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Indiana Mechanic’s Lien–Pre-Lien Notice Required

 In Mechanic’s Lien Law Changes and News for Indiana

Filing your Indiana mechanic’s lien means that you record this in the clerk’s office of the county in which the project is located. But you out also have to bear in mind pre-lien notice requirements. This in turn requires you to understand there are three types of projects in this state for mechanic’s lien purposes:

1. Type 1 – Residential Projects. This is defined to include single or double unit residential dwellings.

2. Type 2 – Utilities. This includes property owned or operated by state-regulated utilities and property intended to be used for the production, transmission, delivery or furnishing of heat, light, water, or power to the public. Telecommunications, sanitation, and waste disposal projects are not included in this category.

3. Type 3 – All other projects. This covers all other projects, including commercial and industrial.

This state requires at least one Notice be sent out before the Indiana mechanic’s lien is filed/recorded. For simplicity, this notice will be referred to as a “Prelien Notice”. There are at least 2 prelien notices that may be filed in Indiana. They are categorized as follows:

PRE-LIEN NOTICE TO OWNER OF INDIANA MECHANIC’S LIEN RIGHTS
(Subcontractors and Suppliers)

Who Must Use
this Notice: Subcontractors and material/equipment suppliers that perform construction services for a single or double family dwelling, either occupied or to be occupied by the owner of the property. For this reason, there is no requirement of giving this prelien notice in the following cases:

A. When the residence is not occupied by the owner but is used as a rental.
B. If you have a contract directly with the owner.
C. Work done on Type 2 properties (regulated utilities) or Type 3 projects (industrial and commercial).

    Subdivisions:

Under this definition would be residential subdivisions owned at the time of construction by a contractor or developer. In such a case, there is no intended specific homeowner at the time of construction. As is commonly known, the units are sold to homeowners after construction and marketing is complete. Technically, because there is no intended specific homeowner, the notice would not be required.

Nevertheless, it is highly recommended it be served. Here is why: When the eventual homeowner buys the property, they are considered an innocent purchaser and not subject to your Indiana mechanic’s lien. The only exception is if you have previously served the Notice on the developer of the subdivision and recorded it before they close escrow. If that is the case, it would be subject to your mechanic’s lien.

So, you are required to 1) serve the owner by certified mail and 2) record the Notice in the recorder’s office. The owner would be the developer. To find out that person’s name and address, look in the County Auditor transfer books or the Township Assessor’s transfer books.

Spec. homes:

If a homeowner purchases the land and hires a general contractor to build, clearly the Notice would be required. This is because there is a specifically identified homeowner. Serve that homeowner by certified mail. Recording is not required.

If there is no specifically identified homeowner (in other words, no homeowner has signed a contract yet) and the property is owned by a general contractor or developer, the Notice must be served on the developer and recorded.

Custom homes:

By definition, the homeowner owns the land and has already signed a contract with the developer or general contractor. As such, the Notice is served on the homeowner but there is no requirement of recording. This is because the homeowner is knowledgeable of the construction and can hardly be considered an innocent purchaser.

Repair or a model of an existing home:

Similar to the situation of a custom home, the Notice must be served on the owner but need not be recorded.

How to Serve: The prelien notice is served on the owner by certified mail, return receipt requested. In addition, the statute now requires for original construction (building a new home from scratch as opposed to remodeling) as to a subdivision or spec home (see details in above section) that the prelien notice be recorded in the Recorder’s Office in the county where the project is located within 60 days from the time the subcontractor or supplier first furnishes labor or materials. It is absolutely crucial that the prelien notice be mailed to the owner, and recorded. The recording of a prelien notice is relatively new law in Indiana, but if it is not done, the lien claimant is prevented from later filing a mechanic’s lien.

Verified or
Notarized?: The prelien notice must be both verified and notarized.

For more information or to download load a form, go to the Indiana mechanic’s lien page.

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