Why You Can’t File A Mechanics Lien On A State or County Project

Why You Can’t File A Mechanics Lien On A State or County ProjectIn this State Bond Claim Series, we’ve talked about the lien-like remedy available to contractors and suppliers on federal, state or county projects. While many folks believe they can file a mechanics lien on a state or county project, they are incorrect.  The traditional mechanics lien remedy – where you file a privilege against an actual piece of property – is not available on state and county projects. Instead, as we’ve been exploring in the blog series, those unpaid for work or materials furnished to a state or county construction project may file a bond claim.

These are commonly referred to in the industry as “liens” or “mechanics liens,” but they are actually not lien filings. Instead of a “lien” filing a claim against the property itself, a “claim” is filed against the project’s payment bond.

Since the mechanics lien term is used so heavily in the construction industry (thus leading people to assume they can file a mechanics lien on a state or county project), one must wonder: why can’t you file a mechanics lien on a state project?

The answer is quite simple, and it’s that the state, local and federal governments are not going to risk losing its title to property. There are no scenarios in the law that allows a private company or private person to acquire an encumbrance against state property.  Plus, if we go back to the original purpose behind the mechanics lien instrument, it was to provide protection to builders and suppliers who were furnishing to private projects because the private credit markets were so poor in the 1800s.  There was never any significant problems with the US or state governments not having the funds to complete capital improvements.  Over time, to protect builders and suppliers from contractors who misapply construction funds, the governments created bond claim laws to act a lot like mechanics lien laws.

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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+.

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