Mechanic's Lien

AAA

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" .

INVESTOPEDIA EXPLAINS '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. Home Lien

    A legal claim placed on a home that makes selling the home, obtaining ...
  2. Construction Lien

    A claim made against a property by a contractor or other professional ...
  3. Non-Possessory Lien

    The legal claim against an asset in order to secure payment of ...
  4. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  5. Blanket Lien

    A lien that gives the right to seize, in the event of nonpayment, ...
  6. Lien

    The legal right of a creditor to sell the collateral property ...
Related Articles
  1. Holding Titles On Real Property
    Retirement

    Holding Titles On Real Property

  2. How Property Taxes Are Calculated
    Home & Auto

    How Property Taxes Are Calculated

  3. Avoiding Foreclosure Scams
    Personal Finance

    Avoiding Foreclosure Scams

  4. Are You Living Too Close To The Edge?
    Budgeting

    Are You Living Too Close To The Edge?

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center