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

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

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.

If your company sends its own preliminary notices, you’ll want to prepare to update your postage software and your preliminary notice software. If you send your preliminary notices with Zlien, you need not do anything. We’re already prepared for any issued postage increases, and our prices will remain exactly the same.

The problem is so common: They did the work, they weren’t paid. The general contractor was interviewed by 9 News and claims that the workers’ boss (a subcontractor” is “paid up to date.” The subcontractor who owes the workers says “the general contractor is wrong.”

Ah, but someone is lying, yes?

This is a prime example of when the mechanics lien remedy is most effective. It’s a shame that the exposé story by 9 News fails to mention the mechanics lien remedy at all, and it seems like the unpaid workers haven’t filed a lien or considered it.

It’s obvious the workers are having trouble with their employer, a Terry Boyd whose company is named B&B Ltd. Without filing a mechanics lien, however, the workers are stuck seeking the money solely from Boyd. The general contractor can just sit back and make the comment he made: “all my subs are paid.”

Things get a little stickier if these employees were to file a mechanics lien. Then, the general contractor and the property owner would be forced into the situation and required to make payment directly to the workers. For an explanation of this, please see the article 5 Ways A Mechanics Lien Can Get You Paid.

Zlien Will File Liens For These Unpaid Workers For Free

Here’s the deal. If these employees contact Zlien, we’ll file their lien for no charge.

In the spirit of the Thanksgiving holiday, we’ll prepare and file these unpaid roofers’ Colorado mechanic liens for no charge.  We’ll even cover the required filing fees, courier fees and service fees, so that they’ll have absolutely no expenses to pay in filing the liens.

I’m confident that the filing of a mechanics lien will change these folks’ fortunes, just as it turns any construction project around the country on its heads and remedies these types of situations.

Hurricane Irene in the Northeast, Tropical Storm Lee in the Gulf South…the meteorologist are working around the clock, insurance adjusters are on the move, and its quite clear that we’re at the peak of the 2011 hurricane season.  While it’s never good to hear about folks losing their homes and damages to our infrastructure, there is a silver lining for the construction industry.  With construction spending down again this past month, the new work is much needed.

It’s common for suppliers and construction professionals to “chase” these storms, and set up shop in new territories to make grabs at the available business.  In fact, there are some organizations that focus on disaster recovery and repair.  However, while there are state, federal and insurance dollars available to pay for this work, do not underestimate human greed and payment delays.  You may find yourself doing work and not getting paid, and being in a foreign jurisdiction uncertain about lien laws and how to proceed with a legal dispute.

You may be from a state where notice is not required and now working in a state where there are strict notice requirements (see our map of preliminary notice requirements).  You may have a lot less time than you think to file your lien.

Take the time to learn the lien laws for the state where you’re performing work.  We have all 50-state’s lien laws indexed and summarized on the Zlien website, and available for you to peruse for free.  Plus, consider subscribing to our LienPilot, which will help you manage all of your new projects and the notice or lien requirements for those projects.  With our LienPilot, you simply type in your project information and our system automatically calculates the preliminary notice required for the project, as well as the deadlines for delivering notices and filing liens.  When it’s time to file a mechanics lien or preliminary notice, you can do it with just a click of the button.

You’ll be plenty busy with all the extra work in these storm locations – don’t spend unnecessary office hours fumbling with lien and notice paperwork.  But then again, don’t just ignore the lien and notice requirements, because you never know when you’re going to need these tools to protect your company against non-payment.

I love the Avvo service, and have been participating in their community for a few years now.  To date, I’ve published 17 Legal Guides on their site and answered over 50 legal questions, frequently all about mechanic’s liens in the states where I practice (Washington, Oregon, California, Louisiana).

Take a look at how my legal answers look on a smart phone:

In addition to this participation, we’ve partnered Zlien with Avvo through the use of the company’s API. So when you log into the LienPilot, you have relevant and immediate access to the power of Avvo, the nation’s largest online directory of attorneys.

Specifically, once you add a project to the system, click on the “Legal Center” tab.  From there, you can ask attorneys questions about mechanic lien laws, see the Top 10 construction law attorneys in your area, and read legal guides about construction law and lien law in the jurisdiction of your project.  Take a look at the screenshot of this below:

This situation happens all across the country, but happened recently in massive style with “Prium,” a construction outfit in Tacoma, Washington.

The News Tribune just published an article about the situation written by Kathleen Cooper, titled: Prium’s Pierce County Founders Borrowed Big, Lived Well and Left Tenants, Contractors In Lurch. I was contacted by the Tribune as a legal expert to help explain what happens in these messy payment situations.  Unfortunately for contractors, suppliers and builders, the answer is usually nothing.  When a project is completely belly up and there’s no money to be found, those at the top file bankruptcy and those below get stuck.

The News Tribune article does mention the mechanic’s lien remedy, and I also discussed this with the journalist.

Usually, when money gets misappropriated and low tier subs or suppliers get stiffed, the mechanic’s lien works terrifically by letting these unpaid parties jump over who hired them and request payment directly from the prime or property owner.  When things get too bad, however, and the property owner is bankrupt and the property is over-mortgaged, there’s just nothing left to collect.

This is why Lien Priority is so important.  I’ve written about it often on this blog.  In some states, a lien will take priority over a construction loan or mortgage (in which case, the laborers and materialmen are nearly always protected).  In other states like Washington, however, there is no such priority.  The bank gets paid first, and that leaves everyone else with just a sour story.

Great article in the News Tribune that really illustrates a worst case scenario.  Your best protection against these situations is to protect your lien rights, enforce your lien rights, and get on these rights and your collection efforts as soon as you can.

Proper preparation of the mechanic lien or preliminary notice form, however, is not as easy as it sounds. This isn’t because it takes a brilliant legal mind (or any legal mind) to understand how to fill in the blanks – that it certainly doesn’t – but because preparing these documents is time-consuming and requires strict adherence to certain procedures.

Let me offer you a few examples:

Legal Property Description Research

It’s nearly uniformly required across the country that mechanic liens identify the property being liened with a legal property description. The street address, in other words, is not enough. What is a legal property description?   We wrote an entire blog post on this subject, and you can read it here:  Identifying Property in a Mechanic’s Lien.

The definition of a legal property description is:

A legal description (also referred to as land description, property description, or land boundary description) is “a written statement recognized by law as to the definite location of a tract of land by reference to a survey, recorded map or adjoining property.” (from: Glossaries of BLM Surveying And Mapping Terms, Second Edition, 1980.)

To properly prepare that mechanic lien form (and even some preliminary notice forms), you need to research and find the legal property description. Hiring someone experienced in researching legal property locations is critical to properly identifying the property in your lien.

Getting The Form To The Right Places

Assuming you have properly filled out the form, the next step is getting the form filed and / or delivered to the right places, in the statutorily required way.  Here are some questions you will confront:

Does this document need to be filed?  If so, in which county office is it filed?
Most liens require filing, and most notices do not. However, there are exceptions to both. Where you file depends on the state’s requirements, with filings usually going to the county’s mortgage, auditor or recording offices.

Service Required After Filing The Lien?
Once the lien is filed, your task is not over. Most states require that the filed and stamped lien be served upon certain interested parties, including the property owner, the lender, the prime contractor, and/or those other parties up your contracting chain. Service can sometimes be through the mail, but other times require delivery by a courier or sheriff. Knowing what service is required and how it must be done is critical to correctly filing the lien.

How to send the preliminary notice?
Most states require that preliminary notices be sent in a certain way.  Most of the time, the notices are to be sent certified mail or certified mail with return receipt requested. But, there are always exceptions. Sometimes, the notice must be sent restricted delivery, sometimes registered mail, or sometimes by common courier (like FedEx) or hand-courier.

Do I Need to Keep Proof of Delivery?
Yes, and the type of proof varies.  The return receipt green card may be enough, but you may also need an affidavit of delivery. Check out this blog post on the topic: Strict Proof of Delivery May Be Required For Your Construction Notice.

Little Mistakes May Invalidate Your Lien

Unfortunately, since lien laws are very strictly construed, many states will consider a mechanic’s lien or preliminary notice invalid if there is some defect in how it is filled out (i.e. no legal property description) and how it is handled (i.e. filed in the wrong place, or delivered / served incorrectly).

The cost of these mistakes can be significant, and since there are so many moving parts in the filing or delivery of these lien and notice products, it’s a mistake to buy a simple do-it-yourself form and try to maneuver through these mazes of requirements.

Hiring a company like like Zlien (or a construction attorney), who is experienced and familiar with each state’s specific requirements, will reduce the likelihood of error for your company, and make sure your lien and notice rights are protected.

For more posts about this subject, take a look at the Tag “Why Us.”

The Construction Lien Blog (and our sister Construction Law Monitor blog) has been chosen to take part in the Trades Hub.

Trades Hub is an extension the the mikeroweWorks website, which is “dedicated to championing the cause of hard workers and reinvigorating the skilled trades.” The tag line: Mike Rowe Is No Expert, But He Knows Where To Find Them.

Here is the press release from the mrW website:

Mike Rowe Is No Expert, But He Knows Where to Find Them

After being an apprentice on nearly 300 dirty jobs, Mike Rowe is still no expert, but he sure knows where to find them. In 2008, Mike launched mikeroweWORKS, a website dedicated to championing the cause of hard workers and reinvigorating the skilled trades. Since then, mrW has provided resources, news, and a community forum for folks from all kinds of trades. Now, with the launch of the Trades Hub, the goals of mrW can be expanded even further and across many more website portals.

Think of Trade Hubs as a “first cousin” to mrW. With this new platform, we’ll be able to pull together even more experts from such diverse trade fields as construction, plumbing, landscaping, manufacturing, machinery and HVAC just to name a few.

Here’s what you can look for at the Trades Hub:

More High Quality Content: The mrW Trades Hub will be pulling together all kinds of blogs, articles and news stories relating to the trades, by the trades and for the trades. They will be updated throughout the day.

One Stop Shop: With an easy to navigate site, users will be able to quickly source out those areas of interest that appeal to them on any given day. The links will take them right to where they want to go without sorting through all kinds of search engine pages for the right site.

Finding the Diamond in the Rough: When you consider the millions of new pages and posts uploaded across the internet everyday it’s hard to find the best representations for your interests. Trade Hubs takes internet searching to the next level by identifying those popular blog and websites that might normally go unnoticed if you’re not a regular subscriber.

Building Up the Trades Community: “The skills gap is a real concern that’s getting more worrisome every day. Fewer skilled tradesmen in the workforce will affect us all. Younger folks need to have a better understanding of how they can benefit from learning a trade, and parents need to encourage their kids to consider this worthwhile and important path. mrW strives to reinvigorate the trades. The mrW Trades Hub will help us in that effort.”

mikeroweWORKS would like to thank Tony Karrer with assistance from John Sonnhalter for their efforts in getting the Trades Hub up and running.

Visit the site at http://tradeshub.mikeroweworks.com.  Below is a screen shot of the site.

]]> http://constructionlienblog.com/2011/04/construction-lien-blog-an-expert-on-mike-rowe-works-trades-hub/feed/ 2 http://constructionlienblog.com/2011/03/companies-fail-to-file-lien-claims-for-hundreds-of-thousands-of-dollars-on-florida-amway-center-project/ http://constructionlienblog.com/2011/03/companies-fail-to-file-lien-claims-for-hundreds-of-thousands-of-dollars-on-florida-amway-center-project/#comments Tue, 29 Mar 2011 12:00:40 +0000 Scott Wolfe Jr http://constructionlienblog.com/?p=2298 The Amway Center project in Orlando Florida appears to be having money problems. This story from the Orlando Sentinel reports that some contractors are unpaid on the project even six months after they’ve finished work.  And we’re not talking about small amounts of retainage here and there, but debts of up to $2 million.

Money problems on these types of projects is not surprising these days. To me, however, what’s astonishing is this tidbit from the article:

Whitcomb’s company has filed a construction lien against the arena to make sure it is paid the $63,476 still owed. Records show that at least four other companies have also filed construction liens on the Amway Center, ranging from $7,741 to $352,331.

Others haven’t yet taken the legal step of filing liens, but have asked Orlando officials for help in collecting debts as high as $2 million.

It’s beyond me why companies owed significant sums of money on a construction project won’t take the simple step of filing a mechanic lien. Time and time again we’ve posted on this blog that you only get one chance to file a lien, specifically writing an pointed article title: “Promises to Pay Mean Squat to your Lien Deadlines.”

Filing a lien has very clear advantages – check out our “Why Lien” tag here for some talk on how a mechanic lien can help get you paid.  And don’t be one of these companies who ask for help collecting their debts but don’t spend the time and money to file the lien instrument.

The Recorder is using a system created by a third party, but remarked in a news article about the program that the system was attractive to her because her office had just experienced a “fraudulent mechanics lien.” A lien was placed on a home in Elyria, Ohio, by someone who was in prison! The homeowners didn’t find out about the lien until later.

If the notification system were in place, the homeowners would have gotten the notice immediately.

While the notification system doesn’t directly relate to contractors, subcontractors, design professionals or materialmen who file construction liens…it does have an indirect relation. The way I see it, such a notification system could have two primary effects: (1) It could eliminate the need for lien claimant’s to send post-lien notices to property owners; and (2) It would get the owner involved with the dispute more quickly.

This is one small county trying out this service, and notifications are only being sent to those who sign up for the service. As a result, it’s a very, very limited group of people affected by the system. It is, however, an interesting use of technology, and may one day have an impact on those folks filing lien claims.