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.

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.

Step-By-Step Guide on Using Lien Pilot to Manage Lien and NTO Deadlines

Do you manually input all notice and lien deadlines into Outlook or some other calendaring system? Are you constantly trying to figure out which deadlines or requirements apply to your construction project?  Express Lien’s lien pilot helps you manage the lien and notice requirements applicable to your construction project.

It’s easy. You input your project information, and it alerts you to what is due, and when.

This video is a screen-cast of the Lien Pilot system that shows you how to use our system (free) to Lien Smarter, and Get Paid.

Filing A Lien Is A Discipline, and Not A Knee-Jerk Reaction

You’re a contractor, subcontractor or material supplier, and you’re unpaid on a project.   Instantly, your thoughts focus on the mechanics lien concept.  It’s the natural law in the construction industry.

Now, I’m the first to tell you that filing a mechanics lien is one of the best methods of collecting construction debt, and it’s certainly important to think about filing a construction lien as soon as you’re faced with a non-paying customer. But, being prepared and qualified to file a lien takes discipline.

If we’ve said it once, we’ve said it a thousand times….lien laws are complex and hyper-technical.   Across the country, lien laws protect contractors and suppliers by providing them the right to lien non-paying projects.   Likewise, though, the laws protect property owners to prevent owners from paying for services twice, or having an improper lien filed against its property.

So, why is filing a mechanics lien a discipline?   Because it starts the moment you sign your contract.

• In many (not all) states, you can actually waive your right to lien before ever providing any services or materials.  If you’re in one of these states, it’s important to review your contract for this type of waiver language.

• Many states require contractors and/or suppliers to deliver a Preliminary Notice to the property owner (“NTO”) before furnishing labor or materials.  Failure to deliver notice, and to deliver it properly, may result in the forfeiting of lien rights.

• Many states require contractors and/or suppliers to deliver a “Notice of Intent to Lien” or similar instrument a certain number of days after accounts receivables become due, or a certain number of days before filing a lien.   Failure to deliver this notice, and to deliver it properly, may result in the forfeiting of lien rights.   (Read about the differences between Preliminary Notices and Notices of Intent here).

• Liens must be filed within a certain time period, and each state is absolutely different.   (Get state-by-state lien deadlines here).   Liens must be filed timely, or they are likely void.

Express Lien Helps Your Company Be Disciplined About Liens

Express Lien is more than a simple notice and lien filing company (although we’re darn good at this, too).  We were founded to help clear the air concerning the complex lien and notice requirements across the nation.

Here’s how we do it:

• Our Lien Wizard guides you through the notice and lien requirements associated with your role in the project, and the state the project is located.   You tell the Wizard some key information, and it pulls the notice and lien requirements from its database.   From there, you can order the products / documents that are relevant to what you and the law requires.  (Watch a Video on how our Lien Wizard Guides You Through Notice and Lien Requirements).

• We provide you with Free Lien Law Punchlists.   This is a summary of the basic notice and lien requirements of each state.

• The Lien Pilot helps you calculate project deadlines.   For free, you can manage your project data, contacts and important dates.   The Lien Pilot calculates applicable deadlines and filing requirements, and prompts you when they are approaching.

• We do the work for you.   If you don’t want to prepare and send the documents out yourself, or if you just have too many to send and want to focus on running your construction or supply business…Express Lien will do all the work for you.    For notices, we’ll print them, mail them, track them, and store proof of their delivery on our secure servers.  For liens and other filed documents, we’ll prepare them, have them filed, and deliver notice to the project’s relevant contacts.

The Importance of Knowing When Your Lien Period Begins

In nearly every state, the construction lien statutes require that claimants record their mechanics lien withing a certain “lien period.”    The start of the lien period has a specific beginning date, and the lien period usually extends for a period of days or months from this start date.   Mechanic liens filed outside the lien period are typically unenforceable.

Knowing when the end of the lien period arrives is important, but perhaps not as important as knowing when the lien period begins.   After all, without knowing the start date, it’ll be impossible for you to calculate the end date.

In most states, the lien period will begin upon the “completion” of the project as a whole, the “completion” of your particular scope of work, or the “last date” you furnished labor and/or materials.

While this may sound like a straight-forward requirement, it is not always so.  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.

The problem here is clear:  Sometimes, owners or other contractors hold progress payments until the warranty or punch list work is complete.    In theory, your lien period could expire before you’re ever “unpaid.”

Knowing when your lien period begins is critical.  And sometimes, to preserve your lien rights, you may find it necessary to file a lien before the project is finally complete, and before payment has become a major point of contention. (Read two articles on this issue here:   Re: California law and Re: Ohio law).

Our free Lien Pilot helps your company calculate and control lien deadlines.   Once you put in the critical date (i.e. date last labor / materials furnished), the Pilot will calculate the due date for your lien in the applicable state and on the applicable project.  However, for this calculation to be accurate, it’s important to know when that date is.

Every state’s law is different, and so you should consult the law in your state to determine exactly when your lien period begins.

The Wizard Makes Ordering the Right Document at the Right Time Easy

Express Lien’s new Lien Wizard makes it easier than ever for contractors and suppliers to have preliminary notices, notices of intent to lien, mechanics liens and even lien releases processed.

It’s this simple:

1. You put in your project information (state, your role, project type);
2. The Wizard tells you the applicable notice requirements and lien deadlines
3. You select from the list of associated documents

Express Lien’s database of lien and notice deadlines and requirements is more extensive and accurate than any other database in the country.

Take a look at these screen shots to see how the first 2 screens of the Wizard works:

Step 1: Inputting Your Project Information

The first step is easy.    The Wizard asks four basic questions about your project – the state where you are working,  your role in the project, who hired you, and what the type of project.

Lien laws vary state-by-state, but they also vary depending on those other three factors.   It is common for states to impose heightens notice requirements for residential projects…and oftentimes, notices are required only from subcontractor and those without a contract with the owner (rather than from everyone).

Step 2:  Getting Applicable Notice and Lien Requirements for your project

With the small amount of information you provided, the Wizard pulls and displays from its database only the information, requirements and deadlines that are relevant to your project.

Once you’ve read over the notice and lien requirements, you’ll be ready to choose the type of document you want to file or send.   Even this component of the Wizard is tailored to your project, as only the documents relevant to you and your project will display.

Watch It On Video

Screen shots just not doing it for you?

Take a walk-through of these first two steps on video:

And remember, a database is just a database.   It has limitations.   We feel great about our product and its ability to display to you the relevant laws, notice requirements and lien deadlines.   However, there will never be a substitute for a real live attorney reviewing your specific project.    Express Lien is not a law firm.

Virginia’s Payment Chain & Why It’s Important to Lien Early

By statute, the deadline for contractors to file mechanics liens on projects in Virgina is 90 days from the last providing of services or materials.  However, because of Virginia’s unique “payment chain,”  subs and suppliers should file their liens as soon as problems become apparent.

The “payment chain” rules can be quite complex, but its theory is simple:  The property owner must pay for the project only once.

In other words, if the owner pays the general contractor for work before a lien is filed, the lien against the property owner will fail.

So while the Virginia statues provide contractors with 90 days to file their liens, the practical deadline for filing a subcontractor’s mechanic’s lien is before the GC is paid.

What This Means
In previous posts (here, here and here), we’ve written about some mistakes contractors make when collecting on non-paying projects.  Over and over again, it seems contractors wait too long to file their liens, accept promises of future payments, and fear filing a mechanic’s lien to avoid staining relationships.

While in some states a small amount of delay is bearable, the “payment chain” in Virginia makes it deadly.

Across the United States, the best way to protect yourself from a non-paying project is to lien, and lien early.  The “payment chain” in Virginia makes this more the case.

Understanding the Payment Chain
While the theory behind the “payment chain” is simple, as with any other legal concept, the details are more complex.

Here are some questions that are often asked concerning this concept:  What if the property owner partially pays the GC?  How does this actually function in practice?   How do I know whether the owner paid the GC?  What rights do I have if I lien too late?

Fullerton & Knowles, a construction law firm in Virginia, Maryland, Pennsylvania and Wash. D.C. published a Construction Law Survival Manual on its website with answers to these questions.  You can find the particular discussion of the “Payment Chain” at this link.

Things You Can Do To Prevent Payment Chain Problems
The “payment chain” rules apply by default on every construction project.  However, there are features within the Virginia Code that subcontractors can use to bypass these rules.

The Code of Virginia’s Section 43-11 provides that by sending certain notices to the property owner and/or general contractor, the subcontractor can protect itself from a “defense of payment.”   In other words, by notifying the owner and contractor that certain materials or services were provided, the subcontractor or supplier puts the upper tier parties on notice that they deserve payment.

The require notices do require some administrative expense, however, as the code requires that 2 notices are actually sent.  Fuller & Knowles describe the notices and their benefits on its website, as follows:

First, a “Pre-registration” notice is sent to the owner and/or the general contractor before labor and materials are supplied to the project. After labor or materials are supplied, the claimant must provide a second notice with a statement of account and affidavit. The claimant supplying a subcontractor can elect to send the notice only to the general contractor. This will not obligate the owner, but will still obligate the general contractor. The potential benefits are:

1. The Section 43-11 notice can partially take the claimant out of the defense of payment system.  The owner and upstream contractors become directly obligated for payment, to the extent they are holding money at the time they receive the second notice and statement of account. The owner and general contractor essentially provide an involuntary guarantee or joint check agreement after receipt of the second notice.
2. A Section 43-11 notice will probably also provide priority over other mechanic’s lien claimants. In a “partial defense of payment” situation, the 43-11 notice claimant can take the entire fund held by the owner and general contractor. Other mechanic’s lien claimants will receive nothing until the 43-11 claimant is paid in full.
3. There is also an extended deadline for the Section 43-11 claim second notice. A claimant may still have Section 43-11 rights, even after the deadline for mechanic’s lien filing. A claimant probably also still has Section 43-11 rights, even if the claimant has waived lien rights.
4. It is way to avoid problems and legal fees altogether. If the owner and general contractor know they may become obligated, the claimant is likely to receive payment without legal assistance. The owner and general contractor are aware of the players on the project and are motivated to see payments properly applied.

Express Lien Can Help
Express Lien files mechanics liens in the State of Virginia, as we also prepare and send all Virginia construction lien notices.

Fuller & Knowles state that the 43-11 notices are underutilized by contractors because of administrative expense.   Quite frankly, its also because the notices are confusing, and in the middle of operating your construction company it’s difficult to keep up with sending, tracking and managing these notices.

Express Lien solves this problem.

You give us the project data, and our propriety web-based software recommends certain notices and documents, and with the click on a button we’ll prepare these documents, send them for you, track them, and manage them through your client login panel.

Give us a shot, and let us show you how to Lien Smarter.

Virginia’s Interesting 150 Day Rule

In most states, a contractor only has 1 lien deadline of concern:  when the lien must be filed.  In Virginia, however, contractors must juggle two lien deadlines.

First, like other states, Virginia has a regular lien filing time requirement.  All liens must be filed within 90 days from when labor and services were last performed by the contractor.

Unlike other states, however, Virginia has an interesting second deadline, referred to in the state as the “150 day rule.”

From the last day of work, the claimant must count backwards 150 days.   Generally speaking, a contractor is not allowed to include any labor or materials supplied outside this window in its mechanics lien.

While the 150-day rule does not apply to retainage funds or sums not yet due because of a “pay when paid” clause, it usually applies otherwise, and will invalidate a lien if it includes sums due not within this 150-day window.

As mentioned in a previous post about the “payment chain” in Virginia,  an arguable third deadline of concern in that state, subcontractors and suppliers in Virginia have extra motivation for filing liens immediately upon non-payment.   The 150-day rule in Virginia is even further cause.

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

New Georgia Lien Laws Go In Effect April 2009

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

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

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

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

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

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

General Changes:

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

Changes that Benefit Suppliers or Subcontractors

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

Changes that Benefit General Contractors and Homebuilders

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

Changes that Benefit Property Owners

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

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

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

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

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