How to Fight a Lien on Your Property

Here’s a scenario many homeowners are familiar with: you hire a contractor for a much-needed remodel, but they don’t deliver on the work. So, you don’t want to pay. The contractor then tries to force payment by placing a mechanic’s lien on your property, and now your problems have multiplied. Your house still needs work, and now has a lien on it, which means it will be extremely difficult to refinance or sell, and you may not even be able to get a loan because the lien has damaged your credit score. Of course, you want to get it removed, and we’re here to get you started.

What is a lien?

Let’s start by defining what a lien is. A lien is a security interest attached to property, to ensure that the owner pays a valid debt. Usually, before you can sell your property and give clear title to a buyer, you must pay off that lien. A contractor is not the only entity that can get a judgement to place a lien on your home. The IRS, your state government, former spouse, all sorts of creditors can do so, as well. The question is whether you can invalidate the claim, or not.

Disputing the lien

First things first: get yourself an experienced, local real estate lawyer. Discuss filing a “preliminary objection” to the lien claim with your lawyer. This preliminary objection should state all the reasons you believe the lien is improper. For example—if that contractor did not carry the proper license or registration, did not file the lien on time, or send a preliminary notice—the lien they placed can be found unenforceable. The reasons for objection can vary from state to state, another reason why you’ll need a lawyer from your area.

Negotiate with the ‘lienor’

Sometimes, the easiest option is to negotiate a settlement with the lien filer. Now you may rightly feel this is money you should not have to spend. So, again: negotiate. See if the ‘lienor’ will accept less for a quick payment.

Or get some extra work, before you pay in full.

Obtain a lien bond to discharge the lien

If you need to sell or refinance quickly, your best option might be ‘bonding off’ the lien. This means obtaining a bond from an insurance company that would cover the amount of the lien. These are sometimes called surety bonds or lien discharge bonds.

Here’s how it works: the insurance company, through the bond, provides substantiation to the county clerk that you possess the means to pay for the lien if you ultimately have to. The lienor’s claim becomes attached to the bond, rather than your property. However, if you are not in a rush to sell or refinance, you might do better to either negotiate a settlement
or fight the lien in court.

File a lawsuit to vacate the lien

This brings us to the last, and most aggressive option: suing to vacate the lien. Here, again, you’re going to need a lawyer, one who is familiar with the particular type of lien you are fighting. Your lawsuit will seek to:

• Force the ‘lienor’ to establish why you owe them money.
• Allow you to demonstrate why you do not owe that money.

In the case of the contractor who botched your remodel, you would argue that the work was shoddy and they did not complete the scope of work outlined in your contract. If you win, the lien will be stricken from your property record, and the court may also award you additional damages. However, like any lawsuit, the results are unpredictable, and the process can eat up a considerable amount of time and money.

Litigation is an option to discuss more fully with your lawyer.

Frequently Asked Questions

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