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Mechanic’s Liens are a Key Component of Arizona Construction Projects

Mechanic’s Liens are a Key Component of Arizona Construction Projects

On behalf of Richard Murphy at Murphy Cordier Karber PLC

A mechanic’s lien protects the right to payment for construction services, materials, equipment and labor.

Arizona’s mechanic’s lien laws (A.R.S. § 33-981 et seq.) provide a measure of protection to those who furnish professional services, labor, materials, machinery, fixtures or tools for the improvement of real property. Except as set forth in A.R.S. § 33-1002 (owner-occupied residence) and A.R.S. § 33-1003 (recorded payment bond), all persons furnishing labor, materials, fixtures, tools or professional services in conjunction with the construction, alteration or repair of any building, structure or improvement to real property has the right to assert a mechanic’s lien against the property improved by the work.

If the owner fails to pay for the professional services, labor, materials, machinery, fixtures or tools that enhanced the value of the subject property, the holder of a valid mechanic’s lien can file a lawsuit to foreclose the lien and force the sale of the subject property to generate funds from which to be paid.

Arizona’s mechanic’s lien laws are, not uncharacteristically, quite complex. Failure to comply with the strict statutory requirements is likely to mean that the party trying to establish, perfect, or enforce a mechanic’s lien will lose the right to do so. To properly perfect mechanic’s lien rights, an eligible party must comply with very specific requirements regarding the substance and form of legal documents, notice, service, recording, deadlines and time restrictions. While the mechanic’s lien statutes are to be liberally construed, they must be followed precisely.

In addition, for a contractor or subcontractor to properly perfect the right to record and enforce a mechanic’s lien, they must demonstrate that they held a valid contractor’s license issued by the Arizona Registrar of Contractors both at the time the contract was entered and when the work was performed. Furthermore, those providing professional services that require registration under Arizona law must have the appropriate certificates of registration with the Arizona State Board of Technical Registration.

Arizona’s mechanic’s lien laws apply to construction work done on private property and special procedures apply if the property is owner-occupied. Federal, state and local government property are governed by separate laws.

It is extremely important for anyone who provides services, materials or equipment in a construction project to seek legal advice from an experienced attorney. Legal counsel can assist the party in complying with the myriad of mechanic’s lien requirements under Arizona law in order to properly perfect and enforce mechanic’s lien rights. Legal counsel can also provide valuable advice about other potential collection methods in the event of nonpayment, such as a lawsuit for breach of contract.

Mechanic’s lien issues arise in real estate transactions as well. For example, an outstanding mechanic’s lien can cloud title to commercial or residential property that can stop a sale of the property dead in its tracks. A buyer will not want to pay for real estate if a third party may be able to force a sale to enforce a mechanic’s lien. Legal counsel can investigate the validity of the lien and, if necessary, negotiate a resolution of the underlying payment dispute in an effort to have the mechanic’s lien discharged and clear title restored to the property.

Contact an attorney at Murphy Karber Cordier PLC in Phoenix for advice about any mechanic’s lien-related issues. The firm represents construction and real estate clients in the Phoenix metropolitan area and throughout the state of Arizona.