When filing a mechanics lien or delivering a preliminary notice, trust and security is key. Any mistake in the prepared documents can undermine your company’s security rights and cost big money. Further, since the mechanics lien transaction is conducted over the Internet, your company will be transmitting sensitive financial or payment information over the web.

When it comes to providing a trustworthy and secure environment to file mechanic liens or preliminary notices, there’s absolutely no match to Zlien.

To highlight Zlien’s security precautions, the site added a “Security Precautions” page and logo to its website.

This new page takes the visitor through Zlien’s security and trust protocols. Regarding site security, the page displays Zlien’s SSL badge and outlines the company’s procedures to safeguard credit card information.  Regarding trustworthiness, the page displays a VeriSign trust badge and gives detailed information about Zlien’s license, bond and errors and omissions insurance policy.

If you want to Lien Smart, you need to find a quality and trustworthy mechanic’s lien filing and management service. Zlien is trusted by clients all across the country.  We have the world’s best ordering and management system, and we’ve made it a priority to provide our clients a secure and trusting environment.

Come see the difference today, and file a mechanic’s lien with Zlien.

Are You Working On A State Construction Project?

Over the years, I’ve heard state projects referred to as “county,” “public” or “government” projects. It’s all the same. Any project commissioned by a city, state, county, public board or body or other governmental entity is typically a state construction project.  This includes projects commissioned by public school boards, which is a popular type of public work.

This sounds simple, but it’s surprising how many folks are either confused or wrong about whether a project is a state or private work.

Here are some frequently made mistakes:

• Schools:  Schools at every level (elementary, high school, university) can be either state or private, and you may sometimes be unsure.  Go to the school’s website and read the about section.  If the school is operated by a school district or board of education, it’s likely a state project.
• Native Land: Doing construction work on native land can be tricky, because native land has sovereignty rights, and it’s neither federal nor state nor private property.  Many folks confuse native land projects for state projects, but they are not state projects.  Check out this blog post to learn more about your lien rights on native territory.
• Hospitals, Community Centers, and other Quasi-Public Places: Understand what a “quasi public” place is by taking a look at this definition on the Merriam-Webster website:  ‘essentially public (as in services rendered) although under private ownership or control.” Hospitals, community centers, and other similar establishments are usually privately owned properties, which makes it a private project and not a state project.
• Parks:  State parks are typically state projects because they are state owned.  This is the case even when the parks are managed by private managing companies – which is common.  So, while you may be hired by a private property management company, the project itself is state because it’s still state land and under state control.

A Mistake In Identifying The Project Type Can Be Costly

Properly identifying a construction project as either private, federal or state is a critical step to preseving and enforcing your lien or bond claim rights. A mistake in your understanding of a project’s nature can send you down the wrong path of protection, which can leave you with no protection at all.

Over the coming two weeks, we’ll be discussing how to file bond claims and how to protect your rights to file a bond claim. You’ll realize from reading these posts that bond claim laws are just as convoluted, and contain just as many nuances as mechanic lien claims against private projects.

If you’re sending the notices and making the claims under one set of laws when you should be working under a different set, you will have sent and filed all the wrong documents.  Unfortuantely, the law has little to no tolerance for this type of mistake, and that can leave you without lien rights at all.

While determining your project type may seem like a simple affair, there are layers of complexities here. Do some research into who is commissioning the project and who owns the property, and make sure you know the type of project you’re working.

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.

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.

Having 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.

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 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.

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.

Some readers may have noticed this Construction Lien Blog underwent a design overhaul two or three weeks ago. We let it go without mentioning, as it was just a first step toward this complete overhaul. The blog’s new design now matches Zlien’s website, as we went live with the redesign over the weekend.

Although there are significant design enhancements with the new site design, I consider these two as the most significant improvements:

Mechanics Lien & Preliminary Notice Resources

When we set out to redesign the Zlien website, creating a more organized and user-friendly mechanics’s lien resource center was our top priority, and we believe we successfully redesigned this element of our offerings.

Now, the user can click on a state, and be brought to that state’s homepage for lien and notice resources.  All resources, whether it be deadline charts, state projects, private projects, statutes or forms, are all easily accessible from one spot online.  Plus, we even pump our mechanic’s lien law alerts from this blog onto the state’s homepage.

In addition to the design enhancements, we also have content enhancements.  There are more mechanic lien law and preliminary notice requirements published on the Zlien website than ever before, and we’ve got the web’s most extensive mechanic’s lien and preliminary notice forms database.  The best part about all of these forms?  They’re organized, easy to find, and free.

The Fastest, Smartest and Easiest Ordering System On The Planet

Although our Mechanic’s Lien Ordering System was the best and most sophisticated on the planet, we thought it could be even better. Now, it is.

We’ve improved our progress bar, so that instead of seeing a generic colored bar, you can see each step that is required to complete your order and just how much further you have left to fill out.  We’ve completely re-designed our order contact management system, making it more intuitive and easy to add project contacts to your order.  We’ve utilized APIs to match zip codes, cities, states and counties to ensure order accuracy. And finally, we’ve just made the dang thing look prettier.

If your company needs to deliver a preliminary notice, or file a mechanic’s lien or bond claim, there isn’t a faster, easier or more accurate way to get this done.  The Zlien Filing Wizard is the best on the planet, and you can give it a shot here: Order A Mechanic’s Lien Now.

If you have not been paid for labor, services or materials furnished on a construction project in Washington, you may be able to collect the money you are owed by filing a mechanic’s lien (also referred to as a claim of 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 Washington’s lien laws. Liens are authorized by RCW 60.04.021 for any person furnishing labor, professional services, materials, or equipment for the improvement of real property.  The trick is determining whether your construction project is a qualifying improvement, which is defined by RCW 60.04.11(5):

“Improvement” means: (a) Constructing, altering, repairing, remodeling, demolishing, clearing, grading, or filling in, of, to, or upon any real property or street or road in front of or adjoining the same; (b) planting of trees, vines, shrubs, plants, hedges, or lawns, or providing other landscaping materials on any real property; and (c) providing professional services upon real property or in preparation for or in conjunction with the intended activities in (a) or (b) of this subsection.

Suppliers to suppliers are not protected.

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

In Washington, 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 60 days of first furnishing labor or materials to the project. If you did not send a preliminary notice on time, but have furnished labor or materials within 60 days, there are some protections for those who sent late notices as to labor and materials furnished within a 60 day period from when the notice is sent.

While most notice requirements are for those who did not contact with the property owner, in some circumstance, those who did contract with the owner must provide a “Model Disclosure Statement” before commencing work to preserve their lien rights. This is required on select residential and commercial projects. You can learn more about this requirement at this post: Deliver the Model Disclosure Statement in Washington…Or Else

If you furnished these notices, 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. Washington has strict requirements about what your mechanic’s lien must contain (see RCW 60.04.091) Here are a few:

• Identification of the party who hired you
• Description of the labor, materials or services furnished to the project
• 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 Washington mechanic’s lien. Download the form for free here: Free Washington Mechanic’s Lien Form.

The most challenging part of completing this form is to insure you have the proper legal property description for the property being liened, as this is an absolute requirement for your lien to be valid in Washington.

Step 4: Timely Record The Washington Mechanic’s Lien with the Proper Auditor’s Office

The next step is to timely record your Washington mechanic’s lien. Washington 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 a late filing. If you record a tardy mechanic’s lien , it will be void.

The Washington mechanic’s lien – statutorily referred to as a “Claim of Lien” – must be recorded in the county auditor’s office where the construction project itself is located. If a project is situated in two counties, it must be recorded with both auditor offices.

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

Washington requires all mechanic’s lien claimants to serve a copy of the mechanic’s lien on the property owner within 14 days of recording.  While the failure to serve the lien will not invalidate it, it will disqualify you from recovering your attorney fees in any action to enforce the lien (Washington law typically allows lien claimants to recover their attorney fees).  So, not having the lien served can be an expensive oversight.

The mechanic’s lien must be served on the property owner by certified or registered mail, or by personal service.

Step 6: Foreclose On Your Washington Mechanic’s Lien

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

In Washington, mechanic liens must be enforced within 8 months from the date the lien was recorded.  To learn more about lien foreclosure, read this tag: Foreclosures.

Zlien operates out of New Orleans, LA, and so we’re all very excited about the Mardi Gras season. While Mardi Gras officially started on Kings Day (January 6th – Yes, we had our kings cake), the real active part of Mardi Gras is just now apporaching, with some of the first parade dates nearing.

In the spirit of the season, we’re going to address a scenario where folks may wonder about their mechanics lien rights. While this post talks about a very specific type of work that really only occurs in New Orleans, the lesson applies nationwide.  And that’s a lesson we’ve stated over and over again on this blog:  to qualify for mechanic lien rights, incorporation into the improvement is key.

Mardi Gras stands are simply temporary structures where people can stand or sit to watch parades. Local construction companies contract with the city or private entities to build these stands on public or private property.  I found a photograph online of some Mardi Gars stands at the famous Gallier Hall, which will give you a good idea of what these things look like.

Mardi Gras stands constructed in front of Gallier Hall. This is what these Mardi Gras stands look like all over the city of New Orleans, which are constructed and left complete for approximately 1 month a year across the city.

Companies construct these stands to provide temporary value to the property (property owner’s can charge companies big money to use these stands), and they are a “construction project” … but do they qualify for mechanic lien rights?

In most states, the answer will be a resounding no.

The reason this construction does not qualify for lien rights is that they are not permanently attached to the property, and they do not permanently improve the property. Without permanent attachment, there’s no lien rights. That’s that.

Now here comes the surprise.

While the law is crystal clear in most states that this would not be lienable services, in Louisiana, the law isn’t so clear. In fact, after reviewing the law in light of this question, I’d be willing to state that this work very well may qualify for a mechanic’s lien.

The right to file the mechanic’s lien would arise out of the Louisiana Private Works Act.  When describing who has the right to file a lien, the law provides as follows:

The following persons have a privilege on an immovable to secure the following obligations of the owner arising out of a work on the immovable:

(1) Contractors, for the price of their work.

(2) Laborers or employees of the owner, for the price of work performed at the site of the immovable.

(3) Sellers, for the price of movables sold to the owner that become component parts of the immovable, or are consumed at the site of the immovable, or are consumed in machinery or equipment used at the site of the immovable.

What’s interesting about this is that the requirement for the work to be “consumed” at the site or to become “component parts of the improvement” are limited only to those who sell movables (i.e. material suppliers).  But, what about laborers, contractors and subcontractors?  These folks are entitled to the price of their work without any such qualification.

An additional step is required to see if Mardi Gras stand construction qualifies for a lien, as the Louisiana statute only allows a lien filing if the obligations “arise [sic] out of a work.”  The term “work” is a definable term, defined in the Private Works Act’s §9:4808 as follows:

A work is a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.

Whoa!  Look at that.  It’s a pretty broad definition.  It includes any project for the construction, modification, repair…”other physical change” of an immovable or its component parts.

Now, practically speaking, I think a Louisiana judge would look at a mechanic’s lien for Mardi Gras stand construction very strictly, and perhaps interpret the Private Works Statutes in a way that does not classify these stands as a “physical change” to the immovable or component parts.  However, it would make for a very colorful argument, and I’m not convinced the law in Louisiana is clear on either side.