Author Archive

Blog Series on State and County Projects Bond Claim Remedies

On February 3, 2012

Blog Series on State and County Projects Bond Claim Remedies

We published a blog series on mechanic lien laws for the material supplier in January, and are following it up this month with a new focus: state and county construction projects or public works.

Regardless of whether work is being performed on a private, state or federal project, folks in the construction industry commonly believe they have a “lien right.” The sentiment, however, is only half true.

As we will explore in the blog series, the remedies available to a construction project participant can vary greatly depending on the nature of the construction project. Whenever working on a private project, job participants can typically file a traditional mechanic’s lien. However, when working on a state or county project, the mechanic’s lien remedy isn’t available, but in it’s place is a “bond claim” remedy.

Commonly understood as a “lien claim,” the remedy works a lot differently in both concept and practice.

In the past, since this blog focuses on mechanics lien and bond claim remedies on all types of construction projects, we’ve touched on this here at the Construction Lien Blog.  See, for example, these illustrative posts:

FAQ: Can I Lien A State or Federal Project?

FAQ: What Type Of Construction Project Is This?  State, Federal or Private?

Stay tuned over the next few weeks as we explore state and county construction projects from every angle, and educate you on the bond claim remedies available to construction participants. We’ll discuss how to use these bond claim rights effectively, the traps for the inexperienced, and the legal nuances that may leave us scratching our head.

If you’d like to read the State and County Project / Bond Claim content on this blog, view posts in the State Bond Claims Category (RSS).  And, of course, stay tuned this month.

Posted in:     State Bond Claims  /  Tags:   /   Leave a comment

3 Things To Ask Your Mechanics Lien Company

On February 2, 2012

Zlien started doing business back in 2007, when there were barely any companies offering mechanic lien and preliminary notice filing services. Since then, a few folks took cues and now claim to offer professional lien and notice services. However, buyers should beware.

The mechanics lien and preliminary notice business is not without its complications. Just as it’s complicated for a construction business to manage all the nuances in mechanics lien compliance, the same difficulty presents itself to those lien and notice companies. Trusting your notices and liens to a service provider is not a decision to take lightly, as any small mistake can impact your rights. Here are three things to think about and ask your mechanics lien service before committing:

 1) How Do You Keep Up With Law Changes and Compliance Issues?

If a mechanic’s lien service provider doesn’t have a plan and a consistent policy to monitor law changes and compliance issues, consider this a huge red flag.  State legislatures make at least 5-10 changes to mechanic’s lien and bond claim laws somewhere in the United States, and court decisions are constantly making tiny alterations. Each decision and state legislative bill may impact the lien and notice forms to use, as well as service requirements, timing issues, and more (Check out our Lien Law Alerts category, which publishes lien law changes nationwide).

When you ask a provider about their compliance procedures, they may tell you that they have a “network of attorneys.”  Well, consider this a red flag too.

3 Things To Ask Your Mechanics Lien CompanyHaving a “network of attorneys” is just a fancy way of telling you they have a list of attorneys in every state.  Big deal.  I can give you hundreds of lists of attorneys who do construction law or construction lien work.  I promise you, having a “network of attorneys” is not going to notify that mechanic’s lien provider each time a lien law changes, or help them ensure that their forms and procedures are compliant.

There’s another problem with the “network of attorneys” claim. These type of mechanic lien providing companies usually act as a simple referral house for attorneys. Each time you order a preliminary notice or a mechanic’s lien, you’re going to be shuffled off to an “in-network attorney” to fulfill your order.  There are three negative implications to this type of business method:

  1. If you’re working in multiple states, you’re not likely to have the same attorney help you in each place, which is going to be confusing and inconsistent.  You want a single vendor you can work with to get these things processed.
  2. When you get shuffled off to an attorney, you’re going to get contacted by that attorney, you’re going to get charged attorney prices, and these attorney’s are going to followup with you to try and convert the lead into more legal work.
  3. Finally, the company itself doesn’t do anything for you, they are just a clearing house or referral manager for this attorney network.

An example of a vendor who has a “network of attorneys” type business model is NLB Access.  While they may not function exactly as I’ve outlined in the above section, they are certainly a type of service that will process your preliminary notice and mechanics lien orders by utilizing a network of attorneys across the country.

NLB Access tries to spin this as a positive.  On the “Solutions” page of their website, they say:

Some notice filing companies may be cheaper, but NLB provides you with a case load manager that is an experienced legal professional who will review and process your claims..Our General Counsel’s office, in collaboration with local counsel, will inform you of your rights and create an effective strategy to recover your money.

I may be wrong about this, but imagine trying to work with these people if you need 100 notices sent within a month in 5 states.  Will you be shuffling from local counsel to local counsel?  And who knows how much they would charge for this (they don’t have flat rates posted on their website)?

2) What Is Your System For Fulfilling Orders?

Managing preliminary notices, mechanic liens and bond claims on a number of projects is challenging. When an order comes into a mechanic lien service for a new lien or notice, what does the company use to fulfill that order? How do they know what form to use? How do they actually get the form filled, and what courier network do they have in place to get your document delivered or recorded?

All very important questions. When learning about a lien service provider’s system, listen in to see what they do to reduce the risk of errors. When handling hundreds of envelopes and pages of paper every day or week, being organized and having a system that reduces the risk of error is a key feature.

Unfortunately, if you peel back the onion, you may find out something scary:  A lot of these lien services don’t have any system at all.  Sometimes, they just have a staff with access to a server where there is a folder and bunch of document template forms. If you’re working with a lien service operating like this, you should hear “document templates” and equate it with “disorganized mess.”

Zlien has spent five years and hundreds of thousands of dollars in developing a state-of-the-art order fulfillment system. This works on two ends. On the front end, when you’re placing an order, the system guides the user through the various forms available to choose the right form for the job. On the back end, when a order is placed, our staff members automatically have everything they need to fulfill the order.Forms are automatically generated and filled-in with your client data, and there are a host of features that monitor our staff members work to mitigate the risk of error.

Another thing to keep in mind is order tracking.  You will want to know the progress of your order as it is being processed.  Is this something your lien service will perform automatically, or are you getting manual emails from your provider giving you an update when they get around to it?

If you’re getting manual emails, beware.  This means the lien service provider is probably managing all of their orders manually, and it is surprisingly easy for them to get busy and forget all about your project.

Zlien is proud of its automatic system progress emails, which was actually just updated and posted about here.

3) Are You A Licensed Legal Document Preparer and Insured?

Once you are comfortable about a lien service providers systems and compliance procedures, you next want to turn to something that is perhaps most important: Their credentials and security.

Here are some issues to keep in mind:

Are They Licensed?

The Legal Document Preparation and/or Software industry may not need a law license, but in some jurisdictions, there are laws that regulate these service providers.  The state of California, for example, does specifically recognize “Legal Document Assistants,” and requires that they have a license to prepare legal forms for that state. There are also some regulations on how these companies may advertise themselves.

Zlien is a licensed Legal Document Assistant in the State of California (LDA-352).  If your lien service company purports to prepare legal forms in the State of California without an LDA license, it is breaking the law.  And it’s easy to figure out if the lien service is actually licensed.  California statutes require LDAs to put their license number on their website in their footer.

I can give you an example of two companies who are purporting to prepare mechanic liens and preliminary notices in California without a license. LienItNow.com does not have their LDA license information in their website’s footer, and Tradition Notice Services (from Tradition Software) does not have their LDA license information in their website’s footer.  A construction company ought be careful in using these services.

Are They Insured?

Mistakes happen.  Period.  There’s no such thing as a perfect anything.  If you’re trusting your mechanic lien or bond claim rights to a lien service provider, you would be well served to see whether that company carriers errors and omissions insurance.  If they carry errors and omissions insurance, it means that company is serious about their business (they invest in E&O Coverage) and serious about serving their clients (they won’t leave you hanging).

Not only does Zlien carry errors & omissions insurance, but we also publish our insurance policy’s declarations page on our website.  Ask your lien service provider for their insurance information.

Posted in:     Lien Management, Our Services & Us  /  Tags: , , , , , , ,   /   1 Comment

ABC Supply Mechanic Liens In Pittsburgh Demonstrate Why Liens Work

On February 2, 2012

ABC Supply Co. is a wholesale distributor of roofing materials, meaning that they frequently supply roofing materials to roofing contractors who then install those materials on residential and commercial properties.
ABC Supply Mechanic Liens In Pittsburgh Demonstrate Why Liens Work I came across a new story from the CBS affiliate in Pittsburgh about a group of mechanic liens they filed against residential projects in Hempfield, PA. There’s a great video of the story available on the affiliates website (unfortunately, I could not embed here):  Hempfield Homeowners Deal With Mechanic’s Lien.  Hat Tip to @TrinaOrlando, the reporter on the story.

This news story is a great case study to material suppliers and subcontractors as to why they should preserve and enforce their mechanic lien rights.  Here’s what this news story demonstrates about the power of a mechanic’s lien:

Mechanic Liens Are Effective and Encumber Property

“If you have a lien put against your house, you cannot refinance, you cannot sell your house, and you cannot obtain a new home equity unless that lien has been satisfied.” — Barbara Lotz, Homeowner
A homeowner with a lien against her property was interviewed for the story, and her quote really sums up how effective a mechanic’s lien can be.  Barbara Lotz says, “if you have a lien put against your house, you cannot refinance, you cannot sell your house, and you cannot obtain a new home equity unless that lien has been satisfied.”

While this is demonstrative of a mechanic lien’s principal effects, it’s worse that Ms. Lotz reports, and that’s because if the lien remains unpaid, the home can be put on the auction block and sold to pay off the debt.  That’s a very powerful payment mechanism.

Mechanic Liens Create Payment Triangles That Result In Getting You Paid

If you listen to the news story, it is clear that the group of homeowners confronted with mechanic liens had hired the same Texas roofing company to install their roof (Prime Roofing) and had paid that roofing company in full. The Texas company took the money and scuttled back to their hometown, all the richer.

While really unfortunate for these particular homeowners (who should have required lien waivers before issuing the Prime Roofing any payments), the fact that the homeowner paid Prime Roofing does not excuse their liability to ABC Roofing. When mechanic lien laws are utilized, material suppliers and subcontractors recieve ultimate payment protection.  The homeowner will be required to pay a debt twice, and then be left with the burden of pursuing payment from the general contractor who didn’t properly organize payment.

This payment triangle results in getting suppliers and subcontractors paid.  When the prime contractor is still around and the property owner still owes it money, the property owner will pay off the lien and withhold that money from the prime.  When the prime is gone and already paid, the property owner will have to pay the lien (because they’ll lose in suit) and then file suit against the prime to get some money back.

In either event, the subcontractor or supplier is paid.

Mechanic Liens Can Get The Right Kind Of Attention

This story from the Pittsburgh CBS affiliate demonstrates that mechanic liens can get you the right kind of attention.

Two good things happened for ABC Supply Co. after filing this mechanic’s lien.  First, Prime Roofing is now the subject of a negative news story, which will affect their business and put pressure on them to pay ABC Supply.  Second, Prime Roofing is now evidently the subject of a government investigation for contractor fraud.  Again, this will put pressure on the company to pay ABC Supply.

“We’re just doing what we do all the time.  If we’re not paid, we have lien rights. I’m very sorry these homeowners paid their bills and did not have the contractor ultimately pay for their materials.” — Karl Leo, ABC Supply Chief Legal Officer
While ABC Supply is probably going to get a little discontent from the homeowners who are at the bad end of this deal, that is really an isolated problem for them.  Even the news story is careful to not beat up on ABC Supply. After all, ABC Supply is in the right, not the wrong. The Pittsburgh Live Tribune did an article on this situation as well, and the ABC Supply Chief Legal Officer was quoted as saying: “We’re just doing what we do all the time.  If we’re not paid, we have lien rights. I’m very sorry these homeowners paid their bills and did not have the contractor ultimately pay for their materials.”

All in all, this news story demonstrates why it’s a great idea to file a mechanic’s lien. It’s something that we’ve written about here in the past (a lot).  Take a look at our articles by reading through the “Why Lien” tag.

Posted in:     Construction News, Mechanic Liens, The Legal Corner  /  Tags: , , , , ,   /   Leave a comment

How To File A Mechanic’s Lien in Florida

On February 1, 2012

How To File A Mechanic’s Lien in Florida

If you have not been paid for labor, services or materials furnished on a construction project in Florida, you may be able to collect the money you are owed by filing a mechanic’s lien (also referred to as a construction lien).  You can file a mechanic’s lien claim on your own, or call upon an attorney or mechanic’s lien service to help you navigate the paperwork and process.

Step 1: Determine If You Are Qualified To File A Mechanic’s Lien

Not everyone is entitled to file a mechanic’s lien. The services, materials or labor you furnish to a construction project must qualify for protection under Florida’s lien laws.  The term “Lienor” is defined by F.S. § 713.01(17) as follows:

(a) A contractor
(b) A subcontractor
(c) A sub-subcontractor
(d) A laborer
(e) A materialman who contracts with the owner, a contractor, a subcontractor or a sub-subcontractor; or
(f) A professional liener under § 713.03 (architect, landscape architect, interior designer, engineer, surveyor, mapper)

Noticeably absent from this list is the material supplier to a party who is not the owner, a contractor, a sub or a sub-sub.  Therefore, suppliers to other suppliers and suppliers to anyone who is a sub-sub-subcontractor (or below) is not protected.

Step 2: Confirm You Preserved Your Mechanic’s Lien Rights

In Florida, most construction participants must deliver some type of notice to preserve their rights to file a mechanic’s lien.

Those who did not contract with the property owner must deliver a “Notice to Owner” within 45 days of first furnishing labor or materials to the project.  The only exception to this “Notice to Owner” requirement is for pure laborers (who never need to deliver a preliminary notice).

Those who did contract with the owner must record a Notice of Commencement before the start of construction.

If you furnished this notice, you’re in luck, and you’ve preserved your right to file a mechanic’s lien. If you haven’t furnished the requisite notice, you may not have lien rights.

Step 3: Produce The Mechanics Lien Document With Required Content

Now it’s time to produce the mechanic’s lien form. Florida has strict requirements about what your mechanic’s lien must contain (see F.S. § 713.08) Here are a few:

  • Identification of the party who hired you
  • Description of the labor, materials or services furnished to the project
  • The contract price or value of all services furnished
  • Legal Property Description
  • Identification of the Property Owner
  • Date services first and last furnished
  • Amount due and unpaid to you

The statute itself proscribes a form to use to file a Florida mechanic’s lien. Download the form for free here: Free Florida Mechanic’s Lien Form.

The most difficult part of completing this form is to insure you have the proper legal property description for the property being liened.

Step 4: Timely Record The Florida Mechanic’s Lien with the Proper Recording Office

The next step is to timely record your Florida mechanic’s lien.  Florida requires all parties to record their mechanic’s lien within 90 days after last furnishing services, labor or materials to the project. The courts will not accept any excuses for tardy recording.  If you record your mechanic’s lien late, the mechanic’s lien will be rendered void.

The Florida mechanic’s lien – statutorily referred to as a “Claim of Lien” – must be recorded in the county property records where the construction project itself is situated. Each county in Florida maintains its property records by the Clerk of Court for the Florida county, however, some counties delegate that property recording duty to a separate “County Recorder” office.  You want to be very careful here, and make certain that you record the mechanic’s lien instrument where it must be recorded.

Step 5: Send Notice That Mechanic’s Lien Was Recorded

Florida requires all mechanic’s lien claimants to serve a copy of the mechanic’s lien on the property owner “before recording or within 15 days after recording.”  This is a very important requirement in Florida, as §713.08(4)(c) provides that the failure to do this “shall render the claim of lien voidable to the extent that the failure or delay is shown to have been prejudicial to any person entitled to rely on the service.”

So, while the mechanics lien won’t be invalid per se, there is a significant risk that it could be nullified.  Moral: Get the mechanics lien served on the proeprty owner as soon as possible.

The mechanic’s lien must be served on the property owner pursuant to F.S. § 713.18, which provides for service by any of the following methods:

(a) By actual delivery to the person to be served; if a partnership, to one of the partners; if a corporation, to an officer, director, managing agent, or business agent; or, if a limited liability company, to a member or manager.

(b) By sending the same by registered or certified mail, with postage prepaid, or by overnight or second-day delivery with evidence of delivery, which may be in an electronic format.

(c) If the method specified in paragraph (a) or paragraph (b) cannot be accomplished, by posting on the premises.

Step 6:  Enforce Your Florida Mechanic’s Lien

Mechanic liens in Florida (or elsewhere) do not remain effective and encumbering against a property forever (See: Does A Mechanic’s Lien Cloud Title Forever?).

In Florida, mechanic liens must be enforced within 1 year from the date the lien is originally recorded. Be careful about this requirement, however, as this time period can be significantly shortened.

If a property owner serves a “Notice of Contest of Lien” document, the mechanic’s lien enforcement deadline is shortened to just 60 days.  If a property owner (or any other interested party) files a summons and complaint to show cause on the lien, the foreclosure deadline is shortened to just 20 days.

To learn more about lien foreclosure, read this tag: Foreclosures.

Posted in:     Mechanic Liens  /  Tags: , , , , ,   /   Leave a comment

The First Month of 2012 Is History – How Do Your Receivables Look?

On January 31, 2012

At the turn of the calendar year, I wrote some blog posts about starting the year off right, including:  (i) 2012 New Year’s Resolution: Protection Your Lien Rights and Stop Losing Money; and (ii) Use Zlien And The Lien Laws To Reduce Your Bad Debt in 2012.

Here is the summary:  Preserve your lien rights.  Avoid receivable problems. Stop Losing Money.

It’s a good idea to stop every now and again and see how you’re doing with your goals and business expectations. I may actually go overboard on this. I have breakfast by myself every Monday morning to go over my goals from the previous week and the week to come. At the beginning of each month I go over financials and budgets. It takes time, and it’s hard to do sometimes in the face of all the regular business fires, but making time for these things really does help.

As 2012′s first month draws to a close, it’s a good business exercise to take an hour or two away from the grind, and go over your successes and failures in the accounts receivables department.

You probably still remember that feeling you experienced at the end of December, when you thought about how burdensome bad debt was for your business. If things haven’t changed in January of this year, they’re not likely to change in the months to come, and that means you need to make a change.

In the construction industry, there is a simple and effective fix, and that’s Mechanic’s Lien Compliance.

The key word in that phrase is compliance. Just like your business must comply with Davis-Bacon prevailing wages, immigration laws and licensing regulations, you should start thinking of mechanic’s lien compliance in the same way.  You can do it, but its a discipline.

Posted in:     Lien Management  /  Tags:   /   Leave a comment
Next Page »

Mechanic’s Lien Solution

  • The most potent tool you have to manage receivables is to preserve, perfect and enforce your mechanics lien and bond claim rights. But, it's so complex? Zlien is a revolutionary enterprise offering to monitor your lien deadlines and automatically file required documents.

Contact Zlien

  • 4819 Prytania Street
    New Orleans, LA 70115
    (866) 720-5436
    email: mail@zlien.com