Like other states, Arizona offers some protection to contractors and subcontractors who perform work on homes, buildings and other improvements so these companies can be assured of payment.
For example, Arizona allows contractors who perform work to file a mechanic’s lien to secure payment of their bills.
This protection is helpful to the companies who otherwise could suffer catastrophic financial losses if their bills for parts and labor went unpaid. They also help the public indirectly because construction companies which can file these liens may feel more comfortable with not getting paid in full and up front for a project.
Lots of rules, required notices and deadlines apply to mechanic’s liens in Arizona, so detailed questions about them should be directed to an attorney with experience in construction law.
Mechanic’s liens spell potential trouble to landowners and investors
However, the idea behind a mechanic’s lien is that a contractor, or subcontractor, who properly records one has the right legally to foreclose on the lien much like one would foreclose a mortgage.
In other words, the person who has the lien can legally sell the property where the work was performed in order to pay for the work done.
The scary thing about mechanic’s liens is that they apply even if the landowner, or a subsequent owner, have nothing to do with the contractor or subcontractor’s unpaid bills.
Oftentimes, mechanic’s liens can take real estate investors in the Phoenix area who purchased a property by surprise, leaving them having to deal with a serious defect in their title and the possible loss of their property.
On the one hand, contractors should be able to use a mechanic’s lien to collect legitimate bills, but they may need some assistance with doing so.
On the other hand, there are procedural and substantive defenses available with respect to mechanic’s liens that those who own property in Phoenix should be aware of.