So, a lien claimant has filed a Mechanics and Materialmen’s lien claim and you are supposed to close on the property in a week. What do you do?
Oklahoma law provides that a property owner may discharge a mechanics’ and materialmen’s lien immediately by depositing 125% of the lien claim amount with the county clerk’s office in the form of money or a corporate surety bond. A notice containing certain information should be prepared by the party and delivered to the county clerk. The county clerk then serves the notice on the lien claimant. The money or bond stands in lieu of the lien and the lien claimant may foreclose against the substituted security. The lien is discharged immediately if money is deposited. There is a waiting period and other applicable provisions if a corporate surety bond is posted.
If the lien claimant does not take action on the amount posted within one year of filing the lien, the party posting the amount may retrieve it from the county clerk for a $10 fee. Even if the lien claimant files a foreclosure action, the prevailing party is entitled to costs and fees. See 42 O.S. § 176. This method is beneficial because the lien claimant must still take the initiative to foreclose the lien. However, a client may not be able to wait up to a year without use of the amount of money posted.
Alternatively, after money is posted, a landowner could initiate an action against the lien claimant using the procedure in 42 O.S. § 177. The property owner may file a petition with the court naming the lien claimant the defendant and forcing adjudication of the lien. If the lien claimant is unable to establish the validity of the lien, the court may award costs and fees. This may be a better option if the client needs the amount posted back within a shorter amount of time.
For more information about Mechanics and Materialmen’s, please consult Title 42 O.S. § 141 et. seq. This article is not a substitute for competent legal advice. Please consult with an attorney if you are faced with a Mechanics and Materialmen’s lien issue.