Legal Considerations When Dealing with Maryland Construction Liens

Navigating the complex world of Maryland construction liens can be daunting for property owners, contractors, and subcontractors alike. A construction lien, sometimes referred to as a mechanic’s lien, is a legal claim that can be placed on a property by a contractor or supplier who has provided labor or materials but has not been fully compensated. These liens are a critical mechanism in the construction industry, protecting contractors and subcontractors from nonpayment while potentially affecting the property owner’s ability to sell or refinance the property.

C. Edward Hartman III

Christian Hartman

Zachary Zepko

Understanding how construction liens work in Maryland, what legal requirements must be met, and how to protect your rights is essential for anyone involved in a construction project. Maryland’s lien laws offer protection to contractors, subcontractors, and suppliers, but they also impose certain responsibilities on property owners. These legal considerations can significantly impact the resolution of payment disputes and determine the course of action that can be taken to resolve them.

The Purpose and Scope of Maryland Construction Liens

Construction liens exist to ensure that contractors, subcontractors, and material suppliers are paid for their work. When a construction project is underway, multiple parties contribute to the completion of the project, from providing labor to delivering materials. In some cases, a contractor may not pay a subcontractor or supplier, which leaves them with limited options for collecting their rightful payment. By filing a lien, these parties can place a legal claim on the property they have worked on, ensuring they have recourse if they are not paid.

Maryland law is clear that construction liens only apply to private property, not public property. For public projects, such as government buildings or public infrastructure, subcontractors and suppliers must pursue payment through a bond claim rather than a lien. Additionally, construction liens are generally limited to the amount of work or materials that have been provided and remain unpaid.

Filing a Construction Lien in Maryland

The process of filing a construction lien in Maryland involves several important steps, each of which must be carefully followed to ensure the lien is enforceable. Maryland law imposes specific deadlines and notice requirements that must be met before a lien can be properly filed.

To initiate a construction lien in Maryland, the contractor, subcontractor, or supplier must first provide written notice of their intent to file a lien to the property owner. This notice must be given within a certain period after the completion of the work or delivery of materials. Generally, the notice must be sent within 120 days of the last day labor or materials were provided. This timeframe is critical because failure to provide notice within this window can bar the lien claimant from filing a lien altogether.

Once notice has been given, the next step is to file a lien in the Circuit Court for the county where the property is located. This must be done within 180 days of the last day labor or materials were provided. The lien filing must include a detailed description of the work or materials provided, the amount of the claim, and an identification of the property on which the lien is being placed.

Filing a construction lien in Maryland is a formal legal process, and any errors in the filing or failure to meet deadlines can render the lien unenforceable. This is why it is important to ensure that all required steps are carefully followed and that the lien filing is accurate and complete.

Challenging and Defending Against a Construction Lien

From a property owner’s perspective, receiving notice of a construction lien can be concerning. The lien can cloud the title of the property, making it difficult to sell or refinance until the lien is resolved. Property owners have the right to challenge a lien, particularly if they believe the lien is unjustified or the amount claimed is incorrect.

To challenge a lien, the property owner can file a petition with the court, requesting that the lien be declared invalid or reduced in amount. The court will then hold a hearing to determine the validity of the lien. During this process, both the property owner and the lien claimant will have the opportunity to present evidence to support their positions.

One of the key defenses that a property owner may raise is that the work or materials provided were defective or incomplete. If the contractor or subcontractor did not fulfill their contractual obligations, the property owner may argue that they are not entitled to the full amount claimed in the lien. Additionally, if the lien claimant failed to meet the notice or filing deadlines required by Maryland law, the property owner may seek to have the lien dismissed on procedural grounds.

The Impact of Construction Liens on Property Transactions

Construction liens can have a significant impact on property transactions, particularly when a property owner is seeking to sell or refinance their property. A lien placed on the property creates a cloud on the title, which can make it difficult to complete a sale or obtain a loan. Before the transaction can proceed, the lien must typically be resolved either through payment or by reaching a settlement agreement with the lien claimant.

In some cases, a property owner may choose to bond off the lien, which involves posting a bond with the court to cover the amount of the lien. This allows the transaction to proceed while the lien dispute is being resolved, as the lien is essentially transferred from the property to the bond. While bonding off a lien can be a useful tool for property owners, it also requires careful consideration of the costs involved and the potential risks.

For contractors and subcontractors, a construction lien can be a powerful tool for ensuring payment, but it also carries risks. If the lien is challenged and found to be invalid, the lien claimant may be responsible for legal fees and other costs. Additionally, filing a lien can strain relationships between contractors and property owners, particularly if the lien is filed in the midst of an ongoing project.

Resolving Construction Lien Disputes Through Negotiation

While the legal process provides a framework for enforcing and challenging construction liens, many lien disputes are resolved through negotiation. When a dispute arises over payment, it is often in the best interest of both the property owner and the lien claimant to attempt to reach a settlement before pursuing litigation. Negotiating a resolution can save both parties time and money and can help preserve business relationships.

During negotiations, the parties may agree to a payment plan, a reduction in the amount claimed, or other terms that allow the lien to be released. In some cases, mediation or arbitration may be used as an alternative to going to court, providing a more efficient and less adversarial way to resolve the dispute.

It is important to approach lien negotiations with a clear understanding of the legal rights and obligations of both parties. Property owners should be aware of the potential consequences of failing to resolve a lien, while lien claimants should consider the risks of pursuing litigation, particularly if there are doubts about the validity of the lien.

Legal Assistance in Maryland Construction Lien Matters

Dealing with construction liens in Maryland involves navigating a complex legal landscape. Whether you are a property owner seeking to challenge a lien or a contractor or supplier seeking to enforce your right to payment, it is essential to understand the legal considerations involved and to take the appropriate steps to protect your interests.

One of the most important factors in successfully resolving a construction lien dispute is having the right legal guidance. Construction lien law is technical, and errors in the filing process or failure to meet legal requirements can have significant consequences. Working with a legal team that understands Maryland’s construction lien laws can help ensure that your rights are protected and that you are taking the appropriate steps to achieve a favorable outcome.

If you are facing legal challenges related to a construction lien in Maryland, the experienced team at Hartman, Attorneys At Law is here to help. Our legal team understands the complexities of construction lien law and can provide the guidance you need to protect your rights. Whether you are a property owner, contractor, or supplier, we are committed to helping you resolve your dispute efficiently and effectively. Contact Hartman, Attorneys At Law today to schedule a consultation and learn more about how we can assist you with your construction lien matter.