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Protecting Against Mechanic’s Liens

The Maryland Mechanic’s Lien law allows contractors, subcontractors and suppliers to bring claims directly against an owner of residential or commercial property, provided that the claimant meets certain procedural and substantive qualifications.  Additionally, Maryland contract law does not allow a contractor or subcontractor to waive their right to file a mechanic’s lien, even if the waiver is expressly stated in the parties’ contract.  

Owners of residential and commercial property in Maryland, however, can protect themselves against the filing of mechanic’s lien by ensuring certain provisions are agreed upon in their construction contract and by taking additional steps prior to rendering payment.

The following are examples of ways an owner of a residential or commercial property can better protect themselves from a mechanic’s lien claim.

  • Lien Waivers – upon rendering of any payment, an owner should obtain a lien waiver from the contractor.  Additionally, a final lien waiver should be obtained at the completion of the project.

  • Sworn Statement that Sub-Contractors have been Paid – if provided for in the construction contract, the owner can require that the general contractor has paid the sub-contractors.  This can also be included as part of the lien waiver.

  • Indemnity Agreement and Duty to Defend – a construction provision, that would require a general contractor to indemnify and defend and owner against any claims by any of the subcontractors for non-payment.  

  • Right to Withhold Payment – a provision in the contract that allows the owner to withhold payment if claims are made by a subcontractor or supplier that the general contractor has not rendered payment.

  • Bonding Obligations – requiring the general contractor to obtain payment and performance bonds can assist in protecting an owner from the non-payment of a general contractor.

  • Issuance of Joint Checks – upon agreement with the contractor, owners may issue joint checks to the contractor and their sub I contractor/supplier, which will assist in assuring payment has been received by the lower tiered subcontractors.

  • Direct Payment – similar to the issuance of joint checks, owners would directly make payment to subcontractor/suppliers.

For additional information related to Maryland Mechanic’s Lien law or construction law in Maryland, contact Michael W. Siri at siri@bowie-jensen.com.  

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