Arkansas Residential Mechanic’s Liens & Payment Bonds for Public Projects

Changes for Arkansas Residential Mechanic’s Liens and Payment Bonds for Public Projects

Arkansas recently passed two House Bills. HB 1835, which changes the notice requirement for residential contractor’s lien, and HB 1855, which revises the bonding procedure for payment bonds issued for construction contracts. Both bills are effective July 30, 2021.

HB1835: Residential Contractor’s Lien Notice Requirement

AR HB1835 amends the statute regarding the residential contractor’s lien notice. If a residential contractor fails to serve the notice to owner, the contractor will not have lien rights.  Although the contractor will not have lien rights if it fails to serve the notice, statute no longer bars a residential contractor from bringing an action to enforce any provision of the residential contract.

The notice format did not change, but this is a great opportunity to review its contents. Here’s a copy of the notice as prescribed by A.C.A. 18-44-115(a)(7):

AR Residential Contractor's Lien Notice

HB1855: Payment Bonds Issued for Construction Contracts

General Payment Bond Notes

AR HB1855 requires a payment bond for public construction contracts exceeding $50,000 (previously $35,000).

A payment bond is optional for private, non-religious/charitable projects. However, for religious or charitable organizations projects, a payment bond is required for contracts over $20,000 (previously $1,000). If a payment bond does not comply with statutory requirements, parties (except the prime contractor) will have the right to enforce a mechanic’s lien.

Serving a Bond Claim & Filing Suit

Previously, Arkansas statute didn’t specify a deadline for serving a bond claim; rather, parties were to serve their bond claim in accordance with the terms of the bond. Effective 7/30, statute dictates any party not contracting with the principal of the payment bond (frequently the general/prime contractor), should serve the bond claim upon the contractor and surety within 90 days from last furnishing materials or services.

The deadline for filing suit has also changed. Previously, claimants were to file suit to enforce their bond claim within 6 months from the date final payment was made on the contract. As of 7/30, the suit deadline is the earlier of 1 year from date of final payment on the contract OR 1 year from the date the principal of the bond terminates work on the contract.

Please contact us if you have any questions on securing mechanic’s lien or bond claim rights in Arkansas.

Most Recent Resources

Blog

Help Your Customer Understand UCC Filings

Filing UCCs? Send your customer this letter to help them better understand the UCC filing and how it impacts them.
Read More
lien index
Lien Index

NCS Credit Lien Index 2023 Q2

The Lien Index decreased 16 points in Q2 2023 to 47. The significant decrease comes as the revised Q1 2023 Index skyrocketed to 63.

Read More
live webinars
Live Webinar

Common Mistakes In UCC Filings

A UCC filing is an incredible credit tool; however, taking and perfecting your security interest requires strict compliance with UCC Article 9. Make sure your UCCs are prepared and filed correctly, or you could jeopardize your security.
Read More