Lien Foreclosure Lawsuit–Who do You Sue?
Most of us are familiar with the basic procedures after recording your mechanic’s lien. If payment is still not forthcoming, you have no choice but to institute what is called a mechanic’s lien foreclosure lawsuit. In other words, the mechanics lien itself is only valid for a certain period of time and is no longer enforceable unless you bring that action. Each state has a different statute of limitations so give us a call and we can let you know the time period for your state.
So now that you are bringing a lien foreclosure lawsuit, who do you sue? Obviously, you want to name as a defendant the owner of the property. Because the proceeding is considered in rem, you are asking the court to foreclose against the owner’s property in order to satisfy the lien.
In most cases, the owners own the property, known as fee simple ownership. This applies even if there are mortgages on the property. In other instances, the owner is actually a long-term tenant and you have performed tenant improvement work (more on that in a subsequent blog).
So, you would have a cause of action for foreclosure of the mechanic’s lien against that owner’s interest.
If you are a general contractor with a direct privity with the owner, then the only party defendant would be the owner. You can also join causes of action for unjust enrichment, common counts, breach of contract, account stated, and other possible causes of action.
If you are a subcontractor or supplier having a contract with the prime, you also join that contractor. But you can’t sue to foreclose your mechanic’s lien against the prime contractor. You can only sue them for breach of contract and other related causes of action. This is because you have a direct contract with that entity and there is an obligation to pay under your subcontract.
You would have two basic categories of defendants if you are a sub: the owner and the general contractor.
Some these matters are a bit tricky so feel free to call National Lien Law for free consultation.