Make Sure you Serve the Mechanic’s Lien and File the Mechanic’s Lien
Serve the mechanic’s lien and file the mechanic’s lien. Two actions that are often lumped together or referenced interchangeably. But they are, in fact, two distinct and separate actions. What happens if you file your mechanic’s lien, but don’t serve the mechanic’s lien on the appropriate parties? It will depend on statute, but generally failing to serve the lien where required by statute means your mechanic’s lien is invalid.
Serve and File, What’s the Difference?
To serve a document means to provide a copy of the document to another party; to give them notice. For example, if statute says the owner must receive a copy of the lien, you will serve them with a copy of the lien, which alerts them of the lien being filed on their property. (We’ll get into types of service in a minute.)
To file a document means to provide the document to the appropriate county or state office for the office to record. Filing, also referred to as recording, creates a public record of the document. In the case of mechanic’s liens, the public record of the document is confirmation the property has a lien against it for funds due to the liening party.
Types of Service
State statute will define what is appropriate service of a document, but generally you can serve documents via certified mail, registered mail, overnight mail (e.g., FedEx), or personal service. Of course, each state is different, but here’s a look at a handful of states.
In California, the mechanic’s lien should be served “…by registered mail, certified mail, or first-class mail, evidenced by a certificate of mailing, postage prepaid, addressed to the owner or reputed owner at the owner’s or reputed owner’s residence or place of business address or at the address shown by the building permit on file with the authority issuing a building permit for the work…” [CA Civ. Code 8416 (e)]
What happens if you don’t serve a lien in California? Statute is clear: “Failure to serve the copy of the claim of mechanics lien as prescribed by this section, including the Notice of Mechanics Lien required by paragraph (8) of subdivision (a), shall cause the claim of mechanics lien to be unenforceable as a matter of law.”
In Florida, section 713.18 of the state’s statute provides a thorough explanation of service, but here some of the highlights:
(a) By actual delivery to the person to be served; if a partnership, to one of the partners; if a corporation, to an officer, director, managing agent, or business agent; or, if a limited liability company, to a member or manager.
(b) By common carrier delivery service or by registered, Global Express Guaranteed, or certified mail, with postage or shipping paid by the sender and with evidence of delivery, which may be in an electronic format.
(c) By posting on the site of the improvement if service as provided by paragraph (a) or paragraph (b) cannot be accomplished.
Statute goes on to say “Failure to serve any claim of lien in the manner provided in s. 713.18 before recording or within 15 days after recording shall render the claim of lien voidable to the extent that the failure or delay is shown to have been prejudicial to any person entitled to rely on the service.”
In Pennsylvania, the mechanic’s lien should be served “…by an adult in the same manner as a writ of summons in assumpsit, or if service cannot be so made then by posting upon a conspicuous public part of the improvement.” [Title 49 P.S. Chapter 6, Sec. 1502. Filing and notice of filing of claim]
This means the lien can be served by a person (e.g., sheriff or personal server) or if that doesn’t work, you can also meet the statutory requirement by posting a copy of the lien at the project.
Does Serving the Lien Really Matter? Let’s Ask this Nevada Lien Claimant
The project, Phase 1 of the construction of a medical marijuana facility in Las Vegas, is owned by 4620 Eaker Street LLC (Owner) and for this construction, the general contractor and lien claimant is RL Jaehn Group Construction LLC (GC). Owner hired the GC and the GC hired various subcontractors and material suppliers. Ultimately, Owner fell behind in payments and the GC filed two mechanic’s liens. The first mechanic’s lien was filed for $241,761 and about 6 months later, the GC filed a second lien (adjusted for payments received) for $197,194.
At some point, someone with the Owner’s company did a lien search, and discovered mechanic’s liens had been filed on the project. Of course, there are other issues going on in this case (primarily focused on the frivolity of the GC’s liens) and the case ended up in court. One issue in court was presented by Owner, who argued the GC’s liens were invalid because GC didn’t comply with statute.
During the hearing, the GC confirmed he “never served either notice of lien through any method of service set forth in NRS 108.227.” But the GC claims the Owner had notice of the liens because the GC “sent the notices of liens through regular mail.”
Guess what? There’s no proof that “regular mail” makes it to the intended destination or party.
Hmm, if only there were a form of mail that included “proof” of receipt.
Wait a minute. There IS. Hello certified mail!
Nevada statute says, serve a copy of the lien upon the owner:
(a) By personally delivering a copy of the notice of lien to the owner or registered agent of the owner;
(b) By mailing a copy of the notice of lien by certified mail, return receipt requested, to the owner at the owner’s place of residence or the owner’s usual place of business or to the registered agent of the owner at the address of the registered agent; or
(c) If the place of residence or business of the owner and the address of the registered agent of the owner, if applicable, cannot be determined, by:
(1) Fixing a copy of the notice of lien in a conspicuous place on the property;
(2) Delivering a copy of the notice of lien to a person there residing, if such a person can be found; and
(3) Mailing a copy of the notice of lien addressed to the owner at:
(I) The place where the property is located;
(II) The address of the owner as identified in the deed;
(III) The address identified in the records of the office of the county assessor; or
(IV) The address identified in the records of the county recorder of the county in which the property is located.
As you can imagine, the court agreed with Owner – GC’s liens didn’t comply with statute, meaning the liens were invalid.
“We conclude that (GC) did not perfect its liens because it failed to serve (Owner) with notices of the same, rendering its liens invalid as a matter of law.”
In fact, the case ended there. There was no need to discuss the potential frivolity of GC’s liens, because even if they weren’t frivolous, GC still failed to adhere to statute and the liens would be invalid.
Remember, Serve AND File
If you don’t serve the mechanic’s lien AND file the mechanic’s lien, you may find yourself with nothing more than an invalid mechanic’s lien and an unpaid claim.
Need help serving and filing your mechanic’s lien? Contact us!
You can read the case text here: 4620 EAKER STREET LLC v. RL JAEHN GROUP CONSTRUCTION LLC, Nev: Court of Appeals 2021