Posts Tagged ‘Deadlines’

Riddle for Construction Attorneys: Does Lien Clock Start When Materials Leave Supplier or Arrive At Jobsite?

On October 20, 2011        

It’s funny how you’ll go years not thinking of a particular issue, and then run into it two or three times in the same week.  That’s the case for the current riddle about mechanic lien law now confronting me.  And since I can’t find any answers in a survey of mechanic lien cases in the US, I turn to the world of construction attorneys to help.

So, it’s clear that mechanic liens must be filed within a prescribed time period in every state, and it’s clear that the time period starts at some defined marker. While not the case in all states, in many states the lien deadlines begin from when the lien claimant last furnished labor and/or materials to a project.

I’ve written about some nuances presented by this trigger date in the past, mostly related to whether punch list work or warranty work will count as a day of furnishing.  See, for example, “The Importance of Knowing When Your Lien Period Begins” and “Think You Know The Last Date You Delivered Materials or Performed Services?  Think Again.”

A few material suppliers have recently inquired with me as to whether their last date of “furnishing” is the date the materials arrive at the jobsite, or the date when the common carrier takes control of the materials if they are delivered to a loading dock FOB?  (Definition of FOB, by the way, available on Wikipedia at this link).

The concept, of course, is that if the materials are delivered to a common carrier FOB, the title will actually pass from the supplier to the prime contractor / subcontractor / owner at the moment it hits the FOB location.  So, does that mean the materials were “furnished?”

Or, are the materials not really “furnished” because they were merely put into the contractor or owner’s name and not yet furnished to the job site itself?  Liens are, after all, claims against the property and not against any specific individual in a theoretical sense…

I think this is a great question, but I honestly cannot find an answer Riddle for Construction Attorneys: Does Lien Clock Start When Materials Leave Supplier or Arrive At Jobsite? .  What says you?

Posted in:     Mechanic Liens, The Legal Corner  /  Tags: , , , ,   /   7 Comments

Miller Act Claim Statute of Limitations Is Not Extended By Remedial Work – Confirmed by Louisiana Federal District Court

On July 26, 2011        

Thanks to Rob Pitkin (@KCconstrlawyer) for calling my attention through Twitter to a recent Miller Act decision out of Louisiana Eastern District federal court:  Contracting King, Inc. v. Creek Services, LLC.

There is nothing ground breaking about this decision, but it does contain a nice long discussion of the Miller Act’s statute of limitation.  In case you don’t know about the Miller Act’s time limitations, read all about the Miller Act on our blog, or take a look at the court’s explanation here:

An action brought under 40 U.S.C. § 3133, “must be brought no later than one year after the day on which the last of the labor was performed or material was supplied by the person bringing the action.” § 3133(b)(4).

(Remember too that certain parties must also file a Notice of Miller Act Claim within 90 days of last furnishing labor and/or materials).

But knowing this 1-year requirement is only half the battle.  You must also understand what starts the 1-year clock, or in other words, what the law means by “last of the labor was performed or material was supplied.”  Does that include warranty work?  punchlist work?  off-site project close-out work?  The Contracting King court explains:

The majority of circuits that have addressed this issue have held that remedial or corrective work or materials, or inspection of work already completed, falls outside the meaning of ‘labor’ or ‘material’ under [the statute of limitations]. Citing U.S. v. International Fidelity Ins. Co., 200 F.3 456, 459 (6th Cir. 2000).

Posted in:     Miller Act Claims  /  Tags: , ,   /   Leave a comment

FAQ: If We’re Promised Payment, Should We Wait To File A Mechanic’s Lien?

On April 19, 2011        

Short Answer: No. You only have once chance to file a mechanics lien, and once that period expires, your lien rights are gone forever. Promises of payment will not extend your lien period. When unpaid on a construction project, you should file your mechanics lien.

Long Answer: The experience of applying for and receiving payment in the construction industry is unlike the experience in any other industry. Calculating the amount due requires accurate estimations of work performed, and those estimations are forwarded up the contracting chain where, after they are approved, the payments must flow back down the chain. The process is complex, can be time consuming, and as every contractor or suppliers know, money can leak through cracks along the way.

While money is being passed up and down the chain, the window for you to filed a mechanics lien may be closing. In most states, a mechanics lien must be filed within a specific time period after a company last furnishes labor or materials. This period can be as short as 30 or 45 days in some states.

A mechanic lien may cause money flow problems at the project, and when general contractors allow liens against a project, those contractors are frequently considered in breach of their contract with the property owners. As a result, many on a construction project will ask parties to not file a Mechanic’s lien, promising that payment is soon forthcoming.

There are two problems with these promises.

First, you may not be part of the negotiations between a general contractor and the property owner, and thus don’t know whether payment really is forthcoming. The owner may have a reason for holding payment that is not being communicated to you (workmanship flaw, delay, etc.). The promise to pay, in other words, may be an empty one.

Second, the promise will not slow down your state’s mechanic lien deadlines. We wrote a blog post about this in the past called: Promises To Pay Mean Squat To Your Mechanic Lien Deadlines.

To conclude, filing a mechanic lien is a great collections tool; check out these blog postings about why liening is important. If you’re promised payment on a construction project, it may be worth waiting a little while before filing a lien, but be very cautious about your lien deadline, since promises to pay will not stop the deadline from expiring. And once your lien deadline goes by, so do your liens.

Posted in:     FAQs, Mechanic Liens  /  Tags:   /   Leave a comment

With Lien Deadlines – The Devil Is In The Details

On March 4, 2011        

Last year, we wrote a blog post titled: Think You Know The Last Date You Delivered Materials or Performed Services? Think Again. The point of the post addressed this complex issue:

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?

While this question may seem simple on the surface, leave it to the court system and lawyers to muck it all up.  Depending on the project’s location, the lien period may begin when labor and/or materials are last furnished, or at the end of the entire project. Even more specific – and perhaps, more confusing – the lien period may begin when the work is substantially complete or when its finally complete. Sometimes, punchlist or warranty work will extend the lien period, and sometimes it won’t.

The Michigan Court of Appeals just released an opinion that addresses this question in that state. Commenting on Michigan’s Construction Lien Act, the court of appeals confirmed that the 90-day filing period does not get extended when a contractor provides repair or warranty work to the project.

Here is the rule in the court’s own words, with the most critical language highlighted in bold print:

According to MCL 570.1111(1) and MCL 570.1104(5), a repair completed pursuant to a contract is an “improvement” and the last furnishing of an improvement commences the 90-day filing period. Thus, for example, where a contractor is specifically hired to repair an aspect of the property, such as a nonworking door or a leaky roof, that contractor is making an “improvement” to the property for which the contractor is entitled to claim a lien. However, as this Court held, in Woodman v Walter, 204 Mich App 68; 514 NW2d 190 (1994), the performance of “warranty work” to correct deficiencies in work performed, or defects in fixtures installed, by the contractor does not constitute an “improvement” under the Construction Lien Act because “[i]t does not confer any value beyond the value furnished at the time the initial installation work was completed.” Id. at 69. Therefore, in such situations, “[t]he ninety-day filing period commences on the date of completion of the original installation work and is not extended by the later performance of warranty work.” Id. at 70. The distinguishing factor between a repair constituting an improvement to the real property, which allows for the commencement of the 90-day filing period, and warranty work, which does not allow for the recommencement of the 90-day filing period, is whether the work in question conferred any value beyond the value furnished by the completion of the original work.

The case is Stock Building Supply, LLC v. Parsley Homes of Mazuchet Harbor, LLC, and you can read the full-text of the opinion by clicking on the case name.  Also, check out an article by Walter, Norcross & Judd about the case posted on JDSupra.

Posted in:     Lien Law Alerts, Mechanic Liens  /  Tags: , ,   /   Leave a comment

Promises To Pay Mean Squat To Your Lien Deadlines

On October 18, 2010        

Promises To Pay Mean Squat To Your Lien DeadlinesOwed money on a construction project, but weary about filing a mechanics lien because the owner or contractor is promising to pay?

Well, as the promise to pay “tomorrow,” turns into “Friday,” and turns into “next week,” the time period available for you to file a mechanics lien continues to tick. And in some instances, the time periods can be quite short.

It’s very important for contractors and suppliers to realize that these promises to pay do not extend the lien period. You only have one shot to file your mechanic lien, and once the window closes, it will never re-open.

So, while a promise to make a payment is a significant comfort (it’s better than an outright refusal to pay), a business should be weary about relying on this promise and foregoing its right to lien. The lien protections will disappear…and your client’s promises? Who knows.

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Posted in:     Lien Management, Mechanic Liens  /  Tags:   /   1 Comment
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