Homeowners are afforded a special protection against Mechanic's Liens. Arizona limits the parties who can file Mechanic's Liens against a homeowner to only parties that directly contract with the homeowner. This means that subcontractors or material suppliers who enter a contract with another contractor, but not the homeowner, cannot place a Mechanic's Lien upon this property.

Homeowners are afforded this protection so long as the homeowner owns the home at the time the work is supplied to the residence, does not intend to sell or lease the home, and resides in the home, or intends to reside in the home at least thirty days within the twelve months following completion of the work. If the foregoing is true, only the party in direct contract with a homeowner may place a Mechanic's Lien upon the home, not the parties who subsequently contracted with the first contractor.

There is a part of the owner occupied rule in Arizona that needs to be clear. If an owner of a residential lot plans on moving in to the property within twelve months of completion of the project and live there more than thirty days the property is considered owner occupied. This even pertains to if the reason for filing the lien is present long before the owner occupies the home for the thirty days.

When looking at a residential project, there are a few options that can help protect your job:

1. A Direct Contract with the Owner
2. A Joint Check Agreement between you the Owner and the General Contractor
3. A Personal Guarantee from the General Contractor

All of these options should be discussed with your legal council before you are bidding on residential projects.

Tags: Owner Occupied