Long Answer:  It’s extremely common for folks to not quite understand the differences between preliminary notices and notices of intent to lien; and further, to not quite understand when a state requires notices of intent to be sent.

Generally speaking, the states that require a “Notice of Intent to Lien” are in the minority. We wrote a blog post listing out the states that require notices and when these notices must be filed.  While every state is a little different, the “Notice of Intent to Lien” states typically require the lien claimant to notify the property owner 10-30 days before moving forward to file the lien.

However, the majority of states do not have any such requirement, and those unpaid on a construction project can proceed to file their lien without ever sending a “notice of intent” or warning anyone immediately before filing.  You can check out a summary of the 50-State Mechanic Lien Laws at Zlien.com/Lien-Law/ to get details about the requirements in your state.  Also, if you want to order a mechanics lien or notice of intent, you can do so on the LienWizard.

As such, it was nice to see a post this last week from the Mid-America Association of Real Estate Investors, who focused on how the new law may affect this group:

One of the problems cited by the blog post is something that is a problem with all of these laws:   they create redundancy and confusion.

Last week, in response to our blog post “Great Summary of Missouri Lien Law Changes from MoLien.com,” someone named Kim, a real estate investor, commented that the new requirements “seems really cumbersome and unfair to everyone.”

She makes an excellent point.   And really, it’s not only a good point with regard to the Missouri law, but with every one of these complex lien and notice requirements.    They are just plain confusing.   Here is part of my response to her comment:

Kim calls out for help in her comment, asking to connect with folks who may want to pressure the legislature to fix the new law.   It’s a cry for help also found on the Mid-America Association of Real Estate Investor’s website:

It is a thought….

Related articles

The following is a post submitted to us by MoLiens.com, which is a great site and service operated by Missouri construction attorneys Garry Seltzer and Kevin Seltzer.   In light of the recent changes to the Missouri lien laws (which we posted about previously) they published a comprehensive update and analysis of the changes.  The below is a summary of that update.

Read the full Missouri Lien Law Changes Analysis.

In May the Missouri Legislature passed a new mechanic’s lien provision that will have a profound effect on Missouri’s subcontractors. This new statute is a nightmare for Missouri’s construction industry.

The law addresses residential properties, but the term “residential” is now broadly defined in the new law to include apartments, condominiums, streets, sidewalks “and other facilities within the defined residential use structure or located on or within the separate and identifiable parcels identified as and for residential use.”

Missouri’s new mechanic’s lien legislation will make asserting mechanic’s lien rights much more difficult for subcontractors and material suppliers. The law takes effect August 28, 2010 and will apply to real estate closings on or after November 1, 2010. Because of the deadlines imposed by the new legislation we are encouraging material suppliers and subcontractors to file a “Notice of Rights” on every “residential” job – new or ongoing – beginning September 15, 2010. If you fail do so, you risk losing lien rights. This law was promoted by general contractors and title companies, all of whom gain at the expense of subcontractors and material suppliers.

The New Problem:  Filing a “Notice of Sale” Means Mechanic’s Lien Rights May Be Lost.

The new lien law introduces two new concepts: (1) a “Notice of Sale,” filed by a property owner and (2) a “Notice of Rights,” filed by a subcontractor or material supplier. The new law provides that if the property owner intends to sell the real estate, even while construction is ongoing, then the property owner must give 45 days notice by filing a “Notice of Sale.” The earliest possible closing date which could be affected would be November 1, 2010. A “Notice of Sale” recorded as early as Friday, September 17, 2010 announcing a November 1, 2010 closing will forfeit the mechanic’s lien rights of suppliers and subcontractors who have not recorded a “Notice of Rights” by Wednesday, October 27, 2010 (five calendar days before the closing) even if their six month lien time is not close to expiring.

The new law requires a lien claimant to file its own “Notice of Rights” at least five days before the intended closing. If the lien claimant fails to file a “Notice of Rights” within the required time, then the lien claimant’s mechanic’s lien rights are lost forever – even if the job is ongoing – even if the six month time to file a lien has not expired. How does a subcontractor or supplier learn of the property owner’s “Notice of Sale”? There are three notification methods contemplated in the statute, each of which has its own problems (which are explained in detail in the accompanying analysis).

Before the law changed, suppliers and subcontractors had an objective standard about when to file a lien claim. Everyone knew a lien claimant had six months from furnishing the last labor or material to file a lien claim. But now if a property owner records a “Notice of Sale” that means that the existing six month time to file a lien claim is no longer operative. Failure of the subcontractor or supplier to record its “Notice of Rights” is an absolute waiver of lien rights forever, notwithstanding that under the former law there still may be time to file a lien.

The Solution: Suppliers and Subs Should File a “Notice of Rights” At The Beginning of Every “Residential” Job.

Because an owner may post a “Notice of Sale” at any time, we are urging our clients not to wait for the property owner to do so, but instead to record their own “Notice of Rights” at the earliest opportunity for every arguably residential job beginning September 15, 2010. A sample intake form which you may use to transmit the information necessary to generate a “Notice of Rights” to us is enclosed. You make additional copies to begin the process.

Even if the supplier or subcontractor files a “Notice of Rights” at the beginning of a job, the unpaid subcontractor or supplier must still file a lien claim within six months of finishing the job.

Related articles by Zemanta

• ALERT: Missouri Residential Lien Law Changes Now In Effect (constructionlienblog.com)
• John Meyer’s Excellent Summary of Missouri Lien Law Changes (constructionlienblog.com)
• Lien Law Online eLert for 8/23/2010 – Missouri (lienlawonline.blogspot.com)
• Are Mechanic Lien Laws Changing Across The Country To Require More Notice? (constructionlawmonitor.com)

Well, in doing some additional searching on the topic, I ran across a summary by Missouri attorney John Meyer, of Capes Sokol.   I normally don’t post a link to each and every lien law article I find (because I find a lot of them), but John has done a really great job of summarizing the important changes.   (read here).

While we’re pointing to resources on Missouri mechanic lien laws, here are a few other places online with great information for consumers and contractors on the Missouri mechanic lien and preliminary notice regulations:

Farris Law Firm’s Mechanic Lien and Preliminary Notice Chart
The title here really says it all – some folks like to read articles and in-depth explanations of the lien laws.  Other folks want to look at a chart to get the gist of lien and notice requirements.  This is an excellent chart published by the Farris Law Firm.

E-How To File A Mechanic Lien in Missouri
E-How provides visitors with a step-by-step guide to filing a mechanic lien in Missouri.    For another website like e-How, check out Avvo.com, and specifically this answer from Missouri attorneys about filing a mechanic lien in that state.

Missouri Attorney General Publication on Mechanic Liens
Finally, the Missouri Attorney General chimes in about mechanic liens.  While this article is written more for consumers, it offers good information for anyone affected by mechanic lien laws.

Related articles by Zemanta

• ALERT: Missouri Residential Lien Law Changes Now In Effect (constructionlienblog.com)
• Lien Law Online eLert for 8/23/2010 – Missouri (lienlawonline.blogspot.com)
• Mid-Week Review: Great Articles About Mechanic Liens (constructionlienblog.com)

Well, the end of August has come so quickly, and the Missouri lien law change is now in effect.

Here is our summary of the important changes that was posted back in May:

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.

In addition to this summary, you can also read about the change on the Lien Law Online Blog here:  Missouri Lien Law Alert.

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.

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.  Zlien’s forms and deadline database has already been updated to accommodate these law changes.

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.

Zlien 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.

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