Thursday, May 10, 2012

Thomas Jefferson: The Founding Father of Mechanics Liens

When we think of our laws relating to construction, we generally think of them as something that have evolved over time, and that were generally enacted in the 20th Century.  Who knew, though, that the mechanics lien was introduced through Thomas Jefferson: founding father of the United States of America?

That means is that protection through construction lien laws is certainly not a new, or even a recent, development in the law.  During a time where the mechanics lien filing is being constantly revised across the nation in reaction to the economic crisis of 2008, it is interesting to know that Thomas Jefferson first introduced the Mechanic’s Lien Act in 1791 to encourage construction for what would be the nation’s capital in Washington, D.C. The Mechanics Lien Act of 1791 was introduced in Maryland, and the idea behind it was the same as today: to provide protection to contractors and tradespeople. The mechanics lien laws, then as they do now, provide the laborer, contractor, subcontractor or materialman an alternative to suing for the work they performed and the value they add to the development of real estate.

But the mechanics lien law has had a curious side effect: while it aims to protect contractors and subcontractors, the construction lien laws increased the capacity of capital markets by “allowing” a landholder to use his land as security for improvements. Thus, the mechanics lien law benefits not on the person who performs work on the project, but also the owners and the financial institutions that fund the projects. 

We'll never know whether Jefferson ever realized all the benefits of allowing the filing of mechanics liens, but it is just another example of the ways he influenced our Country for the better.

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