Illinois Makes One Small Change to Lien Statute that affects General Contractors

Effective on the first of this year (Jan 1 2010), reports are abound that the Illinois Mechanics Lien Act contains an amendment that changes the notice requirements for contractors on owner-occupied single family residences.

Section 7 of the Illinois Mechanics Lien Act has been amended to include the following language:

(d) A contractor for improvements of an owner-occupied single-family residence must give the owner written notice within 10 days after recording a lien against any property of the owner.   The notice is served when it is sent or personally delivered.  If timely notice is not given and, as a result, the owner has suffered damages before notice is given, the lien is extinguished to the extent of the damages.  The mere recording of the lien claim is not considered damages.  This subsection does not apply to subcontractors, and it applies only to contracts entered into after the effective date of this amendment [January 1, 2010].

Read the full text of the Public Act on the Illinois General Assembly website.

So, starting January 1, 2010, all original contractors on owner-occupied single family residences must give this notice to the owner post-filing a lien.

If you order your lien through Express Lien, sit back and relax, because we always send notice to the owner, certified mail.

Related articles by Zemanta

• Lien Law Online eLert for 1/13/2010 – Illinois (lienlawonline.blogspot.com)
• Can a Sub Still Have a Valid Lien Without Supplying an Owner The Required 60-Day Notice?… An Exception to Weather-Tite? – Crawford Supply Co. v. Schwartz, et al. (illinoisconstructionlawblog.com)

Michigan Lien Recovery Fund Raises White Flag

Cavanaugh & Quesada, PLC’s Michigan Construction Law Update posted an troubling blog post just before the end of the year concerning the Michigan Lien Recovery Fund.

In plain language, the Michigan Lien Recovery Fund is a self-sustaining fund that steps in and pays lien claims on residential properties.   A homeowner can avoid paying for work twice by dumping claimants to the fund, and claimants can recover money owed by seeking judgment against the fund (as opposed to the homeowner).

There are some rules, restrictions and limitations, of course (such as a $75k cap per residential structure)…but in theory, the whole thing works out.

As the turbulent 2009 comes to a close, however, there is trouble with the Michigan Lien Recovery Fund:  it’s completely out of money.

Earlier in December, the Department of Engery, Labor and Economic Growth posted this update about the status of the Fund on their website:

At the present time, the Fund has become essentially insolvent, with a declining balance and an ineffective funding source to cover pending claims. The Department is seeking to repeal the Fund through legislative action.

According to the DELEG and Michigan Construction Law Update, the lack of money is fact, and not fiction:

The Fund is currently involved in over 250 pending lawsuits involving more than 350 claims against it that total more than $18 million. In 2009, Judgments against the Fund have averaged $123,800 per month. By mid-October, there was only $524,000 remaining in Fund coffers.  (from Mich. Construction Law Update)

The Fund sought a judicial remedy to the situation, but they received an adverse ruling in court.   For the time being, everyone involved is really stuck between a rock and a hard place (homeowners are exposed, claimants don’t know where to turn, the Fund is a lame duck, etc.).

This doesn’t / won’t necessarily affect a Michigan contractor or supplier’s lien and claim rights, but it certainly implicates the method of foreclosing upon claims.  Stay tuned.

California Lien Law Forms, Procedures and Laws Changing on January 1, 2011

The California legislature just passed an act to amend California Code § 3084 and 3146, relating to construction liens, and the new regulatory scheme is set to take effect on January 1, 2011.   While the effective date is still more than a year away, it’s important for potential claimants to understand and prepare for the changes.

You can read the Act amending the mechanics lien laws by clicking here.

Here are some key changes to the California lien laws:

Service of the Lien Upon Owner

Previously, there were no specific provisions requiring service of a recorded lien upon the property owner.   As Porter Law Group reported on a website bulletin, “[p]roperty owners have long complained that until they receive the foreclosure lawsuit they are often entirely unaware that a mechanics lien had even been recorded on their property.”

To address the concern, California Civil Code § 3084 will be amended to provide a specific statement titled “NOTICE OF MECHANICS LIEN.”  This identical statement must be printed in at-least 10-point boldface type on the lien itself….and it must be served upon the property owner contemporaneously with the filing of the lien.

Along with the printing of this text onto the lien, § 3084 (a)(6) also states that a “proof of service affidavit” must be completed and signed, and included with the lien, by the person serving the Notice of Mechanics Lien to the owner.

If the lien is not served, § 3084(d) provides that the “mechanic’s lien [shall be] unenforceable as a matter of law.”

Additional Changes

§3146 adds the requirement of recording a “notice of pendency of proceedings” within 20 days after the filing of the mechanic’s lien foreclosure action.  §3084 also adds that reference to the user of the term “mechanics lien,” when it previously only referred to a “claim of lien.”

Express Lien is Prepared

Express Lien is prepared for the upcoming changes to California’s lien laws.  Starting January 1, 2009, the Claim of Lien document will be updated to include the new Notice of Mechanics Lien language, and service of the property owner will be made as required by the statute.

Express Lien can help your company manage the sending of these notices, record delivery and sending notifications, and record affidavits of service.

Subscribe to our blog to stay tuned to lien law changes across the country.  An alert will be posted to our blog before the change takes effect in 2011.

The New Georgia Lien Laws are Effective Today. Will Your Lien Comply?

As previously reported, Georgia Senate Bill 374 with proposed changes to the state’s lien laws has been passed and becomes effective today, March 31, 2009.    The new rules consist of substantive changes to the Georgia lien laws that affects contractors, subcontractors, suppliers, homebuilders and property owners.

We discussed the changes on the Construction Lien Blog back in December 2008  – click here.

Is your company prepared for these changes?   Will your Georgia construction lien meet the new requirements?

Express Lien files your lien and send the new required Notice of Lien to the interested parties.  Express Lien can also prepare Notices to Contractor, Notice of Contest, and suits to perfect your lien.

Get Started now with the Lien Wizard.

Illinois Contemplating Amendment to Mechanics Lien Statute

It appears that the Illinois legislature is contemplating an amendment to its mechanic’s lien statute, as reported last week by the informative Illinois Construction Law Blog.  According to that blog post, the guts of the amendment would require contractors (non-subs) to given written notice on owner-occupied single family residences prior to filing a lien.

According to the blog, this requirement already exists for subcontractors, and the purpose of the amendment would be to extend the requirement to contractors who contract directly with the property owner.

The Illinois Construction Law Blog does weigh the pros and cons of the bill.

In their discussion, they mention that the bill makes sense because homeowners cannot be considered as sophisticated as commercial property developers.

On the other hand, however, since the bill would only require notice before filing the lien, the blog states that notice could be given the day before the lien is filed.  Of this timeframe, the author asks "what protection does that afford the home-owner?"

A similar requirement exists in Louisiana, according to Wolfe Law Group’s Construction Law Monitor. They describe the requirement as follows:

Notice is required whenever you are working on a residential project, and you contract directly with the owner of the property, who also lives in the residence.

The type of notice required is called the “Notice of Lien Rights.”

The Notice of Lien Rights to be sent to owners in residential projects is very important, because the law requires that it be provided before work begins, and not as a condition to your construction contract.

Read full article here.

The difference between the Louisiana requirement and the requiremnet in Illinois, however, is that in Louisiana notice is required before work begins, and in Illinois, its required only before filing the lien.  Perhaps the goals of the Illinois legislature would be better achieved by a rule similar to that of Louisiana’s?

Nevertheless, for the time being, the requirement does not exist at all for contractors in Illinois, and is only a twinkle in the legislature’s eye.  You can track the progress of the bill at this link.

Firms Starting To Warn About New Georgia Lien Laws

Earlier in the year, the Construction Lien Blog reported that changes in Georgia’s lien laws were only months away...and the date of the change is now right around the corner.   The new Georgia lien laws go into effect on April 1, 2009.

With the changes quickly approaching, law firms practicing construction law in Georgia are starting to provide warnings and information to their clients.

Baker Donelson, for example, published an article in its Construction Newsletter on February 6, 2009, titled “Changes to Georgia’s Mechanics’ Lien Law.”

Kilpatrick Stockton, LLP, reported about the changes as well, calling them “Significant Changes” here.  Seyfarth and Shaw, LLP wrote an article about the changes soon taking effect in Georgia here, Substantive Changes to Georgia’s Lien Law Set to Go Into Effect March 31, 2009.

The changes are also being reported on by trade associations, such as the Georgia Associated General Contractors of America, here.

Georgia Lien Law Information and Resources Online

The Express Lien Services page has now been updated to provide readers with free information about Georgia’s lien laws.   The Georgia lien law summary page provides (i) A summary of notice requirements and lien deadlines; (ii) links to free online resources; (iii) free legal forms available for download; and (iv) a listing of Georgia construction attorneys.

The Georgia resources and information is provided to the public free of chrage, and is another way Express Lien is helping construction professionals in Georgia Lien Smarter.

Furthermore, you can read blog posts here at the Construction Lien Blog related to Georgia by visiting the “Georgia Tag.”

Efforts to Change California Lien Law Dead…for now

Senate Bill 1691 went to Governor Schwarzenegger’s desk, and he vetoed the bill.   The law would have made significant changes to the California Mechanic’s Lien Law – but for the time being, the legislative efforts to make changes to the state’s laws have failed.

Considering the governor’s non-substantive veto message (which was copied and pasted to a number of different bills), it’s safe to assume that the matter will be re-examined in future legislative sessions.

For the time being, however, the California lien laws will remain unchanged.

The governor’s veto message was:

“I am returning Senate Bill 1691 without my signature.  The historic delay in passing the 2008-2009 State Budget has forced me to prioritize the bills sent to my desk at the end of the year’s legislative session.  Given the delay, I am only signing bills that are the highest priority for California.   This bill does not meet that standard and I cannot sign it at this time.”

Express Lien will monitor California’s efforts to make changes to the California mechanic’s lien law.

New Georgia Lien Laws Go In Effect April 2009

In the spring of 2008, a senate advisory committee in Georgia completed a report on the state’s lien laws, and proposed a bill to make certain substantive changes to OCGA 44-14-361 et seq., which houses Georgia’s lien laws.

The first paragraph of the report’s summary nicely explains the challenges facing legislatures when drafting and re-drafting lien laws:

The Lien Law Study Committee was born out of concern for homeowners coupled with respect to private enterprise.   Indeed, there are frustrated and worried homeowners who have had liens filed against their real property despite the fact that these homeowners have paid in full for services rendered.   Conversely, there exist disappointed, hard-working homebuilders, subcontractors and suppliers who have provided goods and services yet have received no payment.

The bill – which is described as a “fair and balanced lien law” by the Georgia Lien Rights Coalition, was passed by the Georgia legislature earlier in 2008.

The bill (Senate Bill 374) will become law in Georgia on March 31, 2009.  It’s important that contractors, subcontractors, suppliers, property owners and all others affected understand the changes, as it can affect each’s lien rights.

Great summaries of the changes are provided by the Georgia Lien Rights Coalition on its site.

General Changes:

1. Lien Deadlines are worded in days instead of months.  So, for example, instead of requiring a lien to be filed within an ambiguous “3 months,” liens must now be filed 90 days from labor, services or materials last supplied to the property;
2. Day Counting is now more consistent with Georgia law.  If a deadline fills on a weekend or public holiday, it will be extended to the next business day.  Previously, the deadline would be moved up to the preceding business day.
3. Definitions are clarified.

Changes that Benefit Suppliers or Subcontractors

1. Notice of Bond to Remove Lien: Previously, a property owner could bond out a lien without ever notifying the subcontractor or supplier.  The new rules close this lophole by requiring property owners to notify lien claimants that the lien has been bonded off the property.
2. Deadlines: All deadlines in the Georgia lien laws are made clearer by the new bill.  Here are some important deadline changes:
   1. Liens must be filed within 90 days from labor, services or materials last supplied to the premises (previously 3 months);
   2. Notice of Lien filing must be sent to property owner within 2 business days from filing of claim of lien;
   3. Lien must be perfected within 365 days from w hen lien filed (previously 1 yr from labor, services or materials last supplied);
   4. Notice of lawsuit to perfect lien must be delivered to owner within 30 days (previously 14 days).

Changes that Benefit General Contractors and Homebuilders

1. Prior law was inconsistent and confusing as to whether general contractors or homebuilders were required to receive copies of filed liens.  The new law states that when a “Notice of Commencement” is filed on the project, the general / homebuilders must receive notice of the lien.
2. The Lien Waiver Forms have been made more clear, with bold, capital letters explaining what the waiver means.

Changes that Benefit Property Owners

1. New Notice of Contest: Owners can now send a “Notice of Contest” to contractors who file a claim of lien.  The notice sets forth that the Owner contests the debt, and requires that a lawsuit to perfect the lien be filed within 60 days.  If a suit is not filed within the 60 day period, the lien is invalidated.
2. Expiration Date on Lien: The new rule requires that the Claim of Lien itself include a statement as to when it expires.

For more information about the revised law, you can view the Senate Bill 374 here, and you can read about hte new rules at the Georgia Lien Rights Coalition website.

Express Lien continues to monitor the lien law changes in Georgia, as it does in every state.  When the new rules go into effect on March 31, 2009, the Express Lien, Inc. forms will be updated to meet the new requirements.

Our service prepares and files Claims of Lien for contractors, subcontractors and suppliers throughout the state of Georgia.  We also send Notices of Lien to the interested parties, can prepare and send Notices of Contest for Georgia property owners, and prepare and file lawsuits to perfect your construction liens.

Save you company time and money, and ensure that your Georgia liens are filed professionally with Express Lien.

Don’t Delay Filing California Liens: County Recorder Backlogs

Warning to all California Contractors and Material Suppliers: Do NOT delay in filing your mechanic’s liens.

While the California Code provides a 30-day, 60-day or 90-day lien window (depending upon circumstances – see this article), some county recording offices are reporting recording delays of up to 2 or 3 weeks! Documents submitted to the County of Los Angeles Recording Office, for example, may not be recorded for 10-20 days, and may not be returned for up to 10 weeks!

Obviously, therefore, California contractors are pinched to submit their liens for recording as soon as practical to lower the risk of the lien being tardy. A late lien is likely ineffective.

Express Lien, Inc. works diligently to record your lien as soon as possible after being ordered. In California, we work with certified process servers, and in some instances make deliveries with overnight carriers to ensure that your lien is stamped and recorded as quickly as possible.

If you haven’t been paid on a construction project, however, its important that you take steps to protect yourself immediately. Contact Express Lien today to learn more.