Avvo Legal Guides on Oregon and Louisiana Liens Published

Want a step-by-step guide on how to file construction or mechanic liens in Louisiana or Oregon?   Your call has been answered this weekend with the publication of Avvo Legal Guides on both these subjects, which you can view here:

How to File a Construction Lien in Oregon

How to File a Construction Lien in Louisiana

These two legal guides offer plain english explanations on how to prepare and file a construction lien in either of these states.    After reading the guide, you can visit Express Lien’s free Lien Punchlist & Forms center, where you can download more information about on the subject, and even download free PDF-fillable lien forms.

Want to dot your i’s and cross your t’s, and rest easy knowing your document will get filed?   Consider using the Express Lien service to prepare your lien, file and serve it, and then store it online for your records.

The two above-listed legal guides were written and published by Scott Wolfe Jr., who is the founder of Express Lien and the company’s President.   Separate from Express Lien, Scott is a practicing construction attorney in Washington, Oregon and Louisiana, with his construction practice the Wolfe Law Group.

He previously published a similar legal article on Avvo.com about filing construction liens in Washington, which you can read here.

Good Looking Dogs

As many of our clients and friends are aware, Express Lien is a pet friendly workplace, and Betsey Rue (our 8 month old French Bulldog) runs the show.

Today Betsey Rue, and her best friend Sam (office neighbor Wolfe Law Group’s 3 year old Bichon Frise) were featured on WomansDay.com as the Cutest Pets of the Day. Check it out.

We invite our employees to bring their own pets to the office. Betsey Rue and Sam are supervised in the New Orleans office by Oscar (the 3 year old French Bulldog of WLG founder Scott Wolfe).

Mechanics Lien – Is it like a Mortgage? Yes and No.

In most states, contractors and suppliers can file “Mechanics Liens,” whereby they acquire a privilege against the construction jobsite’s property.    The liens usually work like a mortgage on the property, such that it must be satisfied before a property is sold, transferred or refinanced.

While liens act a lot like mortgages, they certainly are not identical to mortgage instruments.

First, in most states, mechanics liens themselves expire.    Most states require that the contractor file a lawsuit to “enforce” or “foreclose” on the lien within a certain time period (sometimes short), to extend the life and effectiveness of a lien.   Here are some example timeframes:

In Louisiana, liens must be enforced within 1 year from filing.  In Washington, lien foreclosure is due within 8 months of filing.  In California, you must foreclose within just 90 days of filing!

Second, depending on the state, liens are given more or less “priority.”    Lien priority effects the order the instruments are paid in the event of a property sale or foreclosure.   In other words, if a property is foreclosed upon but sold for an amount less then the sum of all liens, and there are two mortgages and a mechanics lien on record, who gets paid and who doesn’t?

The answer to this question depends on your state.   In Louisiana and Washington, liens take a junior priority to mortgages and similar instruments.  In other states, however, the rules are or, depending on circumstances, can be different.    In Virginia, mechanics liens have priority over construction loan mortgages.   In Minnesota, depending on when the respective instruments are filed, a mechanics lien can take priority over mortgage-type instruments.

The North Carolina Mechanics Lien Scheme

Like most states, North Carolina has laws allowing those who provide labor or materials or rental equipment to a construction project to “lien” the project in the event of non-payment.

While the general availability of filing a lien is a simple rule in North Carolina, it is more complex to determine how a party can file in the state.   The manner of filing a lien in North Carolina depends on the claimant’s role in the project.    We take a shot at explaining the North Carolina lien scheme in this post, and compare it to how liens are filed in other states like Washington and Louisiana.

Those Who Contract With The Owner:

Those who contract with the “owner” on a North Carolina construction project, and who are not paid for labor or materials, may file a “traditional” mechanics lien with the county recorder.

The lien must be filed within 120 days from the last date labor or materials are furnished to the project, and must follow other formalities required by statute.   These formalities are set forth in N.C. Gen. Stat. § 44A-12, which also provides a form to be used when filing.

This lien actually attaches to the property at controversy, affecting the property’s title.

Those Who Do Not Contract With The Owner:

For those who do not contract with the property owner, the North Carolina lien scheme offers two possible remedies.

First, a “Notice of Claim of Lien Upon Funds” is something that is delivered – and not filed – to parties “up the contract chain.”   This requires those up the chain to put a freeze on funds that may be due the claiming subcontractor.    If a Notice of Claim of Lien Upon Funds is delivered to the Owner, and the Owner thereafter disburses funds to the general contractor, the claimant can then escalate its notice into an actual lien.

Second, a “Subrogation Lien” is filed by a sub or lower-tier sub within 120 days from when the general contractor last performs work, and may be filed only if a Notice of Claim Upon Funds was delivered to the Owner and some amount of money is due to the GC from the Owner.

Both of these lien remedies are discussed below in this post.

Claim of Lien Upon Funds

The rules are a bit different for those parties to a construction project who do not contract with the owner.  Who are these parties?  Subcontractors, Second-Tier contractors and suppliers, Third-Tier contractors and suppliers, etc.

Unlike parties who contract with the owner (i.e. generals), lower tier contractors cannot file a ‘traditional’ lien.   Instead, these contractors protect their right to payment by serving a “Notice of Claim of Lien Upon Funds.”   The requirements for this notice is set forth in N.C. Gen. Stat. § 44A-19.

This notice does not affect a property’s title, and it is not filed with the county records.  Instead, it is served upon every party “up the chain” from the claimant.

So, for example, a first tier subcontractor would deliver notice of claim to the owner and the general contractor.

While a traditional lien provides a claimant a lien on the property, this type of lien provides the claimant only with a lien on the funds at controversy.   After receipt of the notice, if the owner or other party makes payments down the construction chain with funds that are liened (i.e. eventually belong to the claimant), the party who improperly made the payment will be personally liable to the claimant for payment.

If the party is the owner, the claimant may then file its notice with the country recorder.

Lien Through Subrogation

In addition to the “Notice of Claim of Lien Upon Funds,” subcontractors and lower-tiered subcontractors can also file a mechanic’s lien against the property through “subrogation” of the general contractors right to lien.

With this type of lien, the lien claimant must:  (1) have served a Notice of Claim of Lien Upon Funds to the property owner; and (2) the general contractor must be owed money from the owner.    The subrogation lien must be filed within 120 days from when the general contractor last furnished labor and/or materials to the project.

Comparing with Other States:  Louisiana and Washington

One of the problems with lien statutes across the country is balancing the rights of laborers and materialmen to get paid with the interests in protecting a property owner from being required to pay for the services twice, and to have its property title illegiatemly affected.

Different states balance these issues differently.

In Washington, lower-tiered contractors are required to provide the owner with notices prior to filing a lien.

In Louisiana, there is a focus on the public records, allowing owners to file notices in the public records that affect the interests of lien claimants.

North Carolina balances these issues differently, essentially allowing only those who contract with the owner to immediately affect a property owner’s title.  If the contract is not with the owner, the lien at first only affects the funds.  If the parties continue to refuse the claimant payment, the problem grows, and more parties become personally liable for the debt and the property’s title is at stake.

Express Lien’s Services:

Express Lien prepares, files and serves both “Liens’ and “Notice of Claim of Lien Upon Funds” in North Carolina.

With regard to “Liens,” filed by those who contract with the property owner, there is a $295.00 flat charge which includes the document preparation, filing and service upon interested parties.   Also, liens that are recorded by subs and those who did not contract with the owner are also $295.00.

With regard to “Notice of Claim of Lien Upon Funds,” which are delivered and not filed, these are considered a notice, and are charged our low flat fee for preparing and delivering notices.

Get Started Now.

How to Challenge an Improperly Filed Construction Lien

At Express Lien, we’re usually helping companies get construction liens on the books.   However, sometimes, your company may actually require the opposite:  getting an improperly filed construction lien off the books.

Co-founder of Express Lien, Inc., Scott Wolfe, is a construction attorney in Seattle, WA and New Orleans, LA, and he recently published two legal guides on the attorney rating website, Avvo.com.   The two articles discuss how to dispute a construction lien in Louisiana and Washington state.

Here are links to the articles:

• How To Dispute A Construction Lien in Louisiana
• How To Dispute a Construction Lien in Washington State

The article even points readers to a free template letter demanding the cancellation of an improperly filed lien.

What makes a lien invalid?  Read about common filing mistakes right here on the construction lien blog.

And avoid making common filing errors by having Express Lien prepare and file your document.

Lien Smarter…Get Paid.

Pro-Owner ‘Trick’ in the Delaware & Pro-Contractor ‘Trick’ in the Louisiana Lien Statutes

Here and there, there are statutes within a state’s lien laws that allow a property owner to place a duty of performance on subcontractors and contractors.

When representing property owners, savvy construction attorneys will recommend that these statutes be utilized to protect the owner from future liens.

An example of these types of statutes can be found in Delaware, under the Code Title 25, Section ¶2705.  The statute provides simply as follows:

The owner of any structure built, repaired or altered by any contractor or subcontractor may require such contractor or subcontractor from time to time to furnish and submit to him a complete and accurate list in writing of all persons who have furnished labor or material, or both, in connection therewith, and who may be entitled to avail themselves of the provisions of this chapter. Should any such contractor or subcontractor fail to furnish such list for 10 days after demand made therefor by such owner, he shall be entitled to receive no further payments from the owner until such list be furnished and shall not be entitled to avail himself of any of the provisions of this chapter.

What does this mean?

Well, quite simply, if an owner makes this “demand” in writing, the contractor or subcontractor ought to immediately comply or risk losing the ability to file a lien.

Unlike Delaware, Louisiana has a reverse requirement…allowing the contractor or subcontractor to burden the property owner with future performance with the risk of penalty for non-compliance.

La. R.S. 9:4822(K) provides that any person with lien rights may give a certain notice to the property owner, and if provided properly, the owner will be required to notify that person within 3 days of the filing of a notice of termination, the substantial completion or the abandonement of the work.  Of course, these events trigger time requirements under the lien statute.

What happens when an owner fails to provide this notice?   They are liable for “all costs and attorney’s fees for the establishment and the enforcement of the claim.”

Working on a private project in either state?  Both the Delaware and Louisiana notice can be ordered from Express Lien today.

Illinois Contemplating Amendment to Mechanics Lien Statute

It appears that the Illinois legislature is contemplating an amendment to its mechanic’s lien statute, as reported last week by the informative Illinois Construction Law Blog.  According to that blog post, the guts of the amendment would require contractors (non-subs) to given written notice on owner-occupied single family residences prior to filing a lien.

According to the blog, this requirement already exists for subcontractors, and the purpose of the amendment would be to extend the requirement to contractors who contract directly with the property owner.

The Illinois Construction Law Blog does weigh the pros and cons of the bill.

In their discussion, they mention that the bill makes sense because homeowners cannot be considered as sophisticated as commercial property developers.

On the other hand, however, since the bill would only require notice before filing the lien, the blog states that notice could be given the day before the lien is filed.  Of this timeframe, the author asks "what protection does that afford the home-owner?"

A similar requirement exists in Louisiana, according to Wolfe Law Group’s Construction Law Monitor. They describe the requirement as follows:

Notice is required whenever you are working on a residential project, and you contract directly with the owner of the property, who also lives in the residence.

The type of notice required is called the “Notice of Lien Rights.”

The Notice of Lien Rights to be sent to owners in residential projects is very important, because the law requires that it be provided before work begins, and not as a condition to your construction contract.

Read full article here.

The difference between the Louisiana requirement and the requiremnet in Illinois, however, is that in Louisiana notice is required before work begins, and in Illinois, its required only before filing the lien.  Perhaps the goals of the Illinois legislature would be better achieved by a rule similar to that of Louisiana’s?

Nevertheless, for the time being, the requirement does not exist at all for contractors in Illinois, and is only a twinkle in the legislature’s eye.  You can track the progress of the bill at this link.

Caution: Lien Laws in are Hyper-Technical

In most states, the liens laws are hyper-technical.   This means that the laws have many requirements, and that courts strictly construe the rules against the party filing construction liens.

This is true for nearly every state.

While laws across the nation provide lien rights to those in the construction industry, because of the power of these instruments most states require that the liens be filed in exact accordance with the law to be valid.

This is especially the case with regard to the required contents of a lien.

Each state has different requirements for what must be stated within a mechanic’s lien, and how that information must be stated.

Every state, for example, will require the claimant to identify the property being liened.  In Louisiana, Washington and Virginia, however, the law requires that the lien use the legal property description and not simply a municipal address.   The proper identification of property can be so important we’ve written an entire blog post about it here.

In Virginia, the laws are even stricter.   Because the Virginia lien law is land record based, the claimant is expected to perform a complete title search to acquire the exact legal owner and legal property description.   A lien that does not lien the exact owner, at the exact property for the exact amount due, can be deemed invalid by courts.

Express Lien does this leg work for your company, helping your company properly prepare these important legal forms.   Our professional legal document preparers are familiar with the lien and notice forms in your state, and can help your company Lien Smarter.

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.

Express Lien Reconized in 2008 Innovator of the Year Program

The eighth annual CityBusiness Innovator of the Year awarded Express Lien for its innovative way to revolutionize the way people file liens. This program acknowledges companies and individuals who have introduced an innovative product, service or concept that’s changing the marketplace and setting the pace for our region’s future.

Express Lien was recognized at the September 26th luncheon at the Sheraton hotel on Canal Street, New Orleans. A special Innovator of the Year insert will run in the September 29th issue of CityBusiness. All employees of Express Lien attended the luncheon and were ecstatic to receive the award that offers its customers a more affordable and efficient way to file construction liens.

To read the story that highlights Express Lien’s success click here.