A Beginner’s Guide to Understanding Mechanic’s Liens in Arizona

Mechanics liens allow any person who furnished “labor, materials, professional services, fixtures, or tools, in the construction, alteration, repair, or improvement of any building, or other structure pursuant to a contract with the owner, or with an agent of the owner” to secure payment if they were unpaid on a construction project. Mechanic’s liens have been protecting workers for decades, and it is likely that you or your business will be able to file one, if necessary.

What is a Mechanic’s Lien?

A mechanic’s lien is a guarantee of payment to builders, contractors or anyone else who has furnished a construction project. If the property owner or project leader who signed a contract has not paid for the person’s or business’ services, the person or business can file a mechanic’s lien to attach a lien to the property.

As a refresher, a lien is a public notice that the owner of the property in question owes a creditor money. The process ensures that workers and services providers are not taken advantage of and that contracts are fulfilled.

Once a mechanic’s lien is filed, the lien holder (you) can file a lawsuit against the property owner to foreclose the lien, which results in the property being sold at a foreclosure sale. You would then receive payment out of the proceeds of sale. There is a six-month deadline to initiate a foreclosure action after the lien is filed.

Who Can File a Mechanic’s Lien?

Nearly everyone involved in contributing to a construction project is entitled to file a mechanic’s lien if payment, but there are three exceptions:

• Design professionals who have not entered into a written contract with the property owner or a written or oral contract with the project architect do not have the right to file.
• Individuals who worked on an occupied residential project without a written contract do not have the right to file.
• Those who supplied the project’s suppliers do not have the right to file.

Unfortunately, this means that some subcontractors, or those who issued materials to the workers without a direct contract with the property owner, wont be able to use a mechanics lien as a remedy.

In Arizona, liens must be filed within 120 days from the completion of the project as a whole. However, if a notice of completion was filed, the deadline is shortened to 60 days from the date such notice was filed.

How Do I File a Mechanic’s Lien?

Mechanic’s liens must be filled out according to Ariz. Rev. Stat. 33-993 and include all the information about the project and property that is listed in the statute. There is the option to file by mail, electronically, or by filing in person.  Filing in person may be wise, as it ensures that the lien will be filed that day. Those who wish to file in person must do so at the Arizona county recorder’s office where the property is located—filing at the closest and most convenient office could result in the lien being rejected.

Once the lien is recorded, a notice must be served (sent) to the property owner in a reasonable time. Be sure to also get a return receipt or other record that the notice has been served. You may need this receipt if you must reinforce the lien, which has a deadline of six months from the date it was filed. Continued failure to issue payment results in a foreclosure of the property, if you prevail.

Find an Experienced Phoenix Real Estate Attorney

If you are involved in a dispute about mechanic’s liens, you want to make sure you have experienced legal representation. The most effective approach in a potential dispute is working with a legal team that can evaluate your potential case and break down the best options for success. MacQueen & Gottlieb has significant experience with resolving legal disputes involving real estate. Contact us today at 602-562-7218 to schedule an initial consultation or make an appointment online.