Here’s this week’s scenario. You buy a brand new home from a reputable builder and since closing live in the home for nearly 18 months. One day the doorbell rings and it’s the postal carrier with a certified letter for you to sign. You sign and open the letter only to find that you have a mechanic’s lien filed against your property for work completed before you closed on the home.

Your home loan closed 18 months ago. The builder was paid. You have had no work performed on your home that has not been paid for. So why the lien?

This has become a recurring story in the OKC metropolitan area. With builders closing their doors, some are leaving sub-contractors unpaid for work completed months earlier. In most cases conversations have taken place between builder and contractors and attempts have been made to settle these outstanding balances. However, in some cases, builders simply “close up shop” leaving the subs high and dry.

The contractor’s first reaction is to file a mechanic’s lien on the property where the work was done. A mechanic’s lien is an instrument allowed by Oklahoma state law whereby a contractor who has performed work but not received timely or full payment for their work can encumber a property for the outstanding amount.

Should this happen to you please do not call the county offices demanding that it be released. These offices bear no responsibility to investigate the legitimacy of these or any other liens. They are responsible only to process liens that are filed against properties.

If you receive a mechanic’s lien you believe to be invalid the first call you should make is to your builder or their attorney. Provide a complete copy of the lien and any cover letter to assist in their matching purchase order numbers with work completed.

If they have not been paid, Oklahoma state law allows contractors 90 days from the last date work was done on a property to file a lien. There is a quick way to determine if the lien filed against your home is legitimate or not. If the lien mentions purchase order numbers and dates the work specified by the purchase orders was completed, and the lien is filed more than 90 days after work was completed, then the lien is invalid by Oklahoma state law.

Another instrument of protection also should be present to help you in this situation. Oklahoma state law requires that all residential transactions be covered by title insurance. This coverage is provided by the title company that last closed your home mortgage.

Before title insurance is issued on any transaction, Oklahoma state law requires an attorney perform an abstract search to verify that the property being transacted upon is free and clear of any encumbrances other than those that will be settled at closing. In other words, the mortgage you place on the home must satisfy any and all outstanding debts against your new home. Title insurance guarantees that when you sign your closing documents that a clean title is transferred into your name.

If you have a mortgage or mortgages on the home, title insurance guarantees both the owner and the lender holding these mortgages that the only encumbrances against your home are those you know about.

Should you receive a mechanic’s lien you believe to be bogus, contact your builder and then contact the title company who provided your title insurance. On a practical note, when you’ve done all this, take a deep breath and relax. It may take some time for everything to settle out, but in most cases your title insurance will cover any of these type situations and should allow you to conduct any type of property transaction you choose to do with your own property.

TREY BOWDEN is a licensed mortgage professional for Aduddell Mortgage Group in Edmond. To read more go to: http://homeownergonemad.blogspot.com.