Mechanic's Lien

DEFINITION of 'Mechanic's Lien'

A guarantee of payment to builders, contracters and construction firms that build or repair structures. Mechanic's liens also extend to suppliers of materials and subcontractors and cover building repairs as well. The lien ensures that the workmen are paid before anyone else in the event of liquidation.


A mechanic's lien is also known as "artisans' liens" or "materialmen's liens" .

BREAKING DOWN 'Mechanic's Lien'

Mechanic's liens are often necessary to secure construction help on a project. The lien stays in force until the project is finished and all constuction personnel have been paid.


From an investment standpoint, it is important to note that mechanic's liens generally have a higher priority than other forms of debt. This priority determines the hierarchy of claims in the event of foreclosure or repossession. Interestingly, mechanics liens were not named after automobile mechanics seeking payment for repair services. Instead, the term traces its roots back to the 18th century, when laborers were often referred to as "mechanics."

RELATED TERMS
  1. Voluntary Lien

    A claim that one person has over the property of another as security ...
  2. Possessory Lien

    Property that is in the hands of, or is possessed by, the individual ...
  3. Floating Lien

    A legal claim placed on a set of assets rather than on a single ...
  4. Silent Automatic Lien

    A lien that does not appear in any public record. This is a method ...
  5. Lien Sale

    The sale of the claim or "hold" placed on an asset to satisfy ...
  6. Home Lien

    A legal claim placed on a home that makes selling the home, obtaining ...
Related Articles
  1. Personal Finance

    How Does a Lien Work?

    A lien gives a creditor the legal right to seize and sell property, then use the proceeds to pay off a borrower’s debt.
  2. Personal Finance

    IRS Asset Seizures: Could It Happen To You?

    If you can't pay your taxes, know that the IRS has many avenues for collecting what you owe.
  3. Financial Advisor

    Top Alternatives Assets for Capital Preservation

    At best, alternative investments can help preserve capital by avoiding correlation with stocks and by beating inflation. Here's a look at some options.
  4. Trading

    Life Beyond the Major Currencies

    Renowned currency expert Kathy Lien looks at other world currencies and their nation's economies to demonstrate that there are opportunities in forex outside of the US dollar.
  5. Trading

    One Nation's Debt Is Another's Trade Set-Up

    Though economists may view sovereign debt in terms of numbers, Kathy Lien says it's also a sentiment gauge, and successful recent debt auctions have kept euro traders bullish.
  6. Personal Finance

    5 Most Overpriced Car Repairs

    Doing these common repairs and maintenance tasks yourself instead of seeing a mechanic can save you a lot of money.
  7. Trading

    How To Profit From News About China

    Renowned currency analyst Kathy Lien notes that as the US heads into midterm elections, politicians often focus on China, and she thinks the Chinese yuan will be active this fall.
  8. Investing

    Check Your Credit Report

    Make sure there are no errors holding you back from obtaining a loan.
  9. Retirement

    Retirement Planning for Entrepreneurs and Small Businesses

    If your business has receiveables, here's a smart way to leverage them to build up your retirement fund fast.
  10. Personal Finance

    How To Negotiate Back Taxes With The IRS

    Recently, the IRS has been more amenable to working out late tax payments. But you have to address the problem up front, and don’t keep Uncle Sam waiting on his tax money.
RELATED FAQS
  1. How do I avoid a tax lien on my property?

    Find out the best way to prevent the government from placing a lien on your property, including the consequences of having ... Read Answer >>
  2. Does the IRS report to credit bureaus?

    Understand the relationship between the IRS and the various major credit bureaus. Learn how credit bureaus find out about ... Read Answer >>
  3. Can credit card creditors put a lien in house property?

  4. What is the difference between a lien and an encumbrance?

    Understand the legal terms ''lien'' and ''encumbrance,'' and learn the significant distinction between these two essential ... Read Answer >>
  5. How can I transfer ownership of my home to another individual?

    Can I remove my name from the title on my property? Can it be gifted? I am still maki... Read Answer >>
  6. Why choosing the right investment advisor is crucial for your portfolio's health

    Absolutely! Just as finding a good mechanic will help keep your car running smoothly, finding a good broker or financial ... Read Answer >>
Trading Center