work done during the 20 days preceding October 31st, which would be October 11th.
But here is where the contractor can still go wrong. If he records a mechanic’s lien that includes all of the work dating back to September 1st, then the entire lien is invalid, even the part that includes the work done in the last 20 days of October. That’s how strict the mechanic’s lien statutes are.
The Contractor or Supplier Must Record the Mechanic’s Lien in Time
Assuming the contractor followed the preliminary 20 day notice requirements appropriately, and has preserved their lien rights, the next step is to record the Mechanic’s Lien. Arizona law states that the lien must be recorded with the county recorder no later than 120 days after completion of the work. In many cases, the deadline is even sooner depending on the construction contract and other factors. But 120 days is the drop dead limit on how long a contractor can wait to file the lien. If the contractor misses that deadline, any lien recorded after that will be invalid.
Mechanic’s Lien Foreclosure Deadline
Assuming there was a valid preliminary notice and a validly recorded lien, the contractor is still not out of the woods. Arizona law provides that the contractor or supplier must file a lawsuit to foreclose on the mechanic’s lien within six months of recording the lien. Failure to do so will invalidate the lien and the contractor will have no further lien rights.
Other Ways to Remove a Mechanic’s Lien
There are several other ways to avoid or remove a mechanic’s lien. In Arizona, an owner-occupant of a residential property is only subject to a mechanic’ lien by a contractor or supplier that the homeowner directly contracted with. That means, sub-contractors may be out of luck against an owner-occupant of residential property. Other methods of avoiding a mechanic’s lien include:
- Payment Bonds
- Discharge Bonds
- Negotiated Settlement
Resolving the Debt Associated with a Mechanic’s Lien
Even without a mechanic’s lien, there is still the underlying debt or alleged debt to the contractor or supplier that needs to be dealt with. Our firm is skilled at negotiating down and eliminating mechanic’s liens and any associated debt. Of course, it is always helpful if we can find a way to invalidate the mechanic’s lien, so that is one of the first paths we analyze. But we also provide a comprehensive strategy to settle the debt for a fraction of what the contractor is demanding.
We offer a free consultation with a mechanic’s lien lawyer. Call us to find out how your mechanic’s lien issue can be resolved.