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. Lien

    The legal right of a creditor to sell the collateral property ...
  6. Blanket Lien

    A lien that gives the right to seize, in the event of nonpayment, ...
RELATED FAQS
  1. What are the different types of operating expenses?

    The primary types of operating expenses include payments that are related to compensation, sales and marketing, office supplies ... Read Full Answer >>
  2. What is the difference between an operational expense and an administrative expense?

    The differences between an operational expense and an administrative expense is that operational expenses cover the costs ... Read Full Answer >>
  3. How did Jeff Weiner get the idea for LinkedIn?

    Jeff Weiner did not actually found LinkedIn or have the idea of starting it. As of March 2015, he has been serving as CEO ... Read Full Answer >>
  4. What is the difference between business intelligence and business analytics?

    Business intelligence and business analytics share the same goal - to help firms make better decisions through actionable ... Read Full Answer >>
  5. What's the difference between outsourcing and subcontracting?

    Business leaders often blur the lines between outsourcing and subcontracting, but both practices are distinct, and each is ... Read Full Answer >>
  6. What is enterprise risk management and why is it important?

    Enterprise risk management is a plan-based business strategy that aims to identify, assess and prepare for any risks that ... Read Full Answer >>
Related Articles
  1. Retirement

    Holding Titles On Real Property

    Find out how best to claim and convey ownership on your assets.
  2. Home & Auto

    How Property Taxes Are Calculated

    Understanding how property taxes work will ensure that you won't be overcharged.
  3. Personal Finance

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  4. Budgeting

    Are You Living Too Close To The Edge?

    If a missed paycheck will make your finances cave in, you must learn how to make proper supports.
  5. Taxes

    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.
  6. Options & Futures

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  7. Mutual Funds & ETFs

    How To Start a Hedge Fund In the United States

    A general overview of how to start a hedge fund firm in the United States, including complying with state and federal regulations.
  8. Mutual Funds & ETFs

    How To Start A Hedge Fund In The UK

    Starting a new hedge fund in the United Kingdom is more complex than in the United States. We discuss UK laws and regulations for starting a new hedge fund.
  9. Mutual Funds & ETFs

    How To Start A Hedge Fund In Canada

    Would-be hedge fund managers in Canada need to understand the laws and regulations that must be followed in order to start a fund in the country.
  10. Taxes

    Is It Smart To Get Dual Citizenship?

    Does it ever make sense to be a citizen of the U.S. and somewhere else? Yes, so you can work minus a visa – not so much, if you get drafted into the army.

You May Also Like

Hot Definitions
  1. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  2. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  3. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  4. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  5. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  6. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
Trading Center