Maryland

Lien Law Overview

In Maryland a mechanics lien only attaches by court order. Even if there is a court order, there is case law establishing that a mortgagee is considered a bona fide purchaser for value, which would trump a mechanics lien in most situations. See UA Constr. Corp. v. Carney, 104 Md. App. 378, 390-392 (1995).

A lien for doing work or furnishing material or both may be granted to a contractor or subcontractor in any building erected or repaired, rebuilt, or improved to the extent of 15% of its value. A subcontractor doing work or furnishing materials for or about the building other than a single-family dwelling being erected on the owner’s land for his or her own residence may not bring a lien, unless, within 120 days after doing the work or furnishing the materials, it gives written notice of its intention to claim a lien in compliance with Section 9-104(a) of the Maryland Mechanics Lien Law. Within 180 days after work is completed or the materials are furnished, a lien petition must be filed in the circuit court for the county where the land or any part of the land is located. See RP§ 9-105(a).

A subcontractor doing work or furnishing materials or both for or about a single-family dwelling being erected on the owner’s land for use as the owner’s residence must provide preliminary notice to the owner as required by RP § 9-104(a)(2). Upon receipt of notice, the owner is entitled to withhold from sums due the contractor the amounts the owner ascertains to be due the subcontractor. See RP § 9-104(f)(1).

The lien of a subcontractor:

• Will not lie unless the owner has not yet made full payment to the primary contractor prior to the owner’s receipt of the subcontractor’s required preliminary notice (See RP § 9-104(a)(2).)
• May not exceed the amount by which the owner is indebted under the contract at the time the notice is given (See RP § 9-104(f)(3).) See also Winkler Constr. Co. v. Jerome, 355 Md. 231 (1999)

A Note about Public Projects in Maryland. In Maryland, a mechanics lien cannot attach to a public project, so a claimant may only seek to recover moneys by filing a bond or construction trust fund claim. See Md. Code Ann., State Fin. & Proc. § 17-108 and RP § 9-202. See also C&B Constr., Inc. v. Dashiell, 460 Md. 272 (2018).

Lien Waivers

Lien Waiver Summary

Maryland does not promulgate form lien waivers, so generic forms may be used. RP § 9-110 provides that a lien claimant does not waive his or her lien by virtue of giving a credit or taking a note or other security in exchange for their lien claim unless it is received as payment or the lien right is expressly waived. Thus, it is a good practice to obtain mechanics lien waivers from all contractors and subcontractors.

Are title companies required by law to manage construction loan disbursements?

No, but title companies are insurance companies that may require -in exchange for insurance coverage – some level of control over how loan proceeds are disbursed. If they do, the lender either must comply with the title company’s demands or risk not having coverage for the loan (or try another title company, but they tend to share best practices by location/region).

Can a mechanics lien have priority over a pre-existing mortgage in Maryland?

Generally, no. It is important to note that – unlike other states, a Maryland mechanics lien has several steps, including court filing before it becomes enforceable.

A lien for doing work or furnishing material or both may be granted to a contractor or subcontractor in any building erected or repaired, rebuilt, or improved to the extent of 15% of its value. A subcontractor doing work or furnishing materials for or about the building other than a single-family dwelling being erected on the owner’s land for his or her own residence may not bring a lien, unless, within 120 days after doing the work or furnishing the materials, it gives written notice of its intention to claim a lien in compliance with Section 9-104(a) of the Maryland Mechanics Lien Law. Within 180 days after work is completed or the materials are furnished, a lien petition must be filed in the circuit court for the county where the land or any part of the land is located. See RP§ 9-105(a).

Contractor Licensing

Maryland requires contractors on home improvement contracts (not new construction) to obtain a license from the Commission.
https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gbr&section=8-101&enactments=false

Maryland home improvement contractors must secure liability insurance and may have to secure a bond. See https://www.dllr.state.md.us/license/mhic/mhiclicreq.shtml

License Search: https://www.dllr.state.md.us/cgi-bin/ElectronicLicensing/OP_search/OP_search.cgi?calling_app=HIC::HIC_qselect