Since launching my first law blog in 2005, and this construction lien blog in 2007, I’ve talked a lot about mechanic lien laws.   I’ve never addressed where these laws originated, and why our United States has some of the most unique lien and security laws in the world.

So I hit the books, reading cases construing mechanic lien laws from the 18th and 19th Century, and some treatises on the subject written in the 1800s.   What I found, in short, is that the idea of the mechanic lien may have roots in the Roman Empire, that it was modernized and brought to the US by Thomas Jefferson, and that the reasoning and interest of these laws have changed drastically since introduction.

Where The Mechanic Lien Idea Comes From

A lot of folks attribute the invention of the modern Mechanic’s Lien to American hero, Thomas Jefferson.[1] Such credit is not completely inaccurate. After all, the founding father did introduce the first Mechanic Lien legislation, and no such lien rights existed in England (where America’s legal concepts are rooted).

It makes sense that England didn’t have such laws. There, land ownership was an indicator of class status, and it would be an absurdity to provide a low-class builder any ownership rights in property simply because he contributed to its construction.[2]  But with land supply so abundant in America that it was given away, it’s clear the circumstances there were quite different.

America’s problem was not a shortage of land.   It’s problem was the shortage of materials and labor to improve the land.

As for the concept of the mechanic lien, it’s not likely that Mr. Jefferson single-handedly dreamed up the idea.

Instead, at the time Jefferson promoted the law, a lien-like privilege already existed in civil law countries like France, Belgium and Spain, with some even tracing its roots to the Roman Empire. And since Louisiana had passed control between the French and Spaniards, and had largely adopted the French Napoleonic Code, there was a similar privilege concept in that territory.[3]

It seems highly likely that the legislators working on the first U.S. Mechanic Lien laws had knowledge of, and referenced these civil law concepts.

This is not to say that the United States version was unoriginal. The contrary is true, as the American version of the lien gave builders a much more robust right into the land itself (versus just the improvement’s value).

Why Colonial America Needed Lien Laws

The colonial period in America presented many challenges for developing land and building homes. Before independence, for example, the Nonimportation Act made supplies and materials of all sorts (even those organic to America) very expensive and difficult to obtain. Aside from this, the credit markets were in dismal condition, meaning that while the access to land was unprecedentedly simple, the finances to develop that land were very difficult to come by.

If the country was going to continue its expansion and develop all of its land, some solution was required. And that solution was created by Thomas Jefferson to get land development moving along in one specific and very important location: Washington D.C., the nation’s new capital.

In 1791, he introduced the Mechanic Lien Act to the Maryland legislature (where DC was then located), and it was passed rather immediately. We do not have record of any significant opposition to the concept, and there likely was none considering how uniformly and quickly similar laws were adopted elsewhere in the United States.[4] After just one year of action, a similar law was passed in Pennsylvania, and in no time every state had its own lien law.

The Development of Lien Laws

The mechanic lien laws turned out to be an enormously important piece of legislation for the developing country, as without it, it’s hard to conceive how the nation would have developed so rapidly and successfully. Assuring builders that they would have an ownership interest in the developed land itself gave them the security to move forward with projects, and gave owners the flexibility to do so without intervention and regulation by financing groups.

The success of these laws is evidenced by their quick adoption across the country, and the way the laws expanded in scope. While originally applicable to only states and towns, for example, the laws soon included the agricultural regions and then the entirety of the states.

As the mechanic lien laws were used, problems were exposed and the legislation was quickly refined. At first designed to simply protect builders contracting with the owner, protection for subcontractors and suppliers followed when builders fraudulently left those parties unpaid. Additionally, the original laws lacked complexity of any sort, allowing a builder to acquire the lien automatically and without notice, and to maintain it for seemingly forever. This was quickly made more complex by notice requirements and time limitations.[5] As anyone in today’s construction industry certainly knows, the lien laws are no longer lacking in complexity.

Why Is It Called A “Mechanic” Lien?

As an aside, it is interesting to consider the term “mechanic lien” itself, as statutes across the United States almost uniformly refer to it as such (and the term does appear to be an American invention).

While it seems unnatural to us today, in the parlance of Jefferson’s time the term “mechanic” had nothing to do with machinery. Of course, very little machinery even existed then.  Instead, the term mechanic had been nestled in the English language for centuries and referred to folks who perform work with their hands…specifically, builders and tradespeople.

In fact, the association of the term with machinery did not exist until the invention of the automobile. This is a source of a small amount of misunderstanding today, as “mechanic lien” can refer to a lien placed by a builder against a construction project, or a lien placed by a mechanic against an automobile or airplane.[6]

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Footnotes for this Blog Post:

Maryland is one such state where a contractor could truly run into problems. The State of Maryland, differs vastly from its nearby Virginia and District of Columbia. Though VA and DC follow the nationwide rule of record first and file second, Maryland requires a file first and record second procedure.

We want to go through some of these mechanics so that you can become better acquainted with your obligations in the State of Maryland.

Why Lien?

Similar with most states, Maryland’s lien action enables the claimant to obtain a right and action against uphill general contractors and property owners, when they do not ensure that lower level parties are paid for services or materials delivered at a job.

Even in situations where a subcontractor, or other low level party, enters into a contract with a contractor, which conditions payment upon payment to the contractor from the owner, a claimant who remains unpaid may utilize the lien law at any time to preserve its right to payment.

In Architectural Systems, Inc. v. Gilbane Building Co., 760 F. Supp. 79 (D. Md. 1991), a Maryland Court interpreted § 9-113(b) of the Maryland Real Property Code to state that liens are not barred by “payment if paid” or “payment when paid” clauses. Thus, a claimant is free to file as long as they meet other procedural guidelines.

Who Can Lien?

Like most other states, all persons providing labor and materials for buildings erected or for repairs and improvements to existing buildings have lien rights.

However, in the case of “repairs of improvements,” only if such improvements and repairs equal 25% of the value of the improved building does one acquire lien rights. Md. Real Prop. Code Ann. § 9-102(a).

Further, architects and union trustees have also been entitled to claims.

How Do I Protect My Lien Rights? Are There Notices?

Maryland is tough on notice. Under the seminal case, Tyson v. Masten Lumber & Supply, Inc.,
44 Md. App. 293, 408 A.2d 1051 (Md. Ct. Spec. App. 1979), the Court expressly stated that improper notice will void a lien. Thus, care must be afforded when preparing to secure your lien.

(A) General Contractors

If you contract directly with the owner – you are not required to provide notice prior to filing your lien. This includes all general contractors under the statute, as well as those subcontractors or suppliers who have an agreement with the owner to provide services or materials.

(B) Subcontractors/Suppliers

A subcontractor, or other 2nd tier claimant, who does not directly contract with the owner, will lose its lien rights unless within 90 days after doing work or furnishing materials, the owner is given written notice of the intention to claim a lien.

Md. Real Prop. Code Ann. § 9-104 provides the form for this lien. The law explicitly states the mailing of the notice within 90 days, by registered or certified mail, will constitute effective notice.

(C) Exceptions to the Notice Rule?

There are some minor exceptions to the notice rules. Actual notice to an owner of a claimant’s intention to file has been successful, meaning that as long as a claimant can prove that the owner knew about the impending lien claim, it cannot defend on the basis of lack of written notice.

How Do I File My Lien?

This is the tricky part. Unfortunately, Maryland has elected to make liening a property a substantial investment. This makes it more difficult for Zlien to assist you in filing your lien, but not impossible.

Lien actions MUST be initiated by way of a prior legal action. Yep, that’s right, you must file a lawsuit first in order to obtain an order from a court of competent jurisdiction that entitles you to file a lien.

A petition to claim lien must be filed in the court for the county where the work was completed within 180 days from the completion of work or last date of delivery of materials.

Work has been interpreted to mean the last date of work being provide by the claimant, which can extend past the date of substantial completion.

In order to file this action, you should consult with a Maryland attorney or contact the courts to inquire about a form.

At a minimum, the petition will require you to submit a verified account of all material facts and copies of all material papers, including contracts, orders, invoices and payment receipts. Also, the claimant must illustrate that the notice was properly served, if required by law.

The petition must be served upon the owner, who will be ordered to show cause why the lien should not be ordered within 15 days. An owner may answer and defend the petition, but otherwise, if it fails to answer, the petition shall be deemed admitted and the lien valid.

Once your action is filed and you obtain an order from the court, you may contact Zlien to to get your lien filed!

What Can I Recover in My Lien?

Unlike other states, a Maryland subcontractor can make a claim for the full extent of contractual amounts that are due under its contract with a contractor. Thus, the owner cannot defend that it has already paid the contractor for amounts due to the contractor, as long as notice was properly delivered.

The contract will determine what you can claim on your lien. Any additional charges over the costs of the original work may be claimed, as long as they are spelled out in the contract.

What Pitfalls Might I Encounter?

Maryland has bond laws which provide a manner in which the owner, or general contractor, can have the lien released before payment to a subcontractor. This will result in your lien claim becoming a lawsuit for recovery.

But, Maryland does not have a slander or improper lien law which would subject a claimant to liability. As long as the  lien is not proven to have been made (1) falsely and (2) spitefully, the lien will simply be dismissed without further damage to the claimant.

Can I Waive My Lien Rights?

The short answer is NO!

Section § 9-113 of the Maryland Real Property Code was revised in 1981 to expressly prohibit lien waivers prior to beginning of the work at the property. Of course, during the work, and upon payment, contractors may obligate you to provide them with a lien waiver for work completed, but they cannot abridge your rights to claim a lien during the contracting stage.

A copy of pertinent Maryland lien laws can be found here. Let Zlien help now by providing notice of your claim or by filing your lien (after being ordered by the court)!