Be Careful When Using Free Forms to Secure Lien & Bond Claim Rights
There are creditors who prefer to send preliminary notices & file mechanic’s liens, on their own, via free forms they retrieve online. In the digital age, there is certainly no shortage of free information. You can access a variety of free forms from a variety of sources, including county recorder sites and legal service companies.
Just be careful – don’t get trapped by “I saw it on the internet, so it must be true.” If you are going to secure your lien/bond claim rights, by completing online documents/free forms, please ensure the documents meet statutory format & content requirements.
Ensure Documents Meet Statutory Requirements – Including Formatting
A case in Minnesota immediately comes to mind. The lien claimant served the preliminary notice; unfortunately, the notice did not meet Minnesota’s statutory requirements. In Minnesota, the preliminary notice “…whether included in a written contract or separately given, must be in at least 10-point bold type, if printed, or in capital letters, if typewritten”. (MN 514.011 Notice)
The claimant’s notice met the font size requirement, but did not include the required bold font or capital letters. The failure to meet the requirements lead the trial court to invalidate the claimant’s lien.
You may think “Whoa, that’s a bit extreme” and I would be inclined to agree with you, but, statute = law and the law leaves very little wiggle room.
In my experience, some states are less concerned about the format of a document and, instead, focus on the content of the document. But, there are states, like Minnesota, that follow a rigid set of laws.
Another state with specific requirements? Wisconsin
In Wisconsin, statute requires the notice “…whether included in a written contract or separately given, shall be in at least 8-point bold type, if printed, or in capital letters, if typewritten.”
Be Cautious with Plug-n-Play Forms – You Get What You Put In
Aside from incorrect format, creditors may fail to complete the documents in accordance with statute. It’s not enough to meet a state’s required formatting – if you fail to identify a party, you could jeopardize your rights.
Author John R. Lockard has noticed the same pitfalls. In his article, The Perils of Online Mechanic’s Lien Services, he discusses reviewing a lien prepared by an online provider. These are the issues he uncovered when reviewing a Virginia memorandum for mechanic’s lien:
“- It did not conform to the format included in the Code of Virginia;
– It failed to identify the general contractor or the subcontractor for the project as required by the Code of Virginia; and
– It failed to identify the correct address or parcel of property upon which the work was performed.”
Obviously, and as Lockard further discusses, failing to correctly identify the property to be liened is significant. If the address is incorrect, the validity of the lien is questionable at best.
Whether you secure your rights on your own or with the assistance of a service provider, choose carefully. Vet the source and if concerned, seek a legal opinion.
Ensuring payment in the construction industry is already a challenge, don’t jeopardize your rights because you failed to adhere to statutory requirements.