Mechanics Lien Placed On Homes By General Contractors

Mechanics Lien: What Homeowners Need To Know Before It Affects Your Property

A mechanics lien is one of those things that can quietly show up and cause major problems for homeowners. If you’ve hired a contractor for a big home renovation or a complete rehab, and something goes wrong with payments, you could end up with a lien on your property — even if you already paid the general contractor in full.

In this guide, we’ll explain a mechanics lien, how it happens, how it affects your home, how to avoid it, and, most importantly, how you can still get a mortgage even if your home has a lien.

What Is a Mechanics Lien?

A mechanics lien is a legal claim on your property. It happens when a contractor, subcontractor, or supplier hasn’t been paid for their work or materials. For example, if you hire a general contractor to remodel your kitchen and they bring in plumbers and electricians, those subcontractors expect to get paid.

If the contractor doesn’t pay them, they can file a mechanics lien against your property—even if you’ve already paid the contractor in full. This lien gets attached to your home’s title and can lead to some big headaches if you want to sell or refinance later. It essentially marks your home as still having unpaid bills for work that was done.

Why Would a General Contractor Cause a Mechanics Lien?

Here’s how it usually happens:

• You hire a general contractor.
• That contractor hires other workers or suppliers.
• You pay the general contractor in full.
• The prime contractor does not make payments to the subcontractors or vendors.
• Those unpaid parties file a mechanics lien against your property.

This happens more often than you think. Sometimes contractors are short on cash, mismanage funds, or have other debts. Unfortunately, the homeowner gets stuck with the consequences.

Can Subcontractors File a Lien Even If I Paid the Contractor?

Yes, and this is what makes mechanics liens so frustrating. In most states, it’s completely legal for a subcontractor or supplier to file a lien even if the homeowner paid the general contractor.

Many homeowners don’t even know a lien has been filed until they try to sell or refinance. By then, it could delay closing or kill the deal entirely.

How a Mechanics Lien Impacts Your Home Sale or Refinance

A mechanics lien on your home can cause significant issues during a title search, leading to delays in selling your property or closing a refinance. Buyers and lenders typically steer clear of homes encumbered by legal complications, as they complicate the transaction process. To ensure that a sale or refinance can proceed, any existing lien must be resolved before closing; otherwise, the deal will likely fall through.

Can You Sell Your Home With a Mechanics Lien?

Yes, but it’s tricky.

Here’s how most title companies handle it:

• They identify the mechanics lien during the title search.
• They ask the seller to put the lien amount into an escrow account.
• The sale continues, but the lien money stays in escrow until it’s settled.
• If the lien turns out to be invalid, the money goes back to the seller.
• If a settlement is reached, the funds are used to pay it off.

This isn’t a perfect solution, but it’s often the fastest way to move forward.

How to Avoid a Mechanics Lien in the First Place

The best way to protect yourself is to make sure everyone working on your home gets paid. That means you need lien waivers from all subcontractors and suppliers.

What Is a Lien Waiver?

A lien waiver is a written agreement from a contractor, subcontractor, or supplier indicating that they have received payment and will refrain from filing a lien.

Before you make a final payment to your general contractor, ask for:

• A list of all subcontractors and suppliers
• A signed lien waiver from each of them
• Proof of payment to each party

Some loan programs, like FHA 203k rehab loans, require these documents before releasing funds. It’s a smart idea even if you’re paying out of pocket.

State-by-State Mechanics Lien Rules

Each state has different laws for filing a mechanics lien. Some are strict and give homeowners more protection, while others make it easy to file a lien without needing much proof.

For example:

• Illinois: Contractors only need to pay a small recording fee to place a lien. No proof or court judgment is required.
• California: Contractors must serve a preliminary notice before filing.
• Texas: Deadlines to file are strict and must be followed closely.

Make sure you understand your state’s rules, or talk to a real estate attorney before hiring a contractor.

What If I Already Have a Mechanics Lien?

Don’t panic. You have options.

Step 1: Get a Copy of the Lien

• Check with your county recorder’s office
• Review the amount and who filed it

Step 2: Talk to the Contractor

• If the general contractor is responsible, ask them to resolve it
• Request that they pay the subcontractor or supplier

Step 3: Negotiate a Settlement

• You or your contractor can negotiate a lower payoff amount
• Get the agreement in writing and request a lien release

Step 4: Hire an Attorney (if needed)

• If the lien is false or exaggerated, you may be able to challenge it in court.

Step 5: Get It Removed

• After settlement, the lien filer must record a lien release
• Follow up to ensure it is officially removed from your title

Can I Still Get a Mortgage With a Mechanics Lien?

If you’re concerned about obtaining a mortgage due to a mechanics lien, it is still possible with the right lender who understands how to navigate this issue. At Gustan Cho Associates, we specialize in assisting homeowners facing complex title problems, including mechanics liens.

Our services include refinancing your home by escrowing the lien amount, utilizing lien resolution as part of the loan payoff, and offering flexible underwriting when traditional lenders might decline your application. As a national mortgage company, we pride ourselves on being able to say “yes” when other lenders say “no.”

What If I Want to Buy a Home That Has a Mechanics Lien?

If you’re considering buying a home that has a mechanics lien, it’s essential to proceed with caution, although it doesn’t necessarily mean you should walk away from the deal. One important step is to ask the seller to settle the lien before the closing process. Additionally, working with a title company that can escrow funds if necessary is advisable.

It’s also wise to seek legal advice, especially if multiple liens or disputes are involved. Most importantly, do not take ownership of the property until you are certain that the title is clear.

Final Thoughts: Don’t Let a Mechanics Lien Stop You From Moving Forward

A mechanics lien can feel like a roadblock, but it doesn’t have to stop your plans. Whether you’re selling your home, refinancing, or buying a house with a lien, there are ways to move forward.

At Gustan Cho Associates, we help homeowners just like you work through these challenges every day. We know how to navigate mechanics liens and can help you get the mortgage you need, even when other lenders turn you away.

Borrowers who need a five-star national mortgage company licensed in 50 states with no overlays and who are experts on mechanics lien, please contact us at 800-900-8569, text us for a faster response, or email us at alex@gustancho.com.

The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Let’s work together to clear the lien, close your loan, and help you move forward with confidence.

Frequently Asked Questions About Mechanics Lien:

Q: What is a Mechanics Lien in Simple Words?

A: A mechanics lien is an official notification indicating that someone who performed work on your house or supplied materials has not received payment. It becomes linked to your property and can lead to issues when you attempt to sell or refinance.

Q: Why is There a Lien on My House if I Already Paid the Contractor?

A: Even if you paid your contractor, they might not have paid their workers or suppliers. If those people weren’t paid, they can file a mechanics lien on your home.

Q: Can a Subcontractor File a Lien Without Telling Me?

A: Yes. In many states, a subcontractor or supplier can file a mechanics lien even if you didn’t hire them directly or know they weren’t paid.

Q: Can I Still Sell My House with a Mechanics Lien on it?

A: Yes, but it can be tricky. Most title companies will ask you to set money aside in escrow to cover the lien before the sale can go through.

Q: How do I Remove a Mechanics Lien from My Home?

A: You can remove the lien by settling it with the person who filed it. Once it’s paid, ask them for a lien release and make sure it’s recorded with the county.

Q: How Can I Avoid Getting a Mechanics Lien on My House?

A: Before making the final payment to your contractor, ask for lien waivers from all subcontractors and suppliers. This proves they were paid and won’t file a lien.

Q: Can I Refinance My Home if it has a Mechanics Lien?

A: Yes, you can refinance, but the lien usually needs to be paid off or put into an escrow account at closing. Gustan Cho Associates can help you with this process.

Q: What Should I do if I Find Out There’s a Lien on a House I Want to Buy?

A: Request the seller to resolve it prior to the closing. Collaborate with a reliable title company, and refrain from proceeding until you confirm that the mechanics lien is addressed.

Q: Do Mechanics Liens Expire or Go Away on Their Own?

A: Not always. In some states, a mechanics lien can stay on your title for months or years unless it’s removed or legally challenged.

Q: Can I Get a Mortgage with a Mechanics Lien on My Home?

A: Yes, you can — especially with lenders like Gustan Cho Associates who understand title issues. We work with homeowners every day to get approved, even with a lien.

This blog about “Mechanics Lien Placed On Homes By General Contractors” was updated on July 16th, 2025.