What do I do if a contractor has a mechanics' lien against them?
A mechanics' lien filed AGAINST a contractor (by their unpaid subcontractor or supplier) means the contractor isn't paying their bills. Walk away — your subs will not get paid either, and they can lien your property. Multiple liens against the contractor is a hard stop.
There are two directions a mechanics' lien can run, and the direction matters enormously.
Direction 1: contractor files a lien against a homeowner. The contractor claims they did work and were not paid. This is a normal contractor-customer dispute that the homeowner needs to resolve before selling or refinancing the property. Common in real estate transactions; not necessarily a red flag against the contractor.
Direction 2: subcontractor or supplier files a lien against a contractor. The sub or supplier did work for the GC, the GC did not pay them, the sub or supplier is now using lien rights to recover. This is a strong predictor of GC financial distress — the GC is taking money from customers, not passing it through to subs, and the subs are using legal tools to recover.
Direction 2 is the dangerous one for you as a homeowner. Here is the mechanism: you pay the GC. The GC does not pay the electrician. The electrician files a mechanics' lien against YOUR property — not against the GC's property. You then pay the GC AND the electrician (effectively paying twice for the same work), or you face a lien on your property at sale or refinance.
Mechanics' lien law varies by state, but the general pattern: any contractor, subcontractor, or supplier who provides labor or materials to your property has lien rights against the property — even if you have no direct contract with them. Your only defense is to ensure every party on the job is paid.
What to do if you find liens against the contractor BEFORE signing:
- One lien from 3+ years ago, resolved: probably fine. - Two liens from the last 2 years, one open: significant concern, do additional due diligence. - Three or more liens in the last 5 years, multiple open: walk away. This is documented pattern non-payment.
What to do if liens surface DURING the project:
- Stop all payments to the GC immediately. - Demand lien releases from every sub and supplier for work already completed before paying any more. - Use joint checks (made out to the GC AND the sub jointly) for remaining payments. - Consult a construction attorney — in some states you can file a notice of completion that triggers a lien-filing deadline.
What to do if a lien is filed against YOUR property:
- Verify the lien was filed correctly (statutory notice requirements, dollar amount accuracy, filing window). - Negotiate directly with the lien claimant to release the lien, often for less than the face value. - Demand the GC produce evidence of payment to the sub. - If unresolved, file a bond claim against the GC's contractor bond. - For large amounts, consult an attorney about a lien-bond posting to free the property title while disputing.
Groundcheck (earthmove.io/trust) surfaces mechanics' liens filed against the contractor as part of every report. A pattern of subs filing liens is one of the highest-confidence "Caution" or "Critical" signals in the product — read the underlying citations before signing.
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