Mid-Week Review: Great Articles About Mechanic Liens

Believe it or not, the Internet is full of really great news and information about mechanics liens…and it gets fuller by the hour.  Literally.

Here at the Construction Lien Blog we try our best to write posts concerning important updates to mechanic lien laws, or to point out relevant news stories out there that offer lessons about mechanic liens…but it’s so difficult to relay everything!   As such, we’re going to start a new segment here called the “Mid-Week Review.”  Each Wednesday, we’ll post links and short commentary on the law changes, news articles, cases and commentary out there that relate to mechanic liens, preliminary notices, bond claims or miller act claims.

It’s Wednesday now…so here goes:

New Jersey Construction Lien Law Revisions Clear First Hurdle (read)
Thanks to New Jersey’s Cole Scholtz for posting an article on their JD Supra page concerning progress on the state’s consideration of changes to the New Jersey Construction Lien Law (N.J.S.A. 2A:44A-1, et seq.).   It recently passed the NJ Assembly unanimously, and is now moving along to the Senate.   We previously wrote about these pending changes.

Missouri Lien Law Changes Signed Into Law – Effective Nov 1 (read)
Home Builders Association of St. Louis and Eastern Missouri posted an update on their blog that Missouri’s Governor Nixon has signed the Lien Law Changes bill into law this week.    We previously wrote about this bill on our blog here.   The changes take effect on November 1st.

Minnesota Contract Provision Created Lien Waiver – Which Is Invalid (read)
Kraus-Anderson Construction v. Superior Vista LLC was decided by the Minn. Court of Appeals last week, considering a contract provision that impacted a general contractor’s lien rights.   The court found that where the general contractor entered into an agreement with a project’s owner and lenders stating that the contractor agreed “not to . . . assert or file any mechanics’ or materialmans’ lien now or hereafter existing or to sue upon or collect or receive payment of,” until a lender’s claim has been paid in full, the provision created a “de facto” mechanic’s lien waiver, which is a violation of  Minn. Stat. sec. 337.10, subd. 2.  Read the full case opinion here.

What Is The Last Day of Substantial Work in Idaho? (read)
One of our favorite websites – Avvo.com – lets consumers and businesses ask questions to licensed attorneys…for free.   Someone in Idaho just posed this question, which is an important question in determining when a lien is or is not timely.  This question was answered for Idaho specially on Avvo.com, and you can read the question and answer here.

Fewer Mechanic Lien Filings in 2010 – Good or Bad News for Economy? (read)
Louisville, KY’s business journal is reporting that a specific county there has seen a pretty drastic reduction in mechanic lien filings.  Not sure what this says about the rest of the country’s filing stats, but it begs the question in this article – is fewer mechanic liens a good or bad sign for the construction industry?

Massachusetts Mechanic Lien Digest (read)
The Massachusetts Real Estate Blog (operated by Vetstein Law Group) just posted a great primer on mechanic lien law in that state.    You can find more information on Massachusetts mechanic liens and preliminary notices right here on our blog, too, at the Massachusetts tag.

Beauty and Aggravation of the Mechanics Lien (read)
Ned Pelger, P.E. runs an excellent and informative website at ConstructionKnowledget.net, and he recently posted on his blog about this blog and the importance of mechanic liens in general.   First, a big thanks to Ned for the mention.  Second, Ned’s post (and site) contains some great overview information about why liens are important.

Lien Law Changes Approved in Missouri and Effective August 2010

The St. Louis and Eastern Missouri Home Builders Association Blog alerted us to a change in the Missouri Mechanics Lien Law starting August 28, 2010.    The Missouri General Assembly passed House Bill 2058, which “establishes procedures for asserting a mechanic’s lien against certain residential real property.” (Read Bill Summary) (Read Full Text).

What has changed?

Most of the changes affect a claimant’s lien rights on residential property that is being sold.  Presumably, the state legislatures were concerned about innocent purchasers of residential property getting stuck with mechanics liens that weren’t filed at the time of closing, or were filed too near the closing date to get picked up in the title search.   To address this issue, they added the following procedure:

Step 1:   The property owner intended to sell the residential property is to file (and post at the job site) a Notice of Intended Sale, which identifies the closing date for the residential property.

Step 2:   All claimants (subs, contractors, suppliers) who have lien rights must file a “Notice of Rights” at least 5 days before the posted sale date.

Claimants must keep in mind two tricky features of the new rule:  (1)  If the closing date changes, it doesn’t affect when the Notice is due – it’s still due at least 5 days before the posted closing date; and (2) This does not effect the claimant’s lien deadline, before or after filing the Notice of Rights (depending on timing), the lien is still due and must still be separately filed.

The new bill makes other changes as well, which we may post about in the future.   This law goes into effect on August 28, 2010, if it is signed by the governor.   Express Lien’s forms and deadline database has already been updated to accommodate these law changes.

Missouri Staying Strong for Contractors: Recent Litigation Shows Edge Over Owners

In the great Midwest, several states have traditionally been known to have strong, contractor-friendly lien laws. States such as Kansas, Iowa, and especially Missouri have mechanic lien laws which are aimed at preserving contractor rights to the fullest extent possible.

The Midwest Construction Blawg, an internet resource maintained by Dave Seitter, seeks to provide contractors across the states of Nebraska, Kansas, Iowa and Missouri with available resources for their everyday use. One of the most useful resources is Mr. Seitter’s blog which provides up to date case summaries and findings, shaping the lien laws of those states.

Recently, Mr. Seitter has tracked several developing cases over the State of Missouri which pertain to the State’s heavy handed lien laws. In his recent findings, Dave has stated that “Missouri mechanic lien laws continue to [be] liberal in nature – aimed to protect contractors and suppliers.” His remarks were made in response to the case of Glenstone Block Company v. Pebworth, a seminal Missouri case providing insight into the prosecution of mechanic’s liens.

In Glenstone Block, a Missouri Court of Appeals upheld a trial court’s ruling that Missouri’s law provided an “honest mistake” loophole of sorts for contractors recording liens. The recordation of a lien in the State requires a lien statement of the claim, illustrating that the materials or labor were provided on the job site. Though Glenstone’s attachments to its lien were not, in the traditional sense, acceptable, and its claim included work which was not in fact lienable, the Court applied liberal discretion in favor of the contractor.

Citing decades old precedent, the Court stated:

“[S]tatutes creating mechanic’s liens are remedial in nature and should be given a liberal construction so as to effectuate their object and purpose and protect the claims of the mechanics and materialmen. The mechanic’s lien law is to be construed as favorably to the materialman as its terms permit.”

Even more surprising was the Court’s upholding of a trial court decision to award pre-judgment interest to the claimant in the absence of a contractual clause providing the same. Though Missouri law provides such pre-judgment interest where the claimant has a contract with the opposing party, it had not made a determination as to whether lien claimants could recover such interest against homeowners, with which they do not have contracts.

Glenstone determined that lien claimants may in fact be able to recover up to 18% yearly interest on their lien claims. While many other states lack this protection, contractors in Missouri are provided with extra incentive to take the time and file liens on unpaid projects.

Express Lien advises Missouri contractors that lien notice is required for all parties who do not contract with the owner. While a lien can protect your interests, its important that it is formed and filed correctly. Express Lien can assist you with these necessary steps.

Express Lien continues to follow the developing scene in the Midwest, promising to bring you the services you need, to get paid.