Assembly of Good Resources on Oregon Construction Liens

When you’re not paid on a construction project you turn to the Internet to find answers about collections and mechanics liens.  In 2010, it’s the natural thing to do.   When you’re sick, you turn to sites like WebMD.   When you’re not paid, you look to learn about efficient ways to collect, and you turn to sites like this one.

While we work hard to provide great  construction and mechanics lien resources, there’s no need for us to be greedy and re-publish every single feature of the mechanic lien laws.   There’s a lot of great information on other websites out there, and everyone once in a while, we find it useful to our readers to stop and point to those other resources.

This post does just that, as it relates to Oregon Mechanics Lien laws.

Let’s Start With Me

I know I just talked about not being self-centered when it comes to posting information, but there’s not harm in starting this post with a re-cap of the resources we’ve published here and elsewhere.

– The Lien Law Summary Sheet for Oregon

– The Construction Lien Blog’s posts concerning Oregon

– Avvo.com Legal Guide published by Scott Wolfe Jr. on Oregon Mechanic Liens

– The Northwest Construction Law Blog’s posts on Oregon Mechanic Liens and Construction Lien Laws.

Some Others

– An Associated General Contractors chapter in Oregon has published the Oregon Construction Lien Pamphlet.  The Pamphlet does an excellent job of summarizing some of the notice requirements in Oregon, which while not very complex, are very strict.   Oregon’s notice requirement is one of the fastest expiring anywhere in the country – while some states allow for 60 day notices (Washington), or 20 day notices (California), Oregon requires the Notice to Owner be sent within just 8 days!    So, better be on top of things.  This Pamphlet helps.

– I recently came across a service called “Deeper Web? (@about_law)”   From how things look to me, this website scans the web for relevant articles and information on a specific topic, and displays all the results in a magazine-like format in one location.  I’m not familiar enough with the website to say it works all the time…but, I am impressed with their “Special Report on Oregon Construction Lien Laws.”   Some neat things this site links to is the Oregon Contractors Board’s page for consumer help containing information on Oregon lien laws, and a great discussion on LinkedIn on whether a lien can be filed against someone who has filed for bankruptcy.

– No better place to get information on Oregon Lien Laws than from the horse’s mouth.   Here, that’s the Oregon Contractor’s Board.   Their website has a number of good publications that can help contractors and property owners, but most relevant here is the Construction Lien Pamphlet written “to inform contractors and consumers about Oregon’s construction lien laws.”

What Costs Can I Include in a Mechanics Lien?

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).

Can I File a Mechanics Lien For This?

Lien laws vary from state-to-state, but across the country it’s a consistent principle that contractors and suppliers can only file mechanic’s liens for work they perform on a construction improvement project.

This begs the very important questions – what is a construction improvement project?    And beyond that, what is a construction improvement?

With respect to Virginia’s law on the issue, the Virginia Real Estate, Land Use and Construction Law Blog just posted on this topic:   The Line Between Furniture and Fixtures:  What Constitutes An Improvement, Part II. The post quotes a recent federal civil case, Summit Community Bank v. Blue Ridge Shawdows Hotel & Conference Center, LLC, whereby the judge distinguished between installed cabinets (which can be liened) and furniture delivered to the project (which cannot be liened) saying:

It is not sufficient for materials to simply add value to a building by their mere presence without any further connection to the building.

The law in Washington and Oregon is very similar to Virginia.  In both of these states, claimants may lien for work they perform in the “improvement of real property” or work used “in the construction of any improvement.”

Louisiana’s lien law is a bit more unique in this regard, and perhaps the most unique in the nation.   In Louisiana, claimants may file a lien whenever they perform services in connection with a “Work.”    A “Work” is defined as follows by the statute (LA RS 9:4808):

A work is a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.

I once represented a claimant in a Louisiana action against it to remove a mechanics lien, whereby I submitted a memorandum to the court distinguishing “work” (little w” from “Work” required by the statute (big w).   I quoted the 1985 Louisiana Fourth Circuit case Lake Forest, Inc. v. Crilot Co., et al (466 So.2d 61) wherein a subcontractor’s lien against a property for excavation work related to the operation of a sand pit was challenged.

Interesting about this case is that there was no building or “improvement,” but the lien was found valid because the work was considered a “Work,” with the court explaining as follows:

Although “improvement” language is used in this general statement, La. R.S. 9:4808 contains a broader wording.  The definition of “work” as “a single continuous project for the improvement…or other physical change of an immovable…” appears to apply to this unique sand pit operation.

We conclude that this sand pit…was designed to improve Lake Forest’s property.  At the very least the operation was for the “modification…or other physical change of an immovable.”

Summary

Here is a short summary of this post.   It’s important to know what is and what is not an “improvement” to determine whether you can in fact file a construction lien for the work or materials you provided.   It’s also important to answer that question within the context of the laws applicable to your project.   Most of the stuff is black & white…but in some cases, there can be a little gray.

What You Need To Do Immediately After Filing A Construction Lien

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 Express Lien 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 Express Lien 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 Express Lien, 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.

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.

An Owner’s Perspective on Liens

We frequently post about construction liens from a contractor’s perspective – who are clearly interested in figuring out ways to qualify for the filing of a lien.

What we rarely comment upon is an owner’s perspective, who are concerned with the opposite:  figuring out ways to condemn a lien as improperly filed.

It’s important for those who usually file mechanic’s liens to step back and consider the opposing viewpoint.   There is some value in understanding that upon receipt of a lien, an owner’s will likely have the instinct of wanting to fight it as improper or unfair.

When lien laws are drafted, they are drafted with protection for property owners in mind.  And when contractor boards and other regulatory agencies commit time to lien laws, they are usually focusing on educating the public (i.e. property owners) on what they can do to prevent liens.

A December 2008 article from the Daily Journal of Commerce in Portland, Oregon, stands as an example of this.  In the article titled “Five Questions to Ask About Liens,” the author goes through five questions owners should ask when faced with mechanic’s liens to determine their rights on proceeding forward.

This is not a rare example.   To the contrary, regulatory agencies across the nation who regulate contractors focus a great deal of effort on helping owners understand and overcome improperly filed construction liens.  See the page for Department of Labor & Industries in Washington, or the Contractors State Licensing Board in California.

If your company does wind up filing an improper mechanic’s lien and its disputed by the property owner, a loss in court could require your company to pay penalties, attorneys fees and more.

The point?   It’s important to understand the lien laws in your jurisdiction, and avoid making common errors and mistakes.

Andrea Goldman, a construction attorney in Massachusetts, publishes a great blog about this very issue titled:  Home Contractor v. Homeowner.  She frequently posts on issues that surface in home construction between the property owner and contract that results in litigation or arbitration.

With all of the work across the nation from regulatory agencies attempting to stifle improperly filed mechanics liens, Andrea notes in her blog that mechanic’s liens are so powerful of a collection tool for contractors that even an improperly filed lien can yield non-payment.

In her post the “Strength of Mechanic’s Liens,” Andrea states as follows:

Even if the lien is not done properly, one still has to file an action in court to dissolve it, which requires paying legal fees that are frequently not recoverable.

And regardless of your position on the subject (as a property owner, contractor or regulatory board), and regardless of how right or wrong your position may be, Andrea’s point is clear.   Mechanic’s liens are powerful instruments, and even when they are filed with technical defects, they cause parties to consider the debtor’s claim and contemplate a resolution.

Now Filing in Oregon

ExpressLien is pleased to announce that it is growing its service, and that as of Monday, April 28, 2008, its online lien filing service will be available for use in Oregon.

*Express Lien, L.L.C. is a Washington company. Express Lien is not a law firm or lawyers, and does not give legal advice. If you have questions about lien laws, you should consult with an attorney.