Utah Mechanics Liens Are Assignable

Filing a mechanic’s lien in any state is fairly inexpensive and easy to do.   Legal Document Preparation services like Express Lien, for example, perform the task for just $295.00.

While the filing of a mechanic’s lien is effective in and of itself, at times the filing of a lien alone is not enough to get your company paid.   And every state’s laws require that within some period of time, your business move it or lose it.   In other words, you’re required to “enforce” or “perfect” your lien.

In the construction business, cash can be tight.  One option contractors, subs and suppliers might want to consider in these instances is assigning your lien rights to a third party.

Whether lien rights are assignable interests is something that varies state-by-state.  However, a construction attorney in Utah – Randy Birch – just published an article on his Construction & Collections Blog about the assignability of lien rights in that state.

The verdict:  You Can.

Here is a quote from his recently posted article:

Utah Code section 38-1-26 specifically makes mechanic’s lien rights assignable by stating that “All Liens under this chapter shall be assignable as other chooses in action, and the assignee may commence and prosecute actions thereon in his own name in the manner herein provided.” Utah Code Ann. § 38-1-26 (Lexis 2005); see also Elwell v. Morrow, 28 Utah 278, 78 P. 605 (1904).

The right to perfect a lien is also assignable under section 38-1-26.

Read the full article by clicking here.

Will the 2009 Economy Create More Mechanic Lien Filings?

At the Construction Lien Blog, we’ve written about the current state of the economy in America, and how this has affected the construction industry from coast-to-coast.

However, there is recent conversation in the media and out in the blog-o-sphere that the economy’s impact on construction has increased the amount of mechanic’s liens filed by contractors.

The Pacific Business News source in St. Louis, for example, has a story on a construction attorney in Missouri who says that he filed twice as many liens in 2008 as he did in 2007.

A similar article appears in the Virginia Lawyers Weekly, which reports that construction litigation in general is increasing in the current economy, with increased claims for construction delays, defects and problems with collections.

It seems that the business journals are full of stories about construction projects being slammed with liens, like the story here and here.

As the new year approaches, what will we see in the construction industry that is predicted to remain pretty stagnet?

One thing is for sure, regardless of whether lien filings increase, decrease or stay the same, with the current credit crunch and economic woes, it’s more important than ever to file liens on claims you do have, and to do it timely and properly.

Explaining Louisiana Lien Law at AllBusiness.Com

AllBusiness.com, an online media and e-commerce company that operates one of the premier business sites on the Web, is a great tool for contractors.   They self-proclaim to help business professionals save time and money by addressing real-world business questions and presenting practical solutions.

As one of its resources, the website has re-published an article written by Lloyd N. Shields, one of New Orleans’ premiere construction attorneys.   The article, titled Mechanics Liens and Construction Bonds under Louisiana Law, offers a good discussion of Louisiana’s sometimes peculiar lien laws.

When doing work in a particular state – like Louisiana – it never hurts to spend time reviewing the overall lien laws in your area.   Understanding and following lien laws is important for your company to avoid bad collection situations, and is increasingly important in this penny-pinching economy.

It would be a prudent start to the new year to spend some time getting familiar with the lien laws in Louisiana.  You can read some basic information about Louisiana lien laws at the Construction Lien Blog here.   The allbusiness.com article is also a good resource.

Also, be sure to check out the Construction Industry Center at AllBusiness.Com.

A Cure for Construction Litigation: Proactive Thinking Before You Get Started

Litigation. Its a frightening word to many yet to others it is seemingly unknown. The world of construction litigation has become massively entwined with confusion as to goals, limits, and the expectations of a litigant. Attorneys are often unable to properly advise a potential client as to the presumed costs and lengths of a legal proceeding simply because there is absolutely no way of knowing.

A legal proceeding depends upon several factors: the types of parties, the extent of the damage; the willingness to settle; the ability to settle; the requirements of outside contracts; the delays which may ensue; the ability to afford legal representation; and unfortunately personal feelings towards another party. Though attorneys try, it is impossible to predict the extent of the variables and where and how the cookie may crumble. In the end, it is all an unknown.

Because parties are unable to predict the other side’s wherewithal to go the distance with a proceeding or arbitration, several dangers bear notice. Is it worth the risk to lose your financing? Is it worth the possibility of losing a good customer? Is it worth the costs of obtaining adequate legal assistance? These are the questions a headstrong business owner should be asking. Whether it be prior to contracting with another party, prior to beginning the work, or immediately after dispute arises, it is important to have a dispute resolution process or plan in mind for each job, contractor, or customer.

The dangers associated with contracting fallout can be prevented in a number of ways by being up front in your contracts with customers, contractors, and others. A good attorney can provide you with options as to strategies to use for dispute resolution. These strategies may encompass the whole project or merely deal with specific aspects. For instance, it may be wise for you to force immediate mediation of change orders or altered job conditions for price resolution, however you may want to utilize binding arbitration or even court intervention for disputes arising out of final payment. These mechanisms should be addressed during the contracting period, and every detail down to the venue, choice of law and choice of neutral should be decided by the parties.

Most people forget the contracting is open to the parties. It seems obvious that most contractors believe that there are only certain things that can go in a contract. Remember, the law of contracts appeals to your creativity. The more creative and forward thinking a party is, the more likely the contractor will have its way when dispute rears its ugly head.

I conjunction with our affiliate attorney Wolfe Law Group, Express Lien intends to release a series of Contracting Toolkits for construction companies. It is our hope that the Toolkits will spark some conversation amongst your company and your employees as to some of the problems you may face or have faced in the past. The Toolkits will provide a vast assortment of issues that face many contractors today, and the remedies that may save your firm endless time and money.

Whether you are in mold remediation and require extensive environmental obligations; whether you work in asbestos and need proper disclosures and releases; whether you lease heavy machinery to subcontractors and need warranty and release language; whether you provide fire damage services and need safety disclosures; or whether you simply need to ensure specific insurance compliance, Wolfe Law Group’s Toolkits can help you find a way to manage your needs.

Please stay tuned for more information. In the meantime, begin to think about what could make your construction process run smoother.

Common Collection Mistakes and Pitfalls

This article is reproduced with permission from Wolfe Law Group, who originally published the article on its Construction Law Blog. The article discusses some of the common mistakes encountered when attempting to collect on a non-paying construction project. Liening, when stripped to its core, is simply a collection practice. A lot of Wolfe Law Group’s analysis that relates to collections in general, also relates to the specific device of construction liens. Therefore, we have chosen to share this information here.

Taking a reactive approach to collections instead of a proactive approach
Sometimes, unfortunately, the best collection procedures and attorneys on earth cannot fix a collections problem. An insolvent company who owes you $100,000.00 may owe you that amount forever.

Good collection procedures, therefore, begin before you are owed any amount of money; they begin at the time of contracting.

“An ounce of prevention is worth a pound of cure” rings true for those seeking to avoid a high receivables account. Starting with a good contract and following through with smart project management can help keep your uncollected accounts low.

Common contract provisions that may help avoid a collection scenario is discussed in a related blog post at:

Getting “Too Deep”
The worst collection problems are usually the most avoidable. Frequently, a construction company will continue dumping materials and resources into a project without compensation.

It’s important to reject the urge to perform your services upon a “promise” to pay. These promises are all too common between contractors, and in most cases, are all too empty as well.

Learn to notice cues from your prime contractors or customers that money is tight, and react by demanding exactly what you’re entitled to: payment. You may fear that the paying party will seek someone else to perform the work, but not only are they likely contractually restricted from doing this, but the substituted company will certainly expect payment as well.

Being Unprepared for a Non-Paying Customer
The longer an account goes unpaid, the less likely you’ll ever collect. One of the biggest mistakes you can make when faced with an overdue account, therefore, is to delay your attempts to collect.

It’s easy to put off attempts to collect when you’re not prepared. However, with a collection procedure in place, you can start collecting easily and automatically as soon as an account becomes overdue.

Collection procedures will keep you proactive, consistent and more successful at collecting on unpaid accounts.

Disorganization
Finally, the most common and avoidable collections mistake is being disorganized, and specifically being incapable to prove what you are owed.

As soon as an account goes into collections, it will go into dispute. The paying party will disagree with the amount of work performed, the quality of the work, its scope, the project’s change orders, etc.

In construction as you likely know, there’s no such thing as a perfect project, and so it’s not difficult for an adversary in collections to dispute the quality of your work because of paint chips or n incorrect doorknob.

Organization and a detailed record of the work you performed will help you avoid these time-consuming and expensive arguments. If you have photographs, time-sheets, job logs, etc., you’ll have the evidence necessary to combat these arguments and keep your overdue account from turning into a settled account.