Mechanics' Liens In The District Of Columbia.

Construction subcontractors and suppliers must understand mechanic's lien security as a proactive credit management planning tool. You must understand your security opportunities from the beginning of each transaction so that you can properly assess your risk with each customer and each project.

In the last few months, we have provided detailed discussions of mechanic's lien laws in various states. To better understand some of this discussion on District of Columbia mechanics' liens, you may need to refer to the General Mechanic's Lien article in the October 1999 issue of Business Credit, or view the article on our web site at www.FULLERTONWISE.com

Distinctive Features of Law in State

The mechanic's lien provided by the District of Columbia ("DC") Code is generally protective of, and favorable to, contractors. There is very little court case law on the DC mechanic's lien statute, so answers to most questions must be found in the code itself. The lien is relatively easy to file. In fact, the Recorder of Deeds (land records) has drafted a required form, reproduced on page 75. The claimant must fill in the blanks on the form and file it in the land records.

The mechanic's lien form must be filed in the land records within three months after completion of the entire building or improvement. This can create a very generous time limit in the case of subcontractors who supplied labor and materials long before completion of the rest of the project.

The DC mechanic's lien has a high priority. A DC lien is inchoate. Once filed, the lien relates back to the day work commenced on the project. This super-priority of DC mechanics' liens provides a powerful weapon to the contractor. The lien probably survives bankruptcy or a sale of the property.

The owner does have a "defense of payment" to a DC mechanic's lien. All subcontractor liens will fail if the owner has paid the general contractor in full. Subcontractors are entitled to request information from the owner concerning the contract and status of accounts between the owner and general contractor. This notice can provide protection from a defense of payment.