Washington, D.C. is known for playing host to a variety of complex people and institutions. It should come as no surprise then that the modern construction lien – a complicated legal mechanism itself – was conceived in response to the establishment of this important American city.
Following ratification of the Constitution of the United States in 1789, Congress moved quickly to find a home for the federal government. The Residence Act of 1790 gave President George Washington the task of identifying a suitable locale for the nation’s new capital. After a brief search along the run of the Potomac River, Washington settled on a location and development of the city on the north bank commenced.
It soon became apparent that a systemic barrier to contracting could halt the progress of the city indefinitely.
Although it had an abundance of land at the time, America was short on labor and capital.[1] Landowners hoping to improve the value of their property faced the difficult task of producing enough upfront capital to make the necessary improvements. Knowing the state of things, builders were hesitant to provide labor and materials without guarantees that owners would be able to pay. The American legal system – which borrowed heavily from England, a nation repulsed by the idea of common laborers obtaining an interest in the property of landed nobles – offered little in terms of redress for the unfortunate, unpaid builder.[2]
As one can imagine, this environment was not conducive to rapid construction of the kind required by the newly minted capital. The sudden influx of government activity demanded an incredible expansion of infrastructure, commerce and housing. Meeting these construction demands would require a high rate of building contracts – contracts that simply weren’t happening due to the risks involved. The consequences of this fact were felt immediately, as the lack of housing accommodations alone meant that members of Congress, Supreme Court Justices and other high-ranking officials were sometimes forced to employ tents as a means of shelter.[3]
Recognizing the need for change, seasoned lawyer and statesmen Thomas Jefferson provided the solution. He urged the Legislature of Maryland to pass a law giving builders “a lien upon newly created values of [their] labors.”[4] The new law would provide builders with the assurance that contracts would not result in a total loss should the owners fail to pay. By giving laborers an interest in the property they were improving, Jefferson hoped to grease the wheels of commerce enough to reinvigorate construction in the capital.
It worked. So well, in fact, that the legislatures of Pennsylvania, Virginia and Massachusetts soon adopted lien laws of their own.[5] As the need for development traveled hand-in-hand with the wheels of western expansion, states continued to rely on liens as important instruments of commercial preservation. Today, liens are a ubiquitous presence in the construction business.
Over the years, lien laws have evolved according to the needs of the industry. This expansion has not been without its growing pains. Although the complexities of lien laws are enough to require an occasional aspirin, the principles behind their use show a firm and continuing commitment to justice for those who contribute to an ever-growing nation.
Comments: Liens play a significant role in the construction industry. As professionals that constantly encounter this legal mechanism, we thought our readers would appreciate a brief look into the history of liens and the rationales that support their continued use. Knowing the origins of a legal principle can enrich our understanding and make us more effective. At minimum, it provides us with an opportunity to further appreciate the minds and methods that have contributed to the success of our country.
[1] See Friedman, Lawrence M., A History of American Law, 59 (1985).
[2] Id.
[3] Davidson, Charles E., The Mechanic’s Lien Law of Illionois: A Lawyer’s Brief Upon the Topic, 6 (1922).
[4] Id.
[5] Id.