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TITLE 9 STATUTORY LIENS ON REAL PROPERTY
SUBTITLE 1 MECHANICS’ LIENS
9-101 Definitions
9-102 Property Subject to Lien, Exemptions
9-103 Extent of Lien
9-104 Subcontractor’s Notice to Owner
9-105 Petition to Establish Mechanics Lien
9-106 Procedure, Pleadings, Orders, Establishment of Lien,
Bond, Trial
9-107 Land in Another County
9-108 Foreclosure Sale, Prorata Distribution
9-109 Expiration of Right to Enforce Lien
9-110 Payment, Waiver
9-111 Personal Actions
9-112 Construction, Amendments
9-113 Prohibited Contract Provisions
9-114 Releases
SUBTITLE 2 TRUST RELATIONSHIPS IN THE CONSTRUCTION INDUSTRY
9-201 Construction Funds Held in Trust
9-202 Personal Liability of Trustee
9-204 Exemptions from Subtitle
SUBTITLE 3 CONSTRUCTION CONTRACTS
9-301 Definitions
9-302 Prompt Payment
9-303 Remedies
9-304 Exceptions
CODE OF MARYLAND REAL PROPERTY
TITLE 9 STATUTORY LIENS ON REAL PROPERTY
SUBTITLE 1 MECHANICS’ LIENS
9-101 Definitions
(a) In general. - In this subtitle the following words have
the meanings indicated.
(b) Building. - “Building” includes any unit of
a nonresidential building that is leased or separately sold
as a unit.
(c) Contract. - “Contract” means an agreement
of any kind or nature, express or implied, for doing work
or furnishing material, or both, for or about a building as
may give rise to a lien under this subtitle.
(d) Contractor. - “Contractor” means a person
who has a contract with an owner.
(e) Land. - “Land” means the land to which a lien
extends under this subtitle or the land within the boundaries
established by proceedings in accordance with the Maryland
Rules. “Land” includes the improvements to the
land.
(f) Owner. - “Owner” means the owner of the land
except that, when the contractor executes the contract with
a tenant for life or for years, “owner” means
the tenant.
(g) Subcontractor. - “Subcontractor” means a person
who has a contract with anyone except the owner or his agent.
9-102 Property Subject to Lien, Exemptions
(a) Buildings. - Every building erected and every building
repaired, rebuilt, or improved to the extent of 15 percent
of its value is subject to establishment of a lien in accordance
with this subtitle for the payment of all debts, without regard
to the amount, contracted for work done for or about the building
and for materials furnished for or about the building, including
the drilling and installation of wells to supply water, the
construction or installation of any swimming pool or fencing,
the sodding, seeding or planting in or about the premises
of any shrubs, trees, plants, flowers or nursery products,
the grading, filling, landscaping, and paving of the premises,
and the leasing of equipment, with or without an operator,
for use for or about the building or premises.
(b) Waterlines, sewers, drains and streets in development.
- If the owner of land or the owner’s agent contracts
for the installation of waterlines, sanitary sewers, storm
drains, or streets to service allots in a development of the
owner’s land, each lot and its improvements, if any,
are subject, on a basis pro rata to the number of lots being
developed, to the establishment of a lien as provided in subsection
(a) of this section for all debts for work and material in
connection with the installation.
(c) Machines, wharves, and bridges. - Any machine, wharf,
or bridge erected, constructed, or repaired within the State
may be subjected to a lien in the same manner as a building
is subjected to a lien in accordance with this subtitle.
(d) Exemptions. - However, a building or the land on which
the building is erected may not be subjected to a lien under
this subtitle if, prior to the establishment of a lien in
accordance with this subtitle, legal title has been granted
to a bona fide purchaser for value.
(e) Filing of petition constitutes notice to purchaser. -
The filing of a petition under section 9-105 shall constitute
notice to a purchaser of the possibility of a lien being perfected
under this subtitle.
9-103 Extent of Lien
(a) In general. - A lien established in accordance with this
subtitle shall extend to the land covered by the building
and to as much other land, immediately adjacent and belonging
in like manner to the owner of the building, as may be necessary
for the ordinary and useful purposes of the building. The
quantity and boundaries of the land may be designated as provided
in this section.
(b) Designation of boundaries. - An owner of any land who
desires to erect any building or to contract with any person
for its erection may define, in writing, the boundaries of
the land appurtenant to the building before the commencement
of construction, and then file the boundaries for record with
the clerk of the circuit court for the county. The designation
of boundaries shall be binding on all persons. If the boundaries
are not designated before the commencement of a building,
the owner of the land or any person having a lien or encumbrance
on the land by mortgage, judgment, or otherwise entitled to
establish a lien in accordance with this subtitle may apply,
by written petition, to the circuit court for the county to
designate the boundaries.
(c) Unfinished building; repaired or rebuilt building. –
(1) If a building is commenced and not finished, a lien established
in accordance with this subtitle shall attach to the extent
of the work done or material furnished.
(2) If a building is erected, or repaired, rebuilt or improved
to the extent of 25 percent of its value, by a tenant for
life or years or by a person employed by the tenant, any lien
established in accordance with this subtitle applies only
to the extent of the tenant’s interest.
9-104 Subcontractor’s Notice to Owner
(a) Notice required to entitle subcontractor to lien. –
(1) A subcontractor doing work or furnishing materials or
both for or about a building other than a single family dwelling
being erected on the owner’s land for his own residence
is not entitled to a lien under this subtitle unless, within
120 days after doing the work or furnishing the materials,
the subcontractor gives written notice of an intention to
claim a lien substantially in the form specified in subsection
(b) of this section.
(2) A subcontractor doing work or furnishing materials or
both for or about a single family dwelling being erected on
the owner’s land for his own residence is not entitled
to a lien under this subtitle unless, within 120 days after
doing work or furnishing materials for or about that single
family dwelling, the subcontractor gives written notice of
an intention to claim a lien in accordance with subsection
(a) (1) of this section and the owner has not made full payment
to the contractor prior to receiving the notice.
(b) Form of notice. - The form of notice is sufficient for
the purposes of this subtitle if it contains the information
required and is substantially in the following form:
“Notice to Owner or Owner’s Agent of Intention
to Claim a Lien
________________________(Subcontractor) did work or furnished
material for or about the building generally designated or
briefly described as
________________________________________ The total amount
earned under the subcontractor’s undertaking to the
date hereof is $ .____of which
$ _____ is due and unpaid as of the date hereof.
The work done or materials provided under the subcontract
were as follows: (insert brief description of the work done
and materials furnished, the time when the work was done or
the materials furnished, and the name of the person for whom
the work was done or to whom the materials were furnished).
I do solemnly declare and affirm under the penalties of perjury
that the contents of the foregoing notice are true to the
best of the affiant’s knowledge, information, and belief.
_______________________(Individual) on behalf of ___________________(Subcontractor)
(Insert if subcontractor is not an individual)”
(c) Notice by mail or personal delivery. - The notice is effective
if given by registered or certified mail, return receipt requested,
or personally delivered to the owner by the claimant or his
agent.
(d) More than one owner. - If there is more than one owner,
the subcontractor may comply with this section by giving the
notice to any of the owners.
(e) Notice by posting. - If notice cannot be given on account
of absence or other causes, the subcontractor, or his agent,
in the presence of a competent witness and within 120 days,
may place the notice on the door or other front part of the
building. Notice by posting according to this subsection is
sufficient in all cases where the owner of the property has
died and his successors in title do not appear on the public
records of the county.
(f) Payments by owner to contractor after notice; limitation
on lien against certain single family dwellings. –
(1) On receipt of notice given under this section, the owner
may withhold, from sums due the contractor, the amount the
owner ascertains to be due the subcontractor giving the notice.
(2) If the subcontractor giving notice establishes a lien
in accordance with this subtitle, the contractor shall receive
only the difference between the amount due him and that due
the subcontractor giving the notice.
(3) Notwithstanding any other provision of this section to
the contrary, the lien of the subcontractor against a single
family dwelling being erected on the land of the owner for
his own residence shall not exceed the amount by which the
owner is indebted under the contract at the time the notice
is given.
9-105
Petition to Establish Mechanics Lien
(a) In general. - In order to establish a lien under this
subtitle, a person entitled to a lien shall file proceedings
in the circuit court for the county where the land or any
part of the land is located within 180 days after the work
has been finished or the materials furnished. The proceedings
shall be commenced by filing with the clerk, the following:
(1) A petition to establish the mechanic’s lien, which
shall set forth at least the following:
(i) The name and address of the petitioner;
(ii) The name and address of the owner;
(iii) The nature or kind of work done or the kind and amount
of materials furnished, the time when the work was done or
the materials furnished, the name of the person for whom the
work was done or to whom the materials were furnished and
the amount or sum claimed to be due, less any credit recognized
by the petitioner;
(iv) A description of the land, including a statement whether
part of the land is located in another county, and a description
adequate to identify the building; and
(v) If the petitioner is a subcontractor, facts showing that
the notice required under section 9-104 of this subtitle was
properly mailed or served upon the owner, or, if so authorized,
posted on the building. If the lien is sought to be established
against two or more buildings on separate lots or parcels
of land owned by the same person, the lien will be postponed
to other mechanics’ liens unless the petitioner designates
the amount he claims is due him on each building;
(2) An affidavit by the petitioner or some person on his behalf,
setting forth facts upon which the petitioner claims he is
entitled to the lien in the amount specified; and
(3) Either original or sworn, certified or photostatic copies
of material papers or parts thereof, if any, which constitute
the basis of the lien claim, unless the absence thereof is
explained in the affidavit.
(b) Docketing; process; pleadings. - The clerk shall docket
the proceedings as an action in equity, and all process shall
issue out of and all pleadings shall be filed in the one action.
9-106 Procedure, Pleadings, Orders, Establishment
of Lien, Bond, Trial
(a) Review of pleadings and documents filed; order to show
cause; opposing affidavit; answer showing cause. –
(1) When a petition to establish a mechanic’s lien is
filed, the court shall review the pleadings and documents
on file and may require the petitioner to supplement or explain
any of the matters therein set forth. If the court determines
that the lien should attach, it shall pass an order that directs
the owner to show cause within 15 days from the date of service
on the owner of a copy of the order, together with copies
of the pleadings and documents on file, why a lien upon the
land or building and for the amount described in the petition
should not attach. Additionally, the order shall inform the
owner that:|
(i) He may appear at the time stated in the order and present
evidence in his behalf or may file a counteraffidavit at or
before that time; and
(ii) If he fails to appear and present evidence or file a
counteraffidavit, the facts in the affidavit supporting the
petitioner’s claim shall be deemed admitted and a lien
may attach to the land or buildings described in the petition.
(2) If the owner desires to controvert any statement of fact
contained in the affidavit supporting the petitioner’s
claim, he must file an affidavit in support of his answer
showing cause. The failure to file such opposing affidavit
shall constitute an admission for the purposes of the proceedings
of all statements of fact in the affidavit supporting the
petitioner’s claim, but shall not constitute an admission
that such petition or affidavit in support thereof is legally
sufficient.
(3) An answer showing cause why a lien should not be established
in the amount claimed shall be set down for hearing at the
earliest possible time.
(b) Final order; interlocutory order. - (1) If the pleadings,
affidavits and admissions on file, and the evidence, if any,
show that there is no genuine dispute as to any material fact
and that the lien should attach as a matter of law, then a
final order shall be entered establishing the lien for want
of any cause shown to the contrary. Further, if it appears
that there is no genuine dispute as to any portion of the
lien claim, then the validity of that portion shall be established
and the action shall proceed only on the disputed amount of
the lien claim.
(2) If the pleadings, affidavits and admissions on file and
the evidence, if any, show that there is no genuine dispute
as to any material fact and that the petitioner failed to
establish his right to a lien as a matter of law, then a final
order shall be entered denying the lien for cause shown.
(3) If the court determines from the pleadings, affidavits
and admissions on file, and the evidence, if any, that the
lien should not attach, or should not attach in the amount
claimed, as a matter of law, by any final order, but that
there is probable cause to believe the petitioner is entitled
to a lien, the court shall enter an interlocutory order which:
(i) Establishes the lien;
(ii) Describes the boundaries of the land and the buildings
to which the lien attaches;
(iii) States the amount of the claim for which probable cause
is found;
(iv) Specifies the amount of a bond that the owner may file
to have the land and building released from the lien;
(v) May require the claimant to file a bond in an amount that
the court believes sufficient for damages, including reasonable
attorney’s fees; and
(vi) Assigns a date for the trial of all the matters at issue
in the action, which shall be within a period of six months.
The owner or any other person interested in the property,
however, may, at any time, move to have the lien established
by the interlocutory order modified or dissolved.
(c) Bond. - The amount of and the surety on any bond shall
be determined and approved pursuant to the Maryland Rules
except as set forth in this subtitle. The petitioner, or any
other person interested in the property, however, if not satisfied
with the sufficiency of a surety or with the amount of any
bond given, may, at any time before entry of a final decree,
apply to the court for an order requiring an additional bond,
and upon notice to the other parties involved, the court may
order the giving of such additional bond as it may deem proper.
In lieu of filing bond, any party may deposit money in an
amount equal to the amount of the bond which would otherwise
be required, pursuant to the Maryland Rules.
(d) Trial on matters at issue. - Until a final order is entered
either establishing or denying the lien, the action shall
proceed to trial on all matters at issue, as in the case of
any other proceedings in equity.
9-107
Land in Another Country
(a) Filing of documents with clerk. - If any part of the land
is located within another county and the petitioner desires
that the lien attach to the land in that county, the petitioner
shall file a certified copy of the docket entries, of the
court order, and of any required bond with the clerk of the
circuit court for that county.
(b) Time of attachment. - A lien attaches to the land or building
in a county as of the time the documents required to be filed
under subsection (a) are filed with the clerk of the circuit
court of that county.
9-108 Foreclosure Sale, Prorata Distribution
If all or any part of the land or buildings against which
a mechanic’s lien has been established pursuant to this
subtitle shall be sold under foreclosure or a judgment, execution
or any other court order, all liens and encumbrances on such
property shall be satisfied in accordance with their priority,
subject to the limitation in the next sentence of this section.
If the proceeds of the sale are insufficient to satisfy all
liens established pursuant to this subtitle, then all proceeds
available to satisfy each such lien shall be stated by the
court auditor as one fund, and the amount to be disbursed
to satisfy each lien established pursuant to this subtitle
shall bear the same proportion to that fund as the amount
of such lien bears to the total amount secured by all such
liens, without regard to priority among such liens.
9-109 Expiration of Right to Enforce Lien
The right to enforce any lien established under this subtitle
expires at the end of one year from the day on which the petition
to establish the lien was first filed. During this time the
claimant may file a petition in the lien proceedings to enforce
the lien or execute on any bond given to obtain a release
of the land and building from the lien. If such petition is
filed within the one-year period, the right to a lien or the
lien, or any bond given to obtain a release of lien, shall
remain in full force and effect until the conclusion of the
enforcement proceedings and thereafter only in accordance
with the decree entered in the case.
9-110 Payment, Waiver
No person having the right to establish a mechanics’
lien waives the right by granting a credit, or receiving a
note or other security, unless it is received as payment or
the lien right is expressly waived.
9-111 Personal Actions
Nothing in this subtitle affects the right of any person,
to whom any debt is due for work done or material furnished,
to maintain any personal action against the owner of the building
or any other person liable for the debt.
9-112 Construction, Amendments
This law is remedial and shall be so construed to give effect
to its purpose. Any amendment shall be made in the proceedings,
commencing with the claim or lien to be filed and extending
to all subsequent proceedings, as may be necessary and proper.
However, the amount of the claim or lien filed may not be
enlarged by amendment.
9-113 Prohibited Contract Provisions
(a) In general. - An executory contract between a contractor
and any subcontractor that is related to construction, alteration,
or repair of a building, structure, or improvement may not
waive or require the subcontractor to waive the right to:
(1) Claim a mechanics’ lien; or
(2) Sue on a contractor’s bond.
(b) Provisions conditioning payment to subcontractor on payment
of contractor. - A provision in an executory contract between
a contractor and a subcontractor that is related to construction,
alteration, or repair of a building, structure, or improvement
and that conditions payment to the subcontractor on receipt
by the contractor of payment from the owner or any other third
party may not abrogate or Waive the right of the subcontractor
to:
(1) Claim a mechanics’ lien; or
(2) Sue on a contractor’s bond.
(c) Void provisions. - Any provision of a contract made in
violation of this section is void as against the public policy
of this State.
9-114 Releases
(a) Signed release of lien. - At the time of settlement or
payment in full between a contractor and an owner, the contractor
shall give to the owner a signed release of lien from each
material supplier and subcontractor who provided work or materials
under the contract.
(b) Effect of signed release. - An owner is not subject to
a lien and is not otherwise liable for any work or materials
included in the release under subsection (a) of this section.
SUBTITLE 2 TRUST RELATIONSHIPS IN THE CONSTRUCTION
INDUSTRY
9-201 Construction Funds Held in Trust
(a) Definition. - For the purposes of this subtitle, “managing
agent” means an employee of a contractor or subcontractor
who is responsible for the direction over or control of money
held in trust by the contractor or subcontractor under subsection
(b) of this section.
(b) Moneys to be held in trust. –
(1) Any moneys paid under a contract by an owner to a contractor,
or by the owner or contractor to a subcontractor for work
done or materials furnished, or both, for or about a building
by any subcontractor, shall be held in trust by the contractor
or subcontractor, as trustee, for those subcontractors who
did work or furnished materials, or both, for or about the
building, for purposes of paying those subcontractors.
(2) An officer, director, or managing agent of a contractor
or subcontractor who has direction over or control of money
held in trust by a contractor or subcontractor under paragraph
(1) of this subsection is a trustee for the purpose of paying
the money to the subcontractors who are entitled to it.
(c) Commingling. –
(1) Nothing contained in this subtitle shall be construed
as requiting moneys held in trust by a contractor or subcontractor
under subsection (b) of this section to be placed in a separate
account.
(2) If a contractor or subcontractor commingles moneys held
in trust under this section with other moneys, the mere commingling
of the moneys does not constitute a violation of this subtitle.
9-202
Personal Liability of Trustee
Any officer, director, or managing agent of any contractor
or subcontractor, who knowingly retains or uses the moneys
held in trust under s 9-201 of this subtitle, or any part
thereof, for any purpose other than to pay those subcontractors
for whom the moneys are held in trust, shall be personally
liable to any person damaged by the action.
9-204
Exemptions from Subtitle
(a) In general. - This subtitle applies to contracts subject
to Title 17, Subtitle 1 of the State Finance and Procurement
Article, known as the “Maryland Little Miller Act”,
as well as property subject to section 9-102 of this title.
(b) Exceptions contracts. - This subtitle does not apply to:
(1) A contract for the construction and sale of a single family
residential dwelling; or
(2) A home improvement contract by a contractor licensed under
the Maryland Home Improvement Law.
(c) Definitions. - In this subtitle, “owner”,
“contractor”, and “subcontractor”
have the same meanings as in s 9-101 of this title.
SUBTITLE 3 CONSTRUCTION CONTRACTS
9-301 Definitions
(a) In general. - In this subtitle the following words have
the meanings indicated.
(b) Contract. –
(1) “Contract” means an agreement of any kind
or nature, express or implied, for doing work or furnishing
materials, or both, for or about a building.
(2) “Contract” includes an agreement for:
(i) The erection, repair, rebuilding, or improvement of a
building;
(ii) The drilling and installation of wells to supply water;
(iii) The construction or installation of any swimming pool
or fencing;
(iv) The grading, filling, landscaping, and paving of the
premises;
(v) The installation of waterlines, sanitary sewers, storm
drains, or streets; or
(vi) The erection, repair, rebuilding, or improvement of a
wharf.
(c) Contractor. - “Contractor” means a person
who has a contract with an owner.
(d) Owner. - “Owner” means:
(1) The owner of the land; or
(2) An owner’s tenant for life or for years, provided
the tenant enters into the contract with the contractor.
(e) Subcontractor. –
(1) “Subcontractor” means a person who has a contract
with anyone except the owner or the owner’s agent.
(2) “Subcontractor” includes a supplier.
(f) Undisputed amount. - “Undisputed amount” means
an amount owed on a contract for which there is no good faith
dispute, including any retainage withheld.
9-302 Prompt Payment
(a) In general; exception. - Except for work done or materials
furnished under a contract enumerated in section 9-304 of
this subtitle, a contractor or subcontractor who does work
or furnishes material under a contract shall be entitled to
prompt payment under subsection (b) of this section.
(b) Time for payments. –
(1) If the contract is with an owner, the owner shall:
(i) If the contract does not provide for specific dates or
times of payment, pay to the contractor undisputed amounts
owed under the terms of the written contract, within the earlier
of:
1. 30 days after the day on which the occupancy permit is
granted; or
2. 30 days after the day on which the owner or the owner’s
agent takes possession; or
(ii) If the contract provides for specific dates or times
of payment, pay to the contractor undisputed amounts owed
within 7 days after the date or time specified in the contract.
(2) Paragraph (1) of this subsection does not apply to any
contract between the contractor and:
(i) The State;
(ii) A county;
(iii) A municipal corporation;
(iv) A board of education; or
(v) A public authority or instrumentality.
(3) If the contract is not with an owner, the contractor or
subcontractor shall pay undisputed amounts owed to its subcontractors
within 7 days after receipt by the contractor or subcontractor
of each payment received for its subcontractors’ work
or materials.
9-303 Remedies
(a) In general. - In addition to any other remedy provided
under any other provision of law, a court of competent jurisdiction,
for good cause shown may:
(1) Award any equitable relief for prompt payment of undisputed
amounts that it considers necessary, including the enjoining
of further violations; and
(2) In any action, award to the prevailing party:
(i) Interest from the date the court determines that the amount
owed was due; and
(ii) Any reasonable costs incurred.
(b) Attorneys’ fees. - If a court determines that an
owner, contractor or subcontractor has acted in bad faith
by failing to pay any undisputed amounts owed as required
under section 9-302 of this subtitle, the court may award
to the prevailing party reasonable attorney’s fees.
9-304 Exceptions
This subtitle does not:
(1) Affect the rights of contracting parties under Title 9,
Subtitle 1 of this article;
(2) Apply to a contract for the construction and sale of a
single family residential dwelling;
(3) Apply to any transaction under the Custom Home Protection
Act, Title 10, Subtitle 5 of this article; and
(4) Apply to a home improvement contract by a contractor licensed
under the Maryland Home Improvement Law. |
