Mechanic's Lien on Property After Closing

[Jack Martin]

PLEASE HELP!

The house I just purchased on December 6th has just received mechanic's lien for $15K for what I would assume would be for the new the roof the seller's put on the house prior to closing... Can this lien be enforced on me, the new property owner?  Reading through the Title company's (Chicago Title) policy makes it seem like they can easily get out of paying for it even though I have title insurance. Please help. 

[Chris Seveney]

@Jack Martin

This depends on many factors including the state it’s in.

Here is an article

https://www.levelset.com/blog/what-happens-if-i-filed-my-mechanics-lien-after-the-property-was-sold/

We had a contractor file a phony lien on our property and what we did is we waited until after their statute of

Limitations had passed and filed a notice with the court to have it removed as liens must be done properly (and most of time they are not), for this lien they did not spell our names correctly and that was enough to have it removed.

[Wayne Brooks]

@Jack Martin Yes, in most states this is quite possible….assuming the contractor followed the state timelines and procedures. You will have legal recourse against the sellers of course. The seller likely had to sign an affidavit at closing that any contractors had been paid. 

[Sarita Scherpereel]

@Jack Martin I would speak with a local attorney about the laws and procedures for this in your state. In my Market, it's possible but it depends on a lot of factors. Definitely talk to local experts! 

[Peter Walther]

First, what state is the property in?  Each state has unique laws on how mechanic liens are created and enforced.

Next, I'm not sure what you mean by "The house I just purchased on December 6th has just received mechanic's lien for $15K".  Did you receive a demand letter from the roofer?  Has a lien been recorded in the public records?  Were you served with a complaint to foreclose the lien?  In my mind each scenario would have its own universe of possible responses.

Last, I don't know what you're reading in the title policy that makes you think there's no coverage.  Unless there's an exception for the roofer's claim and assuming a lien was created prior to you taking title, I'd think there should be coverage.  I believe it's worth filing a claim with Chicago Title, the worst they can do is deny coverage and you're no worse off.  If there is an exception, then you should have been aware of the lien prior to closing.  If you don't provide Chicago with timely notice and it adversely effects their ability to mitigate damage, your coverage under the policy may be reduced or extinguished.

[Patricia Steiner]

Call the Title Company immediately; ask them to provide proof of settlement from the seller for the roof and the affavidat stating that all work performed in the past 90 days was settled.  The mechanic's lien may be due to a timing issue.  Either way, get the title closer involved in resolving this.  Also, was a permit pulled and a Notice of Commencement signed?  Those should have shown up in a lien search performed by the title company.  

In Florida, a Mechanic's Lien has a life of one year and it cannot be extended.  A property owner can file a Notice of Contest of Lien and the "deadline to initiate an enforcement action is shortened to 60 days after the notice. If the claimant is served with a 20-day notice to show cause, the enforcement deadline is 20 days after the notice."  If the roofer has not been paid, the fastest remedy is to file a lien against the property.  An enforcement action must still be taken or the lien just falls off after a year.

Start with the Title Agent.  Hopefully that's where it will end.

Best...

[Bob Floss II]

@Jack Martin I would email Chicago Title, the sellers attorney, and the seller and let them know about it. Someone will be responsible for it and it shouldn't be you. Let the three of them fight over who is responsible. 

[Mark Ainley]

@Jack Martin @Bob Floss II is right..this isnt your check to write but it might be a pain getting the right person to pay.

[Russell Brazil]

@Tom Gimer is the title master, I bet he would know

[Jack Martin]

Thank you all for your replies, I really appreciate it!! I have Chicago Title's Claim Adjuster reviewing the case now. Will update once I get word back. Fingers Crossed!

[Tom Gimer]

Quote from @Russell Brazil:

@Tom Gimer is the title master, I bet he would know

Thanks so much, Russell! Mechanics lien coverage... it really depends where the property is located but for many I believe the title insurer will step in and either fight or pay and if paid then pursue the seller under the indemnity in the owner's affidavit. Technically a ML is "created" at the time the vendor's work commenced not when the ML is recorded so it should be a covered risk. This is one of the issues a title company/insurer clears by getting the sellers to affirm either (i) no work within the last X days (X often being the statute of limitations for filing a ML) or (ii) any work has been fully paid for. I think @Jack Martin will be OK. Hopefully he will post a follow up.