FAQ: If I’m Unlicensed, Can I File A Mechanic’s Lien?

Short Answer:  It depends.  In some states, unlicensed contractors are forbidden from filing a lien.  In other states, it is allowed.  You must consult your state’s particular lien laws.

Long Answer: The first thing to say about this subject is that if you’re doing work that requires a license without having that license, you’re treading in dangerous water regardless of your state’s laws.  While some state are more liberal and allow unlicensed parties to collect amounts owed to them, it is very rare when the unlicensed contractor isn’t penalized in some way. Therefore, if you’re unlicensed and doing construction work that requires a license….get licensed!  You can read more about Contractor Licensing laws on my other blog, Construction Law Monitor.

The question here is whether you can file a mechanics lien if you’re unlicensed.  Unfortunately for unlicensed contractors, this question may be just the tip of the iceberg.  In reality, unlicensed construction participants must ask a more significant question: can they recover for their work at all?

I’ll discuss the laws in California and Washington, and then in Louisiana, to compare how the answer to this question may vary by state.

In California and Washington, the laws against unlicensed contractors are very strict — unlicensed contractors have no recovery whatsoever.  This means they cannot file a lien, or a lawsuit, or anything at all.  If they did $1,000,000 of work, and a party refuses to pay them, they are completely without a remedy and basically donated their time and money to the construction project.  (See previously written post: Can Unlicensed Contractors Lien in California?)

Is this fair?

There are two schools of thought on this.  In Washington and California, the legislature considers it more important to regulate the unlicensed constructor market than it is to ensure unlicensed contractors get paid.   States like Louisiana take a different approach.  In Louisiana, the unlicensed contractor is still penalized (i.e. he can get penalized by the licensing board, and his contract is declared null and void and the unlicensed contractor can only recover the “minimum value” of his work), but he is still allowed to recover some sort of compensation for the work he performed…and that means, he can file a mechanic’s lien.

If you’re doing work in California or Washington and are unlicensed, you’re really out of luck.  If you’re in Louisiana, you have some legal ground.  Elsewhere, it’s really important to examine that state’s liens laws to determine if you can file or recovery for your work.

, , , , , ,

Scott Wolfe Jr

About Scott Wolfe Jr

Scott Wolfe Jr. is the CEO of zlien, a company that provides software and services to help building material supply and construction companies reduce their credit risk and default receivables through the management of mechanics lien and bond claim compliance. He is also the founding author of The Lien and Credit Journal, a leading online publication about liens, security instruments and getting paid on every account. Scott is a licensed attorney in six states with extensive experience in corporate credit management and collections law, with a specific emphasis on utilizing mechanic liens, UCC filings and other security instruments to protect and manage receivables. You can connect with him via Twitter, LinkedIn and Google+.

Pingbacks/Trackbacks