Mechanics Lien in Indiana. Notices Before You File.
Filing a mechanic’s lien in Indiana is not as simple as waltzing into the recorder’s office with your document in hand. Many times you are also required to perfect that Indiana mechanic’s lien by first serving a pre-lien notice. Because there is some confusion as to which projects require the notice, let us outline the basic mechanics lien law.
What kind of projects? The notice is only required, under Indiana mechanic’s lien law, for Type 1 residential projects. This is defined as either a single or double residential unit currently occupied or to be occupied by the owner. Apparently the “to be occupied” definition would mean sometime in the short foreseeable future. By definition, this would exclude Type 2 utility projects or Type 3 commercial or industrial.
This would exclude residential property that is merely rented out.
Here is a description of the various projects and whether the notice is a condition to filing a mechanic’s lien in Indiana:
Residential Subdivisions. These would be subdivisions owned at the time by the general contractor or developer. Logically, there is no specific intended homeowner at the time the work is done. The units are sold out as the marketing is complete. It would appear the notice is not required.
On the other hand, service is recommended. When the ultimate home buyer purchases the property, they may be considered innocent purchasers and subject to your Illinois mechanic’s lien. One possible exception would be if you have previously served the Notice on the developer of the subdivision and recorded it before they close escrow. In that instance, it would be subject to your Illinois mechanic’s lien.
Spec. homes. This involves the instance in which a homeowner purchases the bare land and hires an architect and general contractor to build a residence. The notice would be required. There is a specifically identified homeowner.
But the notice would probably not be required if the developer is constructing the property for his or her own account and not under contract with any specific homeowner.
Custom homes. Here the homeowner owns the land and has already signed a contract with the developer to build to their specifications. As such, the Notice is required under Indiana mechanic’s lien law.
Repair or re-model of an existing residence. Similar to the situation above, the Notice is required.
Fortunately, Indiana mechanic’s lien law states that only one notice need be sent out before the Indiana lien is recorded. So, you do not have to send multiple notices because of changes in the contract or change orders.
The notice is called a “Pre-lien Notice to Owner of Illinois Mechanic’s Lien Rights”.
Who is required to serve the notice?. Only subcontractors and material or equipment suppliers that do work on residential property as above-described.
How to serve?. The notice is served on the owner by certified mail. Further, Indiana mechanic’s liens statutes now require for original construction (for example building a new home from scratch as opposed to remodeling) as to a subdivision or spec home that the notice be recorded in the recorder’s office in the county were the property is located within 60 days of the time the subcontractor first furnishes labor or materials.
The notice must be both verified and notarized.
So answering the question of how to record a mechanic’s lien in Indiana is a bit tricky. If you have any questions along the way, give us a call.