Join the Zlien Fantasy Football Team

What can we say, being from New Orleans with the Saints as the reigning champions has us all excited about the 2010 NFL Football Season. That’s why we’ve gotten together with our friends at Wolfe Law Group and set up an NFL Fantasy Football League through Yahoo!

And we’re inviting participation from our clients, colleagues, readers and friends. To sign up, just click on this link and set up your team. You will need to know the password, and the password is “construction.”

I must warn you….the Zlien staff not only knows mechanics liens, we know football. So be prepared to lose.

A Catch-22: Pay When Paid Clauses Do Not Extend the Lien Period

If you search “Pay When Paid Clauses” in Google, you’re going to get a lot of results that say a lot different things.   This contractual provision – used in almost every general / sub construction contract – is perhaps one of the most confusing or misunderstood provisions out there.

Wolfe Law Group’s Construction Law Monitor recently blogged about the dangers of using one contract in multiple states.   The post used the “pay when paid” provision as an example of why multi-state contracts are problematic.

The provision itself seems pretty clear:  one party will get paid when the other party gets paid.    It isn’t.   Interpretation of this provision varies by state, with some states striking down the provision entirely as against “public policy” and other states distinguishing between “pay when paid” provisions and “pay if paid” provisions.   The only way to protect your company against this tricky provision is to consult with an attorney about how these provisions are treated in your jurisdiction.

While interpretation of “pay when paid” provisions differ from state-to-state, there does appear to be one constant about this provision across the country:   It doesn’t extend your lien period.

Most states require liens be filed within a certain period after you last worked on the project, or after the project is complete.   The fact that you or your company is waiting for payment because the prime or an upper-tiered sub hasn’t been paid is completely irrelevant.  The lien period still starts when it starts, and ends when it ends.

As you might imagine, this presents a bit of a Catch-22.

On the one hand, you must file a lien to preserve your right to lien.  On the other hand, filing a lien may complicate the payment problems for the prime or upper tier sub (and thus your payment problem), and may cause animosity when negotiations are otherwise calm.

Unfortunately, there is  no easy fix for this complication.    Each situation should be examined individually, and sometimes, a simple joint check agreement may be the solution.  It’s just important to remember that good faith negotiations and waiting for payment under a contractual obligation to do so will not likely extend the lien period, and too much talk could result in the loss of lien rights.

Here are some great resources and articles on Pay When Paid provisions:

- Fourth Circuit Concludes Pay When Paid Clause is Unambiguous and Enforceable

- Pay When Paid or Pay If Paid Provisions

- Is Your Pay When Paid Clause Worthless?

- Contingent Payment Clauses, Use With Caution

Scott Wolfe Publishes Avvo Legal Guide on Miller Act Claims

Seattle based attorney and member of Wolfe Law Group, Scott Wolfe, published a Legal Guide this week on AVVO.com, a lawyer rating service.

What is a Miller Act Claim?

How do you file a Miller Act Claim?

Am I entitled to file a Miller Act Claim?

These are some of the questions answered by Scott Wolfe’s latest Legal Guide published on Avvo.com, titled “How To File A Miller Act Claim.” In the guide, Scott breaks the federal filing down into four steps, introducing the topic as follows:

If you furnished labor and/or materials to a federal construction project, and were not paid, contractors or suppliers may file a “Miller Act Claim” against the general contractor’s payment bond. You can file a claim on your own, through a filing service, or with an experienced attorney.

Click here to read all of Scott’s Legal Guides at Avvo.com.

Use Express Lien To Stay Organized in 2010

Thanks to our friends over at Wolfe Law Group’s Construction Law Monitor for their blog post yesterday recommending the Express Lien Lien Pilot to contractors looking to get organized in the new year.   Organization: A Secret to Managing Legal Messes discussed how good organization tools (and specifically web-based tools) can help contractors and others in the legal industry to avoid legal disputes and expensive legal bills.

In discussing how organization can help an organization with its legal obligations, the post says:

And insofar as your contractual and legal duties are concerned, if you’re organized and know what they are, you’ll have a much better chance of fulfilling them.

This is exactly what the Lien Pilot can do for your business.

Notice and lien requirements are hyper-technical and confusing.  If your company is handling multiple construction projects, or working in multiple states, it’s nearly impossible to keep track of notice and lien requirements.    Some clients reported that they used to keep track of lien and notice deadlines by inputted all due dates in Outlook – which, of course, required them to manually calculate the dates.

Express Lien provides contractors with an easier way.  You simply input your project’s details, and Express Lien calculates all of the project’s notice and lien requirements and deadlines.

In 2010, make a resolution to increase your bottom line and utilize the nation’s lien laws to protect your right to payment on construction projects.   Resolute your company to Lien Smarter in the new year, and sign up for a free account with Express Lien.

The Risks of Litigating a Washington Construction Lien

Our friends at Wolfe Law Group have just started publishing a new blog that focuses on construction law issues in the Pacific Northwest, and specifically in Washington and Oregon.    So, subscribe to their feed and check out that blog to keep tabs on construction (and lien) issues in those states.

Their first post is of special interest to us in at the Construction Lien Blog.    It’s title gives away its substance:  “The Risk of Litigating a Washington Construction Lien.”

More than simply a discussion on how to actually dispute a mechanics lien, the post reviews the potential risk and rewards connected to any proceeding to have a lien overturned.   While this post obviously provides information to those looking to dispute a mechanics lien, it’s also revealing to those who hold or who are filing liens.

In Washington, anyone who disputes a lien faces potential risk…or reward.  If they win and the lien is overturned, they may be entitled to attorneys fees.  If they lose and the lien is upheld, the lien claimant will be entitled to attorneys fees.   Since lien dispute proceedings can cost thousands in attorneys fees, the Washington laws require parties disputing a lien to think long and hard about whether to bring this type of action.

Why is this important to those who hold or are filing liens?   Simple:  It demonstrates just how strong a construction lien can be.

In prior posts, we wrote about how construction liens are not typically invalid simply because someone claims payment is not due.   Usually, for a lien to be declared invalid, there must be some sort of facially or procedural defect with it (it is filed late, it does not properly describe the property, etc.).

These technical and procedural defects may lead to a lien’s demise…but other very critical issues (validity of back charges, change orders, timing of payments, etc.) will likely not.    So, while both parties may have arguments on each of these disputed issues, before using those arguments to dispute a construction lien, the disputing party will have to consider the risk.

And in Washington, there is quite a bit of risk.

The Guy Behind the @ExpressLien Twitter Feed

Do you follow us on twitter?

The @expresslien twitter feed provides its followers with a wealth of information about construction liens.    Updates to our website and blog are published instantly on our twitter feed, and we’re constantly relaying information about lien laws (including law changes) across the country.

Scott Wolfe, our founder, is the guy behind the twitter posts.   Scott is a construction attorney licensed to practice (and practicing) in the states of Louisiana, Washington and Oregon.    He is also the founder of a bi-coastal construction law firm, Wolfe Law Group.

In addition to following @expresslien for updates specific to lien laws and the mechanics lien industry, you can also follow Scott personally on twitter (@scottwolfejr).   On his personal twitter account, Scott publishes more general information about construction law.

Wondering what kind of stuff gets posted on our Twitter account?  Here’s a peak at some of our most recent posts:

– RT BuildingNews Payment excuses are getting more inventive:  A run-down of some of the worst reasons not to stump up the cash  (with link)

– Blogged:  The Importance of Knowing When Your Lien Period Begins (with link)

– California Lien Law Forms, Procedures and Laws Changing on January 1, 2011 (with link)

– Avvo Legal Guides on Oregon and Louisiana Liens published (with link)

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.

Construction Outlook Grim through 2010 – Staying Ahead of Accounts Receivables To Retain Its Importance

Ken Simonson, the chief economist for the Associated General Contractors of America, doesn’t have good news for the construction industry as the challenging year 2009 drags into its 3rd Quarter.

According to Simonson, the commercial construction industry forecast remains grim “at least through 2010.”

For contractors, suppliers, and other construction professionals throughout the nation, this means that good record-keeping and collection practices remain important.

Almost one year ago, Wolfe Law Group posted an article on its Construction Law Monitor after Ken Simonson reported that 2009 would present economic challenges to contractors.

Now more than ever, the article stated, contractors should consider the benefits of a construction or mechanics lien.  The article went on to state:

As soon as the construction project comes to a halt or payment is late, contractors, subcontractors and suppliers should rush to file its construction / mechanics lien to protect its interest in the property. Construction liens are available in virtually every state, and works to transform the project job site as a sort of “collateral” to the contractor for its payment.

The time available to file a construction lien is not indefinite, and the legal requirements should be followed to the letter. However, when filed correctly, a construction lien can help your company recover payment for its project.

Although the stimulus spending will be cause for some optimism in the construction industry, it appears economic struggles will stick around into 2010.    And the recommendations of Wolfe Law Group in 2009 are repeated today.

If your company is awaiting payment, file your lien with Express Lien today.   Lien Smarter…Get Paid.

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.