Posts Tagged ‘Lien Dangers’

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

How Long Will A Mechanic Lien Cause Havoc? Not Very

On November 12, 2010        

I ran across a blog post this afternoon that clearly summarized an important point:

There is a misconception that once a lien is filed or recorded against a property, it remains there indefinitely, similar to a deed or mortgage.  (Refinance PA Mortgage Blog).

Very well put. The point is absolutely true.  Many, many folks in the construction industry think that mechanic liens will impair a property until the lien is paid.   This is not the case.

In some states – like in California – the mechanic lien is only valid for 90 days after its registration.   Less than three months after you file your California lien, then, the lien dissipates and is no longer affecting the property.

In other states, of course, the lien stays valid longer.  In Washington, the lien is valid for 8 months, and in Louisiana, it is valid for a full year.

The fact that the mechanic lien will expire does not defeat the purpose of the lien.   That’s because before the lien expires, lien claimants can file a lawsuit to “foreclose” on the lien.   When this suit is filed, the lien stays put while the merits of the foreclosure action is determined.

We’ve written about this on two previous occasions, and I recommend you read these articles:

What Happens After You File A Mechanic’s Lien?

Is a Mechanic’s Lien like a Mortgage?  Yes and No.

Posted in:     Mechanic Liens  /  Tags: ,   /   5 Comments

What You Need To Do Immediately After Filing A Construction Lien

On January 7, 2010        

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 Zlien 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 Zlien 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 Zlien, 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.

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

The Risks of Litigating a Washington Construction Lien

On December 22, 2009        

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.

Posted in:     Mechanic Liens  /  Tags: , , , ,   /   3 Comments

The Importance of Knowing When Your Lien Period Begins

On November 23, 2009        

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.

Posted in:     The Legal Corner  /  Tags: , ,   /   1 Comment
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