A homeowner hires you for a $25,000 kitchen renovation but refuses to pay the final $5,000. You properly file a mechanics' lien. The homeowner wants to sell the house. What happens to your lien?
Correct Answer
C) The lien must be satisfied from sale proceeds or bonded off
Under Alabama lien law, a properly filed mechanics' lien must be satisfied from the sale proceeds or the buyer must post a bond to clear title for the sale to proceed.
Why This Is the Correct Answer
Under Alabama mechanics' lien law, a properly filed lien creates a cloud on the property title that must be resolved before a clear sale can occur. The homeowner has two options: either pay the lien amount from the sale proceeds to satisfy the debt, or the buyer can post a bond equal to the lien amount to clear the title. This protects the contractor's right to payment while allowing the property transfer to proceed through proper legal channels.
Why the Other Options Are Wrong
Option A: The lien is automatically released upon sale
Mechanics' liens are not automatically released upon sale. They remain attached to the property as encumbrances that must be addressed. The lien holder's rights don't simply disappear because the property changes hands - the debt must still be resolved.
Option B: The lien transfers to the new owner
The lien itself doesn't transfer to the new owner as a personal obligation. While the lien remains on the property, the new owner isn't personally responsible for the original contractor's debt. The lien must be cleared through payment or bonding before transfer.
Option D: The lien becomes invalid after 30 days
Properly filed mechanics' liens don't become invalid after 30 days during a sale process. Alabama law provides specific timeframes for lien enforcement (typically 6 months to 1 year), but a pending sale doesn't trigger an automatic 30-day expiration period.
Memory Technique
Remember 'SATISFY or BOND': When a liened property sells, the lien must be SATISFied from proceeds or BONDed off - it doesn't just vanish or follow the buyer.
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