When to bring a lawsuit to foreclose a mechanic’s lien
What happens after you record a mechanic’s lien but are still unpaid? Does the mechanic’s lien stay on record indefinitely?Unfortunately not. Although each state is different, within a specific period of time you must file what is called a lawsuit to foreclose the mechanic’s lien. By the way, we have templates for this purpose and you can call us if the need arises.
This means that if the lawsuit is not brought within that time period, it becomes null and void. For example, the property could be sold or refinanced thereafter. But the problem: it costs time and money to bring the foreclosure action and you may wish to have additional time to negotiate with the parties without having to plunge into litigation. So is there a way to extend the time to bring the lawsuit to foreclose the mechanic’s lien?
In some states, it is quite simple and statutes allow you to extend the time. For example, in California, you can extend the time to bring a lawsuit to foreclose the mechanics lien for up to one year after completion of the project. But that requires the owner of the property to record an extension. It is as if the owner—the one you file the mechanic’s lien against–is giving you more time to sue them! For this reason, it rarely occurs.
In New York, you can, even without the owner’s permission, record an extension on commercial property for up to one year after you recorded the mechanic’s lien.
But what about the other states? Most states do not provide a statutory allowance for extension. However, under the analogy of the statute of limitations for other types of lawsuits, we can prepare an agreement for you which tolls or extends the statute. In other words, it would be an agreement by the other side not to use the statute of limitations as a defense. That will give you additional time.
But it is absolutely crucial that any such agreement be recorded. Call us if you have any questions regarding such an agreement.