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)

Charts to Make Texas Lien and Notice Deadlines Easy

Texas is unlike any other state when it comes to calculating its lien and notice periods.   Instead of a lien being due after a certain number of days or months, Texas uses somewhat cryptic language to define the lien period:  “on the 15th day of the month four/three months after the last month the claimant performs work.”

WHAT!?!?

Well, to help you out, we’ve created some easy to read charts.   You can take one look at this chart and easily figure out when your lien should be filed.    Check out the Texas Lien Deadline Chart here, or the Texas Two and Three Month Notice Deadline Chart here.   These are housed in the Support section of ExpressLien.com’s website.

But you don’t even have to go that far – you can see the charts right here on our blog:

Texas Lien Deadline Chart

Work Last Performed In:		Residential Liens Due:	Non-Residential Liens Due:
January		April 15th	May 15th
February		May 15th	June 15th
March		June 15th	July 15th
April		July 15th	August 15th
May		August 15th	September 15th
June		September 15th	October 15th
July		October 15th	November 15th
August		November 15th	December 15th
September		December 15th	January 15th
October		January 15th	February 15th
November		February 15th	March 15th
December		March 15th	April 15th

Texas Two and Three Month Notice Deadline Chart

Unpaid Work Performed In:		2 Month Notice Due:	3 Month Notice Due:
January		March 15th	April 15th
February		April 15th	May 15th
March		May 15th	June 15th
April		June 15th	July 15th
May		July 15th	August 15th
June		August 15th	September 15th
July		September 15th	October 15th
August		October 15th	November 15th
September		November 15th	December 15th
October		December 15th	January 15th
November		January 15th	February 15th
December		February 15th	March 15th

* Original Contractors do not have notice requirements in Texas

** Two Month Notice must only be delivered by lower tier subcontractors and suppliers (i.e. those who did not contract with the original contractor)

*** If on a residential project, every deadline is one month earlier.

Remember, too, that you can keep track of project deadlines using our free Lien Pilot.

Got a Public Contract?: Be Sure to Preserve Your Rights to Payment

Over the past two years, the construction industry has seen a boom in public works. This is due to lower construction costs, influx of federal stimulus funds and lower financing rates for local governments.

The result has meant tons of public work for contractors, who benefit both from Davis-Bacon wages and bonded work, which virtually ensures payment!

Express Lien has taken the time to ensure that its clients know the basics of filing and preserving lien rights on the public job. A recent article describes your rights under the Miller Act, a federal series of laws which govern contracts for construction over the amount of $100,000.00.

But, did you also know that each state has what is called a “Little Miller Act.” These collections of laws mirror the purpose and structure of the Miller Act, namely providing rules for payment, security and claims on the public project.

For instance, did you know that every state or locally managed construction contract issued in Louisiana for a total of no less than $100,000.00, requires a performance and payment bond and demands that you file a sworn statement of your unpaid claim within 45 days of completion? (See La. R.S. 38:2241, et seq.) We’ve have reported on this before.

How about the great state of Washington (our home), which requires that a contractor provide 60 day notice of its right to a lien against a public contract’s retainage? (RCW 60.28, et seq.) Failing to timely file could result in forfeiture to timely payment, and your right to proceed in an action against the contractor’s bond.

Its important that contractors understand that it takes more than simple contractual compliance to ensure payment. Having a qualified lien management company on hand makes it all that much easier to feel secured on the jobsite!

Express Lien’s $395 flat fee services includes tracking down and obtaining copies of the prime contractor’s bond, noticing the surety and prime contractor, and filing with the appropriate state or federal agency, your claim. Remember that our services also include all mailing and delivery confirmation.

Also, remember that in many cases, suppliers, second-tier subcontractors, and equipment lessors, may be required to issue preliminary notices of the materials they sell or lease, or the work that they will perform on a public project. Express Lien’s $35 flat fee notices can save you!

Using Express Lien’s Lien Pilot, you could greatly benefit from tracking deadlines and lien obligations. Please be sure to check out Lien Pilot and keep up with ConstructionLienBlog.com, for more information on how to protect your business.

Louisiana Liens: Guidelines for Materials Suppliers

Lets be brief here: Suppliers are never in the know.

One of the most difficult things to do as a construction attorney is to try and educate your supplier clients about the types of information they need to be collecting when selling materials. Suffice it to say that in the event that you, as a supplier, want to file a lien, you need to be prepared with the requisite information.

What Do You Need to Know?

Here are the necessaries:

(A) The Property Address/Tax Assessor Number - obtaining the legal description is required, but your attorney can generally assist you here. But, you need to make sure you have the right address. Addresses change during remodel and reconditioning of property. So, if you can get the tax assessor parcel number – you are in the best shape.

(B) The Owner Name & Address - Louisiana law provides you with a claim against the property owner (See below) under La. R.S. 9:4802(A)(3). Though your attorney may be able to rescue this information from the property records, its always a good idea to have the information readily available, for purposes of sending pre-lien notices (See below).

(C) The Contractor’s Name & Address - We don’t necessarily mean your contractor client. La. R.S. 9:4802 also provides you with a legal cause of action agains the project’s general contractor. So, please be certain to obtain that contractor’s name in order to send pre-lien notices.

(D) The Dates of Delivery – Keep those bills of lading! Oftentimes lien disputes with suppliers come down to a matter of days in calculating whether or not a lien is timely  (see below). It is good practice to keep a log of all material deliveries and keep signed bills of lading to prove delivery.

What Notice is Required?

Suppliers are required to send a Notice of Non-Payment at least 10 days prior to filing any lien. There is a caveat – this notice is only required on residential projects. However, it is good practice to send this notice out on all projects, for purposes of good collection tactics and pre-lien settlement of amounts due.

A notice should include:

(A) the name and address of the seller of movables;

(B)  a general description of the materials provided;

(C) a description sufficient to identify the immovable property against which a lien may be claimed, and

(D) a written statement of the seller’s lien rights for the total amount owed, plus interest and recordation fees.

The notice must be sent to the contractor and to the owner via certified mail return receipt.

NOTE: Be advised that in projects where a notice of contract has been filed, there is a cut off date for providing notice. Notice of Non-Payment must be sent out 75 days from the last date of the month in which materials were delivered, and in no event longer than the statutory period for filing the lien.

How and When Do I File My Lien?

A supplier’s lien is filed just like a contractor lien, but there are some additional time obligations.

If a general contractor files a notice of contract and subsequently files a notice of termination then the supplier must file its lien within 30 days from the date of the filing of a notice of termination.

If no notice of contract has been filed, then the supplier has a longer period. In that event, the supplier has until 70 days from the date of substantial completion or from the date of filing a notice of termination.

A lawsuit must be intiated within one year from the date of filing in order to extend the lien and make it enforceable.

How Can I Best Protect Myself?

Under La. R.S. 9:4822(K), a supplier may send the owner and contractor a request for notice, demanding that the owner provide them with the a copy of any notice of termination filed, or otherwise the date of substantial completion, at least three days from filing or declaring substantial completion.

If an owner fails to to provide this information, then they are responsible for your attorneys fees.

It is good practice to put together a notice that goes out to all project owners on projects that you ship materials to.

Being careful and following the rules will ensure that your lien is safe.

Maryland Liens: Procedural Quandaries

Liens can sometimes become procedural nightmares for contractors and other parties entitled to the placement of this device. Contractors often encounter incredible costs and delays when not following the lien law protocol.

Maryland is one such state where a contractor could truly run into problems. The State of Maryland, differs vastly from its nearby Virginia and District of Columbia. Though VA and DC follow the nationwide rule of record first and file second, Maryland requires a file first and record second procedure.

We want to go through some of these mechanics so that you can become better acquainted with your obligations in the State of Maryland.

Why Lien?

Similar with most states, Maryland’s lien action enables the claimant to obtain a right and action against uphill general contractors and property owners, when they do not ensure that lower level parties are paid for services or materials delivered at a job.

Even in situations where a subcontractor, or other low level party, enters into a contract with a contractor, which conditions payment upon payment to the contractor from the owner, a claimant who remains unpaid may utilize the lien law at any time to preserve its right to payment.

In Architectural Systems, Inc. v. Gilbane Building Co., 760 F. Supp. 79 (D. Md. 1991), a Maryland Court interpreted § 9-113(b) of the Maryland Real Property Code to state that liens are not barred by “payment if paid” or “payment when paid” clauses. Thus, a claimant is free to file as long as they meet other procedural guidelines.

Who Can Lien?

Like most other states, all persons providing labor and materials for buildings erected or for repairs and improvements to existing buildings have lien rights.

However, in the case of “repairs of improvements,” only if such improvements and repairs equal 25% of the value of the improved building does one acquire lien rights. Md. Real Prop. Code Ann. § 9-102(a).

Further, architects and union trustees have also been entitled to claims.

How Do I Protect My Lien Rights? Are There Notices?

Maryland is tough on notice. Under the seminal case, Tyson v. Masten Lumber & Supply, Inc.,
44 Md. App. 293, 408 A.2d 1051 (Md. Ct. Spec. App. 1979), the Court expressly stated that improper notice will void a lien. Thus, care must be afforded when preparing to secure your lien.

(A) General Contractors

If you contract directly with the owner – you are not required to provide notice prior to filing your lien. This includes all general contractors under the statute, as well as those subcontractors or suppliers who have an agreement with the owner to provide services or materials.

(B) Subcontractors/Suppliers

A subcontractor, or other 2nd tier claimant, who does not directly contract with the owner, will lose its lien rights unless within 90 days after doing work or furnishing materials, the owner is given written notice of the intention to claim a lien.

Md. Real Prop. Code Ann. § 9-104 provides the form for this lien. The law explicitly states the mailing of the notice within 90 days, by registered or certified mail, will constitute effective notice.

(C) Exceptions to the Notice Rule?

There are some minor exceptions to the notice rules. Actual notice to an owner of a claimant’s intention to file has been successful, meaning that as long as a claimant can prove that the owner knew about the impending lien claim, it cannot defend on the basis of lack of written notice.

How Do I File My Lien?

This is the tricky part. Unfortunately, Maryland has elected to make liening a property a substantial investment. This makes it more difficult for Express Lien to assist you in filing your lien, but not impossible.

Lien actions MUST be initiated by way of a prior legal action. Yep, that’s right, you must file a lawsuit first in order to obtain an order from a court of competent jurisdiction that entitles you to file a lien.

A petition to claim lien must be filed in the court for the county where the work was completed within 180 days from the completion of work or last date of delivery of materials.

Work has been interpreted to mean the last date of work being provide by the claimant, which can extend past the date of substantial completion.

In order to file this action, you should consult with a Maryland attorney or contact the courts to inquire about a form.

At a minimum, the petition will require you to submit a verified account of all material facts and copies of all material papers, including contracts, orders, invoices and payment receipts. Also, the claimant must illustrate that the notice was properly served, if required by law.

The petition must be served upon the owner, who will be ordered to show cause why the lien should not be ordered within 15 days. An owner may answer and defend the petition, but otherwise, if it fails to answer, the petition shall be deemed admitted and the lien valid.

Once your action is filed and you obtain an order from the court, you may contact Express Lien to get your lien filed!

What Can I Recover in My Lien?

Unlike other states, a Maryland subcontractor can make a claim for the full extent of contractual amounts that are due under its contract with a contractor. Thus, the owner cannot defend that it has already paid the contractor for amounts due to the contractor, as long as notice was properly delivered.

The contract will determine what you can claim on your lien. Any additional charges over the costs of the original work may be claimed, as long as they are spelled out in the contract.

What Pitfalls Might I Encounter?

Maryland has bond laws which provide a manner in which the owner, or general contractor, can have the lien released before payment to a subcontractor. This will result in your lien claim becoming a lawsuit for recovery.

But, Maryland does not have a slander or improper lien law which would subject a claimant to liability. As long as the  lien is not proven to have been made (1) falsely and (2) spitefully, the lien will simply be dismissed without further damage to the claimant.

Can I Waive My Lien Rights?

The short answer is NO!

Section § 9-113 of the Maryland Real Property Code was revised in 1981 to expressly prohibit lien waivers prior to beginning of the work at the property. Of course, during the work, and upon payment, contractors may obligate you to provide them with a lien waiver for work completed, but they cannot abridge your rights to claim a lien during the contracting stage.

A copy of pertinent Maryland lien laws can be found here. Let Express Lien help now by providing notice of your claim or by filing your lien (after being ordered by the court)!

Pro-Owner ‘Trick’ in the Delaware & Pro-Contractor ‘Trick’ in the Louisiana Lien Statutes

Here and there, there are statutes within a state’s lien laws that allow a property owner to place a duty of performance on subcontractors and contractors.

When representing property owners, savvy construction attorneys will recommend that these statutes be utilized to protect the owner from future liens.

An example of these types of statutes can be found in Delaware, under the Code Title 25, Section ¶2705.  The statute provides simply as follows:

The owner of any structure built, repaired or altered by any contractor or subcontractor may require such contractor or subcontractor from time to time to furnish and submit to him a complete and accurate list in writing of all persons who have furnished labor or material, or both, in connection therewith, and who may be entitled to avail themselves of the provisions of this chapter. Should any such contractor or subcontractor fail to furnish such list for 10 days after demand made therefor by such owner, he shall be entitled to receive no further payments from the owner until such list be furnished and shall not be entitled to avail himself of any of the provisions of this chapter.

What does this mean?

Well, quite simply, if an owner makes this “demand” in writing, the contractor or subcontractor ought to immediately comply or risk losing the ability to file a lien.

Unlike Delaware, Louisiana has a reverse requirement…allowing the contractor or subcontractor to burden the property owner with future performance with the risk of penalty for non-compliance.

La. R.S. 9:4822(K) provides that any person with lien rights may give a certain notice to the property owner, and if provided properly, the owner will be required to notify that person within 3 days of the filing of a notice of termination, the substantial completion or the abandonement of the work.  Of course, these events trigger time requirements under the lien statute.

What happens when an owner fails to provide this notice?   They are liable for “all costs and attorney’s fees for the establishment and the enforcement of the claim.”

Working on a private project in either state?  Both the Delaware and Louisiana notice can be ordered from Express Lien today.

Preliminary Notice Rarely Required in Georgia

In Georgia, it can be said that the general rule regarding Preliminary Notices is that they are not required.   As such, under most circumstances, a party providing services or materials to a private construction project can file a Claim of Lien without ever delivering a notice to the property owner or general contractor.

As with every general rule, however, there are certain exceptions.  In limited circumstances, Preliminary Notices may be required on private construction projects.

In Georgia, Preliminary Notices are required when:

(1) The claimant does not have contractual privity with the owner (i.e. is a general contractor) or the general contractor (i.e. is a subcontractor).   Therefore, the claimant is a lower-level sub or supplier;  and

(2) The Owner or Contractor has filed a Notice of Commencement within 15 days of first performing work on the project.

If these two conditions are met, a preliminary notice must be sent to the Contractor and the Owner via registered or certified mail.   The notice must be sent within 30 days of the first delivering of services of materials by the claimant or from the filing of the Notice of Commencement (whichever is later).

If required, failure to send a preliminary notice is fatal to the claimants ability to file a mechanic’s lien.

Express Lien sends & files preliminary notices for $35.00 each.   You can also download the form for no charge.

30-Day Notice on Residential Projects in Virginia

The notice requirements in Virginia are fairly straight-forward.

According to the Code of Virginia, lien notice must only be provided on single or two family residential projects, and only if a Mechanics Lien Agent (MLA) is designated by the property owner in the project’s building permit.

If a MLA has been designated, the notice must be provided within 30 days of the contractor beginning work.  If provided later, a contractor can only lien for materials or labor provided 30 days prior to the sending of notice, and beyond.

Notice must not take a particular form, but it does have to include (1)  The name, mailing address and telephone number of the person (or company) sending the notice; (2) The building permit number; (3) A description of the property as shown on the building permit; and (4) A statement that the person filing such notice seeks payment for labor performed or material furnished

While the rule is simple and requires notice only in limited circumstances, the difficulty really becomes determining whether a MLA has been designated, and who exactly the MLA is.

A contractor can usually contact the building departments to get the mechanics lien agent on file.  However, Express Lien can also investigate this matter for the contractor when preparing the 30-day notice.

7 Habits of Contractors Who Lose Money…and How to Break Them

The Construction Commando’s “Contractor’s Secret Weapon” published an article with this title that described seven instances when contractors lose money on a project.  While the article was drafted to an audience of California contractors, the habits apply nationwide.

It will be to any contractors’ benefit to review this article online, access which habits apply to you, and make an effort to avoid the costly mistakes.  Any progress will help increase your bottom line.

The seven habits highlighted are:

1)    The “Gentlemen’s Agreement” – A Handshake and Your Word.   Bottom line:  Get it in writing.
2)    Using Contracts that Fall Short of the Legal Requirements.
3)    Not Getting Every Change Order in Writing.
4)    Failing to invoice immediately.
5)    Failing to serve a preliminary 20-day notice (pre-lien construction notices)
6)    Don’t Worry – They Will “Take Care of You” on the Next Job
7)    It isn’t good “customer service” to record a Mechanic’s Lien

Top 10 Construction Lien Errors

Debb & Derkin, P.A., a law firm practicing construction law in Florida and filing construction liens in that state, published an article listing the Top 10 Construction Lien Errors.

While the article and Top 10 listing is related to Florida lien laws, since most lien laws in the U.S. are substantially similar, the same errors appear time and time again on liens across the nation.

The Top 10 Lien Errors highlight by Mr. Debb in the article are:

1. Failure to Timely Serve Notice to the Owner
2. Failure to Serve Notices on Proper Parties
3. Failure to Serve Notices by Proper Method
4. Contingent Payment Clauses
5. Overstatement of Amounts Due and Owing
6. Failure to Respond to Sworn Statement Requests
7. Failure to Timely File a Claim of Lien
8. Failure to Provide Copy of Claim of Lien
9. Failure to Foreclose on Claim of Lien within Time Required by Statutes
10. Failure to Secure Proper Licensing

Express Lien, Inc. is experienced in filing construction liens in states across the country, and ensuring that your lien is filed professionally and accurately. Trust your next construction lien to our professionals.

It’s why we say: Lien Smarter…Get Paid.