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):
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.