What is a Mechanic’s Lien anyway?
A mechanic’s lien is a legal claim against real estate for unpaid work, materials, machinery, or certain equipment used to improve the property. Despite its name, it is not about automobile mechanics. It is most often used in construction disputes involving contractors, subcontractors, laborers, material suppliers, and equipment lessors. The lien does not prove the amount claimed is correct or transfer ownership. Instead, a properly recorded lien places a claim in the property’s public title records. It can complicate a sale or refinancing and may be enforced through a lawsuit asking the court to sell the property to satisfy the debt.
Indiana’s Mechanic’s Lien law
Indiana mechanic’s liens are governed principally by Indiana Code 32-28-3. I.C. 32-28-3-1 broadly allows a contractor, subcontractor, mechanic, equipment lessor, journeyman, laborer, or another person who performs labor or furnishes materials or machinery for specified improvements to assert lien rights. Covered work can include building, altering, repairing, or removing a house or other structure, as well as sidewalks, wells, drains, sewers, and earth-moving work. A person claiming lien rights generally must record a “Notice of Intention to Hold Mechanic’s Lien.” Under I.C.32-28-3-3, this is a sworn statement filed in duplicate with the recorder of the county where the property is located. The notice must state the amount claimed, the claimant’s name and address, the owner’s name and tax-record address, and the property’s legal description and street address, if any. An Indiana attorney in good standing may verify and file the notice for a client.
Deadlines matter
The recording deadline is strict. For work relating to a “Class 2 structure,” the notice generally must be recorded no later than 60 days after the claimant last performed labor or furnished materials or machinery. A Class 2 structure generally includes a townhouse or a building containing only one or two dwelling units. For other covered property, the usual deadline is 90 days after the claimant last performed labor or furnished materials or machinery. Missing the recording deadline can defeat the lien. Some residential subcontractors and suppliers who do not contract directly with the owner may also have to give an earlier written notice of their work and potential lien rights. Those preliminary-notice rules can depend on whether the project is new construction or an alteration or repair. Because both the property classification and the claimant’s role can change the deadline, waiting until the project is finished to obtain advice can be risky.
Recording the notice is only one step. Under Indiana Code § 32-28-3-6, the lienholder generally must file a foreclosure complaint in the county where the property is located no later than one year after the notice was recorded. If the lien is not enforced within the statutory period, it ordinarily becomes void.
What should you do if a lien is filed?
Do not ignore it. Obtain a complete copy and note the recording date. Compare the claimant, amount, property description, and claimed last date of work with your contract, invoices, change orders, canceled checks, lien waivers, and communications. Determine whether the claimant contracted directly with you or worked under another contractor. Defenses may include payment, timeliness, notice, the work performed, the amount claimed, or the property interest described.
If the debt is valid and undisputed, payment in exchange for a properly recorded release may be the simplest solution. If the claim is disputed, communicate carefully and preserve all documents, photographs, inspection records, and proof of payment. Because a lien affects title, owners should also notify their closing agent, title company, or lender if a sale or refinancing is pending. Indiana law also permits an undertaking, often called bonding over the lien, in appropriate circumstances under I.C. 32-28-3-11.
The 30-day Notice to Commence Suit
An owner—or another person or corporation with an interest in the property, such as a mortgagee or lienholder—does not always have to wait for the ordinary one-year foreclosure period to expire. I.C. 32-28-3-10 permits that interested party to give the lienholder written notice demanding that the lienholder file an action to foreclose. After receiving the notice, the lienholder has 30 days to file the foreclosure action. If the lienholder does not do so, the lien becomes void, although the underlying debt may still be pursued like another legal claim. The statute allows the notice to be sent by registered or certified mail to the address shown in the recorded lien. After 30 days, if no foreclosure action is pending and no unsatisfied judgment exists, the sender may record an affidavit describing service and the lienholder’s failure to sue. The county recorder can then release the lien.
Get advice early
Mechanic’s lien disputes involve short, technical deadlines. Claimants should verify the correct property, notice, and filing requirements before time runs out. Owners should promptly evaluate whether a lien is valid, negotiate a release when appropriate, or use the statutory 30-day procedure to require the claimant to act. Either side may lose important rights through delay or a defective filing.
This article provides general information about Indiana law and is not legal advice. Mechanic’s lien rights depend on the facts, the type of property, the claimant’s role, and compliance with current statutes. Consult an Indiana attorney about a specific lien or deadline.
Now, isn’t that Nice to Know?