You May Only Get One Shot To File Your Mechanics Lien
In the past, we’ve posted about the importance of filing your lien timely and correctly. Just a small defect in the legal property description, or the omission of something in the contents of the lien can render your lien null and void.
As soon as a lien claimant has their lien challenged as improper, the first thing they want to do is file an amendment. And this brings us to a very important question: Can you amend a defective lien?
In most states, claimants are only allowed to amend the lien to include missing information only if the amendment is made before the original lien period expires.
I stumbled upon a case out of North Carolina addressing this issue. In Gaston Grading v. Young, the NC Court of Appeals explained this general rule:
…if plaintiff wished to correct the mistakes of its second lien, plaintiff was required to cancel the second lien and substitute a new claim of lien containing the correct information. Plaintiff failed to do so within the prescribed time and thus, its claim of lien is void.
While each state’s treatment of this issue may differ, it does seem the be the dominant rule in the United States. I practice law in Washington, Oregon and Louisiana, and those three states treat amended liens similarly to North Carolina.
This is why I’ve titled this post, “You May Only Get One Shot To File Your Mechanics Lien.” While you can – in theory – amend the lien if you make a mistake, you’re still stuck with the time restrictions of your state. When you file the lien the first time, you should get it right.
Don’t Know Who Bonded A State Or Federal Project? Just ask.
In nearly every circumstance, a general contractor on a federal or state project is required to maintain a bond for the work being performed. These bonds protect the payment rights of subcontractors, sub-subcontractors and suppliers. In the event any of these parties are not paid on the project, the unpaid party can typically file a claim against the surety who bonds the project as per the Miller Act or a state’s Little Miller Act. (Read this great article from Construction Business Owner about bonds, generally).
Claims against sureties are beneficial because: (1) It can reduce the prevalence of personality conflicts between the unpaid party and the general contractor; and (2) It is a guarantee that at the end of a proceeding, money will be there.
However, you can’t make a claim against a surety if you don’t know who the surety is. And if you’re not on the best of a terms with a general contractor, you may fear that it won’t reveal the surety to you.
So, this begs the question: how on earth do you discover the identity of a surety?
The answer is quite simple: Just ask. That’s right, just ask for it.
Who To Ask?
Under the Miller Act and most Little Miller Act statutes, the public agency in charge of the project is required to (and quite used to) disclose the identity of the surety to anyone who asks for it.
Using Google, you can generally always find the governing authority. A governing authority will typically manage its contracts through:
(a) public works department;
(b) new construction department;
(c) purchasing department;
(d) capital projects department; or
(e) facilities department
Most of these governing authorities (almost all) will have a website that gives you some information about their public contracts. Figuring out which department is in charge of the contract is generally a toss up, so you will likely need to navigate around government websites to find the best possible contact.
How to Ask
As I stated above, agencies are required to disclose the surety on the job….actually getting it, just depends on how difficult the agency will make it for you.
If a governing authority has a website, you will generally be able to find out at least a little bit of information about their projects. If the project is relatively new, they might still have bid postings, pictures, articles and reports posted.
Giving the agency a phone call will usually do the trick, but if you run into trouble, just send a certified letter making the request. You can even have Express Lien send this notice / request for you. We’ll even figure out who to contact, saving your company valuable time and energy.
Think You Know The Last Date You Delivered Materials or Performed Services? Think Again
Back in November 2009, we posted “The Importance of Knowing When Your Lien Period Begins,” discussing the importance of knowing how to calculate your project’s “trigger dates.”
What is a trigger date?
Every state provides contractors and materialmen the right to lien a project, but they also require these parties to file their liens within a certain “lien period.” The lien period always has a beginning point and an ending point…but the question sometimes arises, when exactly does the lien period begin and end?
It’s a surprising complex question, and when liens are filed in proximity to the lien period’s expiration dates, parties may become involved with proceedings to contest the liens validity and the exact beginning date of the lien period.
In many states, the lien period begins with the last date a claimant has delivered materials or services. Calculating this date, as we previously wrote, can invovle more than expected:
In many states (if not most states), labor and/or materials necessary to perform remedial, punch list items, or warranty obligations are generally not considered in establishing the completion date or the last date of providing work. Contractors and suppliers, therefore, can theoretically have the lien period begin days, weeks or months before they are off the job.
So, what is the “trigger date?” The trigger date is the date that starts or triggers the lien period. In most cases, as discussed in this post and the prior post, the start date for a lien period is the date materials and/or labor were last delivered to a job, or the substantial completion of a job.
After you add a project to our Lien Pilot, the “Date Management” section of the page will ask you to input the trigger dates that are important to your construction project. A screenshot of this portion of the page is displayed to the left.
To calculate your lien deadline for this particular project, you would add the date you last delivered labor or materials. The system will calculate the appropriate number of days from that trigger date and determine the deadline to file your lien.
But be careful. As discussed, figuring out this particular date can be tricky in many states. You’ll want to be extra cautious in determining this date, and to be safe, file your lien with some time to spare.
Of course, to determine the beginning date for your lien period, its best to consult with an attorney. Lawyers in your state will be familiar with the case law that evaluates that state’s statutes and makes determinations as to what does and what does not constitute the start and end of a lien period.
What You Need To Do Immediately After Filing A Construction Lien
So, you filed your construction lien on time. Whew! Now what?
If you’re a subscriber to our blog, you know we frequently post about the technical requirements and strict deadlines that lead up to the filing of a construction lien. We don’t, however, frequently discuss the technical requirements and strict deadlines that follow a lien’s filing. There are a few, and as usual, these requirements vary state-by-state.
Generally speaking, however, you have to keep two things in mind immediately after filing a construction lien.
First, you may need to send notice of filed lien to the property owner and/or contractors “up the chain.” In some states (like in Texas) a lien is actually unenforceable unless a copy of the filed lien is delivered to the property owner within 5 days of its filing. That’s a serious penalty, and a pretty immediate deadline. Other states have similar penalties (in Oregon, for example, you cannot collect attorneys fees from the other party in foreclosing on lien that was not delivered to the property owner after filing).
Now, here is how Express Lien helps.
Any liens ordered from us (in any state) are delivered to the property owner and all other interested parties (those named on the lien) immediately after filing. Notice of the filing is delivered certified mail, and a record of the mailing is maintained in your online account, available for you to review or download at anytime. You simply place your order and forget about it – we do all the rest.
Second, liens expired if they are not “foreclosed upon” or “enforced” within a certain period of time. In some states, liens must be enforced within just 90 days (California), while other states can provide up to 2 years (Texas). Failure to file a lawsuit enforcing / foreclosing the lien will result in the lien expiring.
How does Express Lien help with this?
Well, once you put the “Lien’s Filing Date” into our system, the system will calculate your lien’s expiration date. If you order the lien from Express Lien, we’ll put the date in the system for you. We don’t actually foreclose or enforce the lien for you (you’ll need an attorney for that), we do give you a heads-up when the deadline is approaching.
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.
The Risks of Litigating a Washington Construction Lien
Our friends at Wolfe Law Group have just started publishing a new blog that focuses on construction law issues in the Pacific Northwest, and specifically in Washington and Oregon. So, subscribe to their feed and check out that blog to keep tabs on construction (and lien) issues in those states.
Their first post is of special interest to us in at the Construction Lien Blog. It’s title gives away its substance: “The Risk of Litigating a Washington Construction Lien.”
More than simply a discussion on how to actually dispute a mechanics lien, the post reviews the potential risk and rewards connected to any proceeding to have a lien overturned. While this post obviously provides information to those looking to dispute a mechanics lien, it’s also revealing to those who hold or who are filing liens.
In Washington, anyone who disputes a lien faces potential risk…or reward. If they win and the lien is overturned, they may be entitled to attorneys fees. If they lose and the lien is upheld, the lien claimant will be entitled to attorneys fees. Since lien dispute proceedings can cost thousands in attorneys fees, the Washington laws require parties disputing a lien to think long and hard about whether to bring this type of action.
Why is this important to those who hold or are filing liens? Simple: It demonstrates just how strong a construction lien can be.
In prior posts, we wrote about how construction liens are not typically invalid simply because someone claims payment is not due. Usually, for a lien to be declared invalid, there must be some sort of facially or procedural defect with it (it is filed late, it does not properly describe the property, etc.).
These technical and procedural defects may lead to a lien’s demise…but other very critical issues (validity of back charges, change orders, timing of payments, etc.) will likely not. So, while both parties may have arguments on each of these disputed issues, before using those arguments to dispute a construction lien, the disputing party will have to consider the risk.
And in Washington, there is quite a bit of risk.
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.
ConstructionLawMonitor.Com: Pay When Paid Clauses and Lien Rights
Our good friends over at Wolfe Law Group (ok, it was me) have put up an article on the trials and tribulations facing subcontractors due to the use of the dreaded “Pay When Paid” clause.
See their article here and how these clauses work. As a contractor you need to be aware of your right to payment and potential roadblocks on the way to getting paid.
One of the most important defenses to the “Pay When Paid” clause is your right to lien a project, and consequently the owner. Since the owner’s failure to pay the general contractor has caused your inability to recover payment, a lien will allow you to proceed against that party in a legal action for payment.
Read the article to better understand your rights and the tools you can use to ensure payment. Remember that owners and surety bonds can be reached with a properly filed lien.
Contact ExpressLien.Com in order to protect your right to payment.
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.
Mechanics Lien – Is it like a Mortgage? Yes and No.
In most states, contractors and suppliers can file “Mechanics Liens,” whereby they acquire a privilege against the construction jobsite’s property. The liens usually work like a mortgage on the property, such that it must be satisfied before a property is sold, transferred or refinanced.
While liens act a lot like mortgages, they certainly are not identical to mortgage instruments.
First, in most states, mechanics liens themselves expire. Most states require that the contractor file a lawsuit to “enforce” or “foreclose” on the lien within a certain time period (sometimes short), to extend the life and effectiveness of a lien. Here are some example timeframes:
In Louisiana, liens must be enforced within 1 year from filing. In Washington, lien foreclosure is due within 8 months of filing. In California, you must foreclose within just 90 days of filing!
Second, depending on the state, liens are given more or less “priority.” Lien priority effects the order the instruments are paid in the event of a property sale or foreclosure. In other words, if a property is foreclosed upon but sold for an amount less then the sum of all liens, and there are two mortgages and a mechanics lien on record, who gets paid and who doesn’t?
The answer to this question depends on your state. In Louisiana and Washington, liens take a junior priority to mortgages and similar instruments. In other states, however, the rules are or, depending on circumstances, can be different. In Virginia, mechanics liens have priority over construction loan mortgages. In Minnesota, depending on when the respective instruments are filed, a mechanics lien can take priority over mortgage-type instruments.
