Are You Working On A State Construction Project?

Over the years, I’ve heard state projects referred to as “county,” “public” or “government” projects. It’s all the same. Any project commissioned by a city, state, county, public board or body or other governmental entity is typically a state construction project.  This includes projects commissioned by public school boards, which is a popular type of public work.

This sounds simple, but it’s surprising how many folks are either confused or wrong about whether a project is a state or private work.

Here are some frequently made mistakes:

• Schools:  Schools at every level (elementary, high school, university) can be either state or private, and you may sometimes be unsure.  Go to the school’s website and read the about section.  If the school is operated by a school district or board of education, it’s likely a state project.
• Native Land: Doing construction work on native land can be tricky, because native land has sovereignty rights, and it’s neither federal nor state nor private property.  Many folks confuse native land projects for state projects, but they are not state projects.  Check out this blog post to learn more about your lien rights on native territory.
• Hospitals, Community Centers, and other Quasi-Public Places: Understand what a “quasi public” place is by taking a look at this definition on the Merriam-Webster website:  ‘essentially public (as in services rendered) although under private ownership or control.” Hospitals, community centers, and other similar establishments are usually privately owned properties, which makes it a private project and not a state project.
• Parks:  State parks are typically state projects because they are state owned.  This is the case even when the parks are managed by private managing companies – which is common.  So, while you may be hired by a private property management company, the project itself is state because it’s still state land and under state control.

A Mistake In Identifying The Project Type Can Be Costly

Properly identifying a construction project as either private, federal or state is a critical step to preseving and enforcing your lien or bond claim rights. A mistake in your understanding of a project’s nature can send you down the wrong path of protection, which can leave you with no protection at all.

Over the coming two weeks, we’ll be discussing how to file bond claims and how to protect your rights to file a bond claim. You’ll realize from reading these posts that bond claim laws are just as convoluted, and contain just as many nuances as mechanic lien claims against private projects.

If you’re sending the notices and making the claims under one set of laws when you should be working under a different set, you will have sent and filed all the wrong documents.  Unfortuantely, the law has little to no tolerance for this type of mistake, and that can leave you without lien rights at all.

While determining your project type may seem like a simple affair, there are layers of complexities here. Do some research into who is commissioning the project and who owns the property, and make sure you know the type of project you’re working.

While there was a preliminary notice requirement on these public work projects, if a subcontractor or supplier failed to deliver the notice, there was a safety net allowing notice at the very end of the construction project (15 days from the notice of completion recordation, or if not recorded, 75 days from completion of the project).

However, in 2011, SB 293, Padilla, amended the law to eliminate this preliminary notice safety net.

Preliminary Notice Required Every Time on California Public Works Projects

The new law in a nutshell is that everyone on a public works project in California who did not contract directly with the prime contractor must give a preliminary notice within 20-days of first furnishing labor and/or materials to the construction project. There is no longer a safety net allowing claims at the completion of construction, and therefore, those who do not properly send their preliminary notices on-time, will no longer have any rights to make a claim against the payment bond or to file a stop notice.

Preliminary Notice must be given to:  (i) The public entity; and (ii) The contractor with the direct contractual relationship with the public entity (the “direct contractor”).  There is a special additional requirement if the work was commissioned by the Department of Public Works or the Department of General Services for California, such that the notice must be given to the disbursing officer of the department construction work specifically.

The only exception to this notice requirement is that those who are 100% laborers (not laborer companies) are not required to furnish the notice. Remember also that unlike on private works, where the notice is required if you did not contract with the owner, on public works the notice is only required if you didn’t contract with the direct contractor.  This is an important difference.

When the Law Is Effective? Now!

The law can be a little confusing about which portions go into effect on January 1, 2012, and which go into effect on July 1, 2012, especially regarding the new preliminary notice requirements. However, to be safe, all affected subcontractors and suppliers should consider the new preliminary notice requirements to be fully effective as of January 1, 2012.

Also, while this post only talks about SB 293′s effect on California’s preliminary notice requirements, the bill has a longer reach.  For a quick breakdown of the bill’s full legal impact, see these two articles:  SBC approved by California Legislators and is Headed to the Governor and New Payment Rules in 2012.

Also, you can read the Full Text of the Chaptered SB 293 here.

The result has meant tons of public work for contractors, who benefit both from Davis-Bacon wages and bonded work, which virtually ensures payment!

Zlien has taken the time to ensure that its clients know the basics of filing and preserving lien rights on the public job. A recent article describes your rights under the Miller Act, a federal series of laws which govern contracts for construction over the amount of $100,000.00.

But, did you also know that each state has what is called a “Little Miller Act.” These collections of laws mirror the purpose and structure of the Miller Act, namely providing rules for payment, security and claims on the public project.

For instance, did you know that every state or locally managed construction contract issued in Louisiana for a total of no less than $100,000.00, requires a performance and payment bond and demands that you file a sworn statement of your unpaid claim within 45 days of completion? (See La. R.S. 38:2241, et seq.) We’ve have reported on this before.

How about the great state of Washington (our home), which requires that a contractor provide 60 day notice of its right to a lien against a public contract’s retainage? (RCW 60.28, et seq.) Failing to timely file could result in forfeiture to timely payment, and your right to proceed in an action against the contractor’s bond.

Its important that contractors understand that it takes more than simple contractual compliance to ensure payment. Having a qualified lien management company on hand makes it all that much easier to feel secured on the jobsite!

Zlien’s $395 flat fee services includes tracking down and obtaining copies of the prime contractor’s bond, noticing the surety and prime contractor, and filing with the appropriate state or federal agency, your claim. Remember that our services also include all mailing and delivery confirmation.

Also, remember that in many cases, suppliers, second-tier subcontractors, and equipment lessors, may be required to issue preliminary notices of the materials they sell or lease, or the work that they will perform on a public project. Zlien’s $35 flat fee notices can save you!

Using Zlien’s Lien Pilot, you could greatly benefit from tracking deadlines and lien obligations. Please be sure to check out Lien Pilot and keep up with ConstructionLienBlog.com, for more information on how to protect your business.

With an estimated more than 200,000 works affected by the funding freeze, it’s likely that even California laborers will find themselves with claims for unpaid wages.

If you and your company are working on a public project affected by this spending freeze, you will want to file a Stop Notice to preserve your rights to Get Paid for work performed.

A full list of affected projects is available here:  http://www.signonsandiego.com/news/state/images/081217pmib_impact.pdf

Public bid jobs are referred to in many states as “public works.” Public works are a great way to find well-managed and supervised work. These jobs are bid out to the best contractor based upon a statewide public bid law. Once awarded, the general contractor is required to obtain bonding, practically ensuring that you, as a contractor on the job, will get paid.

Zlien files privileges against Public Works for its clients! Some things that you need to know before considering filing a lien include: what is a public lien? who is responsible for my claim? and how do we file the lien? Of course, we are here to answer your questions:

What is a Public Lien?

Public “liens” are not liens at all. In fact, you as a contractor cannot “lien” public land. A public works project is generally determined by the owner of the land where the work is performed. If the land is owned by a government agency, entity, or section, you will have to file a Public Works statement.

The statement filed upon Public Works is not a “lien,” but instead a sworn statement of the amount due under the contract with your contracting partner. The sworn statement is filed against the project in the local records and sent to all interested parties.

Who is responsible for your claim?

In the majority of states, each of the contracting parties up the ladder to the initiating government-affiliate, is responsible for your claim. Typically, Zlien will search to find the contracting government agency, the prime contractor and the bonding agent who acts as surety on the project.

As a contractor, the law will provide you with a legal remedy against the owner, surety and other contractors, if in fact you are not paid.

How do we do it?!?

By fax, internet or phone, we can get your public lien filing accomplished. Because your personal contract is unlikely to include the information necessary for the filing of a privilege, we ask that you attempt to collect all of the prime contractor’s contract and the bonding information, in order to save time.

Here is what you need to provide:

(1) Your company/personal contact information.

(2) A copy of your contract to perform the work (purchase order or work orders are fine)

(3) Name and Address of Owner/Government Agency

(4) Name and Address of any contractors above you – i.e. those who have subcontracted the work you performed downward, starting at the prime contractor.

(5) Relevant dates when your work began and ended.

(6) Copy of the Prime Contract and Bond.

(7) Copy of any Certificates of Substantial or Final Completion.

Remember that some states require that you Statement be filed within a short period afer substnatial completion. Please make sure that you get your claims filed immediately to prevent any delays in the research system. Some states work under a short time frame for considereing Sworn Statements. In most areas, the statement must be filed within 30-60 days from filing of a Ceritificate of Substantial or Final Completion.

What if I cannot obtain a copy of the Bond?

We are able to utilize online databases, public records, and couriers to pull documents at an additional fee. If we are unable to locate surety information, we will file the Statement against a default surety until the name is located.

Zlien, LLC will obtain the relevant data, file your statement an send out notices to each of the interested parties in the contract. You will never need to worry again about not getting paid! Public works collection projects are much more likely to be paid! So take a step and protect your business today.