Arizona law provides that every person who labors or provides professional services, materials, machinery, fixtures, or tools in the construction, alteration or repair of any building or other structure or improvement shall have a statutory lien right on such building, structure, or other improvement. This “Mechanic’s Lien” or “Materialman’s” lien is a creation of statute, and there are a number of requirements set forth in the lien statute to perfect and enforce this lien right. But assuming a contractor or material supplier or architect satisfies the statutory requirements, the result is a lien against the real property that benefited from the labor, materials, or professional services rendered. The lien will typically be in an amount equal to the contracted price for labor, materials, or services rendered.
Property owners who are building an addition to their home or making improvement to a commercial office space, for example, are often unaware that their property will be subject to liens and could potentially be subject to foreclosure proceedings in the event of non-payment. Sometimes projects suffer significant cost overruns due to unforeseen conditions that exceed the budget for the project. Sometimes issues can arise with the financing on the project. Many things can happen on construction projects that create financial stress resulting in the owner becoming unable to pay. If such circumstances arise, the property owner could be threatened with having his or her property sold through a lien foreclosure proceeding to generate the cash necessary to pay outstanding sums due to those who perfected their lien rights.
Property owners who commence with any construction projects should consult with an attorney to fully understand the liens that could be filed and recorded against their properties, and how to best manage their projects to prevent against the filing of liens. As a property owner, you want your project timely completed to your satisfaction. As a contractor or material supplier, you want to be timely paid for the labor or materials provided to the project. Understanding “Mechanic’s Liens” is important in achieving everyone’s goal – a successful project.