Posts Tagged ‘Lien Filing’

What Costs Can I Include in a Mechanics Lien?

On May 25, 2010        

I practice law, and focus on construction law, in the states of Washington, Oregon and Louisiana.    Whenever folks are looking to put together a mechanics lien, this is a question that is very frequently asked.  (Previously wrote about it here).

While the question seems quite simple, it’s actually a bit complicated.   And it’s a very sensitive question to boot.   The answer differs depending on which state’s law applies, and some states are more sensitive to the topic than others.   In some states, if the lien amount is listed incorrectly, or includes costs not allowed under law, it could invalidate the entire lien.

In other words, tread very carefully.

So, what is this question asking anyway?   Well, folks are typically looking to include two different costs into the amount of its lien.   First, the cost of filing the lien itself.  This may be the cost of an attorney, the filing fees with the county, or the cost of our service ($295).   Second is charged interest on the unpaid account.  Sometimes this is the state’s judicial interest, or interest allowed by contract.

Let me make something very clear:  This is an extraordinarily complicated question to answer on a general basis.  You should consult with an attorney to figure out exactly what costs you can and should and may include in your lien.

However, let me take a crack at trying to answer this question generally.

In Louisiana, Washington and Oregon, if someone wants a general rule, I always advise my clients to simply file the lien for the amount that is due under the contract, without any of the extras.  I advise this unless there is specific circumstances and law that allow them to do the contrary, and they know the law.  I advise this simply in an abundance of caution for these two reasons:

1) If you include it (the extra costs), and you cannot include it, it could invalidate the lien; and

2) if you do not include, it doesn’t mean you can’t collect it. It just means its not part of your lien, and you don’t have the lien against those particular funds (you still have any legal or contractual right to it).

Posted in:     Mechanic Liens, The Legal Corner  /  Tags: , , , , ,   /   5 Comments

Washington Law Protects Contractors from Dangers of Frivolous Lien Statute

On July 7, 2009        

A quick word from the construction law case files:

The Court of Appeals, Division 1, out in Washington state, has refused to deem a construction lien as frivolous based upon the complexity of the construction contract at dispute. The court in SD Deacon Corp. of Washington v. Gaston Bros. Excavating, Inc., decided back in May of this year, that the state’s “frivilous lien” statute, coded under RCW 60.04.081, requires a more in-depth analysis of factual circumstances surrounding the substance of the contract and the lien.

The court in SD Deacon further reasoned that a court can only evaluate in a frivolous lien proceeding are, by way of example, whether the lien was properly filed, signed by the proper party, properly served, and meets the statutory form requirements. Issues of substance of the lien (i.e. the contract amount, amount due or change orders) are issues which require more substantive proceedings to analyze factual circumstances.

Because the frivolous lien procedure codified in RCW 60.04.081 does not provide for such proceedings, a party seeking to extinguish a lien filing will be unsuccessful in attempting to show to the court that the lien was frivolous.

Essentially, the court’s new rule is that the “lien must be so devoid of merit that the claim has no possibility of succeeding” and that “there must be findings supporting the conclusion that the lien is invalid beyond legitimate dispute.”

The Court’s ruling provides some hope for “fringe” contractors who’s claims hold some element of uncertainty, but who desperately need the security provided by a lien in order to collect payment from an uphill contractor or owner.

The frivolous lien statute was enacted to prevent fraudulent claims against contractors, by awarding successful parties attorneys fees. The ruling in the case shows that the award of fees will not be granted unless your lien fails to meet statutory form requirements.

Zlien, Inc. has the knowledge and experience to meet these stringent requirements. Let us help you ensure your lien’s success!

Posted in:     The Legal Corner  /  Tags: , , , , , ,   /   Leave a comment

What Are the Chances of Getting Paid After Filing A Lien?

On June 3, 2009        

In today’s economic climate, payment problems are plaguing construction projects.

Just recently, a prospective customer called us and asked:  what are the chances of getting paid after filing a lien?

Unfortunately, it’s impossible to provide a success percentage because each situation is different.

However, mechanics liens are far and away one of the most effective ways to secure payment for your company.

To put it simply then, we can only point out the obvious in response to this question.   The obvious answer is that filing a mechanics lien is a first, and oftentimes necessary, step to get paid on a problem project.

Without a recorded lien, your company is simply a bystander to the project’s payment obligations, and is pinning its company’s rights to payment on good fortune.

Filing a construction lien isn’t extraordinarily expensive, and it’s a step in the right direction for your organization.  Get to know the lien deadlines and laws for the state where you performed work, and then make a move to protect your company by securing your lien.

File a lien today and get payment to come your way!  Lien SMARTER…..to get paid.

Posted in:     Collection Laws & Tips  /  Tags: , ,   /   Leave a comment

What Costs / Labor To Include In Your Lien?

On February 15, 2009        

It’s been an interesting week on the web as it relates to mechanic’s liens, as I’ve run across a number of web posts about the types of services that can be included in a lien.

Let’s look at the matter theoretically.   Construction lien laws are normally drafted to protect contractors, who invest labor and expense into the improvement of a property.  However, since the laws also balance the property rights of persons or organizations, each state certainly does something to qualify what types of labor and expense can be represented in a lien, and which cannot.

The question here, therefore, is quite simple:   have you performed work or provided materials that can be the subject of a lien?

It’s one of the most important questions a contractor or supplier can ask when determining how to best collect on a non-paying account or project.   If you work does not qualify for a lien, for example, there is no need to even consider if notice is required and other lien filing requirements.

It’s important to consult the laws or your particular state to determine what type of materials and labor can be the subject of a lien, and which cannot.  However, two recently decided cases in Virginia and Kentucky are revealing of some general principals that are followed by most states.  The principal is essentially this:  you can only lien for labor and materials that actually go into improving the property.

What does this exclude?

In Virginia, Virginia Lawyers Weekly reports that a Hanover County Circuit Court invalidated a mechanic’s lien filed by a contractor that incurred costs in anticipation of construction of a steel building, but did not provide labor or materials actually employed in construction of the building.

The case is captioned Dallan Construction Co. v. Super Structures General Contractors, Inc, and can be downloaded here.

Similarly, in Kentucky, the Kentucky Court of Appeals held that “mowing, trimming, edging and street cleaning” did not “permanently improve the property,” and therefore, a mechanics lien was not allowed to be filed for the services provided.  That case is discussed at the South Carolina Community Association Law Blog, and is captioned Steeplechase Subdivision Homeowners Association, Inc. v. Thomas, Ky. Ct. App. 2008.

Posted in:     Mechanic Liens, The Legal Corner  /  Tags: , , , , , , , ,   /   4 Comments

Virginia’s Interesting 150 Day Rule

On January 1, 2009        

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.

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