Any contractor, supplier, or service provider may place a lien on real property in Arizona in most circumstances where they rendered services and were not paid. If a company or individual provided materials or performed work on real property and they were not paid, filing a lien can allow them to still receive compensation for those services or supplies provided. However, it is vital to understand the strict process for a materialmen’s or mechanic’s lien in Arizona if you wish to pursue compensation through this route. This basic overview is intended as an informative guide to the mechanic’s and materialmen’s lien process in Arizona. Each case will require strict attention to detail and it is essential to discuss your individual case with an experienced attorney to guide you through the entire process of enforcement and perfection of the lien.
Mechanic’s Lien in Arizona
Mechanic’s Liens get their name from the common use by repairmen that have performed repair services on a car, truck, or other movable personal property. In cases where a mechanic or repairmen is not compensated for services rendered, they can establish an interest in the vehicle or personal property in order to leverage payment or otherwise receive compensation.
Materialmen’s Lien in Arizona
A materialmen’s lien in Arizona is designed to provide a legal process for compensation to contractors and suppliers that have gone unpaid on a project. In most cases, a subcontractor can use a materialmen’s lien when they performed work based on a contract with the building owner or the owner’s agent. For the purposes of these liens, contractors are agents of the owner. If a lien is filed by one other than the contractor, the contractor has a duty to defend the owner against the claim.
Likewise, a supplier can only use a materialmen’s lien if they provided the materials at the direction of the owner of the property or the owner’s agent. It is advisable to discuss these individual situations with an attorney who’s well-versed in materialmen’s lien laws in Arizona.
Key Deadlines for Filing a Materialmen’s or Mechanic’s Lien in Arizona
Arizona has strict rules to follow in order to execute an enforceable lien for either a materialmen’s or mechanic’s lien. Here are a few of the most important details to understand:
- 20-Day Preliminary Notice Must Be Sent
The state of Arizona requires all service providers, material suppliers, and labor to provide a 20-day preliminary notice to the defaulting party in order to file a valid materialmen’s or mechanic’s lien. If a party does not provide the preliminary notice, it will nullify any attempt to file the lien. While the notice can be sent more than twenty days after work has begun, the party seeking compensation will only be able to guarantee inclusion of invoices from the 20 days prior to the twenty-day notice.
The 20-day preliminary notice in Arizona must include a stated amount owed. This means some contractors, material suppliers, and laborers might have to use a good faith estimate. Arizona law protects those parties that underestimate the correct amount owed in a preliminary notice up to 120% of the estimated amount.
- Know the Deadlines
The two most important deadlines for materialmen’s and mechanic’s liens in Arizona revolve around the Notice of Completion. The deadline to file a lien on a project where the Notice of Completion has been filed is 60 days. On a project where the Notice of Completion has not been filed, all parties have 120 days to file a lien from the completion of the last improvement.
It is vital to understand that Arizona lien deadlines are dependent on the progress/completion of the project as a whole and not just the work on an individual part of the project. This means that contractors and suppliers must pay careful attention to all deadlines and project descriptions.
The state of Arizona also requires the action to enforce a lien must be initiated within 6 months from when the lien was recorded. In Arizona, the lien expires if enforcement is not initiated within that 6 months requirement. Arizona law also requires a Lis Pendens must be recorded within 5 days of filing suit.
- Not All Parties Qualify to File a Materialmen’s or Mechanic’s Lien in Arizona
Arizona has specific laws regarding which parties qualify to file a materialmen’s or mechanic’s lien. For example, there are limitations on liens against residential building occupied by their owners or for professional services, such as design. The party must have a contract with the owner-occupant of residential project in order to file a lien against that project. This means subcontractors and suppliers will not qualify if they invoice the contractor directly on a project, rather than have a contractual relationship with the owner-occupant.
Design professionals, like interior decorators, must have a contract directly with the homeowner, but there is an exception if they have a contract with an architect that has a contract directly with the homeowner.
- Construction Loans Generally Have Priority
Under Arizona Revised Statutes 33-992, construction loans have priority over mechanic’s liens even if the loan was taken out after the project started as long as the mortgage is recorded within 10 days after labor or materials were commenced.
- Liens Must Be Released Within 20 Days
It is generally best practice to remove all liens as soon as possible when they are satisfied. However, the state of Arizona has a deadline of 20 days after satisfaction to remove liens. There are penalties of $1,000 and the possibility of additional fines for actual damages if liens are not removed within the 20-day deadline.
Find an Experienced Attorney for Mechanic’s Liens in Arizona
MacQueen & Gottlieb have significant experience with filing materialmen’s and mechanic’s liens in Arizona. Our firm can review your case and guide you through the filing process so that you meet all requirements and deadlines. Contact us today at 602-533-2840 to schedule an initial consultation or make an appointment online.