Service Area: Notice and Mechanic’s Lien Services

Advantages of Construction Attorneys in Litigation

Posted on May 3, 2019 by - In Other Commercial Credit News

Why Hire a Construction Attorney for Construction Litigation?

Excellent question! In today’s post we’ll review a few key considerations when deciding whether you should hire a construction attorney for construction litigation.

Why use attorneys who are experts in construction litigation?

Companies can’t afford to rely on attorneys that “dabble” in construction law. There is too much at stake and the laws are too complex. Make sure your attorneys are experts in construction litigation.

What are the advantages of having a local construction attorney?

Mechanic’s lien and bond claim laws can vary drastically from state to state, so having an experienced attorney local to the project is a tremendous benefit. The attorney will know the laws specific to that state and may be near the project and/or familiar with the parties involved.

Should I use a large attorney firm for my construction collection needs?

The presumption by many is that using a large law firm will somehow guarantee better results. This is not necessarily the case. Larger law firms often charge high hourly rates and assign your case to a less experienced associate attorney. Working with a small or mid-sized firm may provide your organization with more legal expertise and a better overall value.

But, That’s Not All!

At NCS, our focus is helping you get paid for materials or services provided. But construction is a massive field and in a recent article from Odin Feldman Pittleman PC, construction attorneys can assist with contract conflicts, alternative dispute resolution, bankruptcy, labor disputes, and insurance issues.

According to Odin Feldman Pittleman PC, this is when you should hire a construction attorney:

“Thanks to their extensive legal knowledge, construction attorneys can make any stage of the construction process easier. You may want to consider employing one at the beginning of a project, when you are applying for a permit or need government approval for a project. Construction attorneys can also help you adhere to local, state, federal, and environmental regulations, preventing easily-avoided disputes.

Contract review and preparation are also key areas in which a construction attorney can be a valuable ally. An attorney can assist in the project planning process, then translate your needs to make that project happen into a clear contract that protects your interests. They may also be able to compile other legal documents to supplement your project or protect it from lawsuits.

Finally, construction attorneys are well versed in labor laws and disputes. They can help you settle cases between employees and employers, whether through mediation, settlement, or litigation. Consider hiring a construction attorney if you are faced with a labor dispute of any kind.”

NCS Can Help!

NCS has a nationwide network of construction attorneys with decades of experience. Our attorneys understand that projects often have extenuating or more complicated circumstances (multiple parcels, multiple owners, complex title searches, condominiums, quasi private/public projects, oil and gas liens, etc.) and may be local to and familiar with these projects.

If you need assistance, contact us today!

Oklahoma’s Lien & Bond Claim Requirements

Posted on April 29, 2019 by - Mechanic's Liens & Bond Claims, Preliminary Notices & Construction Credit

Are You ‘OK’ with Oklahoma’s Mechanic’s Lien & Bond Claim Requirements?

Furnishing to a construction project in the Sooner State? Today’s quick read post is just for you! In this post we’ll review the steps needed to secure mechanic’s lien and bond claim rights in Oklahoma. Don’t worry, I know your busy, so I’ll make this easy!

Private Projects: Oklahoma Mechanic’s Liens

Oklahoma Private Project

Recap: Serve the Pre-Lien Notice upon the owner and prime contractor within 75 days from last furnishing materials or services. If contracting directly with the prime contractor or subcontractor, file the lien within 90 days from last furnishing. If contracting directly with the owner, file the lien within 4 months from last furnishing. File suit to enforce the lien within 1 year from filing the lien.

Bonus! Oklahoma statute dictates the information that should appear within the Pre-Lien Notice.

42-142.6. 4. The pre-lien notice shall be in writing and shall contain, but not be limited to, the following:

1. a statement that the notice is a pre-lien notice,

2. the complete name, address, and telephone number of the claimant, or the claimant’s representative,

3. the date of supply of material, services, labor, or equipment,

4. a description of the material, services, labor, or equipment,

5. the name and last-known address of the person who requested that the claimant provide the material, services, labor, or equipment,

6. the address, legal description, or location of the property to which the material, services, labor, or equipment has been supplied,

7. a statement of the dollar amount of the material, services, labor, or equipment furnished or to be furnished, and

8. the signature of the claimant, or the claimant’s representative.

Public Projects: Oklahoma Bond Claims

Oklahoma Public Project

Recap: There is no statutory provision requiring a preliminary notice. Serving a non-statutory notice is recommended. Generally, payment bonds are required for contracts exceeding $50,000. Serve the bond claim notice upon the prime contractor and surety within 90 days from last furnishing. No bond claim notice is required if you are contracting directly with the prime contractor. File suit to enforce the bond claim within 1 year from last furnishing.

Other Okie Lien & Bond Claim Facts

Oklahoma is a full balance lien state. In other words, the lien is enforceable for the full amount owed, regardless of payments made by the owner. (commercial projects)

A payment bond is required for contracts exceeding $50,000 when the construction or improvement is a private building on public real property.

In 2013, Oklahoma’s statute was updated to allow applicable profits and overhead costs, in addition to the costs for materials, equipment and labor, to be included in the total claim amount stated within the lien.

Remember, you can’t lien tribal lands. If a payment bond is issued, take time to review the bond carefully. (Check out No Miller Act Bond Claim Rights on Tribal Construction Project)

Oklahoma offers mineral liens as a separate remedy from the standard mechanic’s lien statute. (see §42-144)

I learned how to spell O-K-L-A-H-O-M-A by singing the theme from Oklahoma! the musical. Thank you, Rodgers & Hammerstein.

OK the last bit wasn’t about lien or bond claim rights, but it is true, nonetheless. Plus, I wanted to see if you were paying attention.

Questions about securing your Oklahoma lien or bond claim rights? Just ask!

Condominium Act Meets Construction Act in Ontario

Posted on April 26, 2019 by - In Other Commercial Credit News

Condominium Act Meets Construction Act in Ontario

Ontario’s Construction Act has been a prevalent topic throughout the last year, and with the second wave of amendments rolling out later this year, the conversation isn’t over! Let’s continue our Ontario conversation today with a quick review of the intersection of Ontario’s Condominium Act and its Construction Act.

In Condominium Construction in Ontario? Unique Challenges Ahead, authors Michael Swartz and Jeff Scorgie, explain how land is held under the Condominium Act and the difference between liening a single condominium unit versus a common area.

Ontario Has Condominium Corporations

Under Ontario’s Condominium Act, when a condominium corporation is registered, the property is comprised of two different types: units and common elements.

Units are typically the individual housing space, and according to authors may also include “…other non-residential types of “units” such as parking spaces or storage lockers. In either event, whether residential or non-residential, each “unit” is assigned its own distinct PIN and is owned or leased exclusively by an individual owner.”

Whereas common elements are any space except the individual units.

“…such as landscaped areas, parking lots, guest suites, recreational facilities, hallways, elevators and foyers… What is important to understand is that the “comment elements” of a condominium are “owned” by all of the units on an undivided share basis.”

Improving a Unit?

It’s imperative to only lien the property improved, therefore, if you furnished to the improvement of a unit, and you are unpaid for furnishings, your lien should be filed on the individual unit. Each unit is issued a parcel identification number (PIN), which identifies the parcel of land and its owner.

Improving a Common Element?

Unlike individual units, the common elements of a condominium do not have PINs. Let’s say you provide carpeting for the building hallways, outside of the individual units. If you are unpaid for the carpeting, your lien won’t be filed against one unit; rather it will be filed against all.

In fact, according to authors, “registering a lien against the common elements requires a lien claimant to list all of the units in the “Properties” section of the claim for lien—thereby liening each unit in the condominium for its proportionate share in the common elements.”

Who Will You Notify of the Lien?

When filing a lien against a single unit, you would notify the property owner. When filing a lien against a common element, you would notify the condominium corporation and ALL unit owners. In an example provided by authors, if the condominium has 200 units with 200 different owners, you must notify all 200 owners. This means you must identify the owners, which let’s face it, could be quite costly (massive title work!).

OK, so what happens if you lien the common elements and individuals want to pay you to have the lien removed from their units? I’ll defer to the experts:

“… under the new Construction Act, an individual unit owner (or an owner of a CEC) can make a motion to court to vacate the registration of the lien as against their unit…. it poses some interesting practical questions for the lien claimant and the other parties in the litigation.  Specifically, if many unit owners vacate a portion of the lien from their individual unit, it could become difficult to track who has paid what amounts into court to clear title.”

My Advice

If you are liening a common element, hire a construction-oriented attorney. You need a legal professional familiar with the law(s) and who can manage payments on your behalf. Don’t try to go it alone!

“Pay-If-Paid” Leaves Subcontractor High and Dry

Posted on April 22, 2019 by - Mechanic's Liens & Bond Claims, Preliminary Notices & Construction Credit

“Pay-If-Paid” Leaves Subcontractor High and Dry

An Alabama Court of Appeals has upheld a trial court’s decision: a subcontractor cannot recover its claim from the general contractor’s surety if the subcontract contains a contingent payment clause (pay IF paid). In today’s post I’ll discuss securing bond claim rights in Alabama, explain contingent payment causes, and review a recent Alabama Court of Appeals’ case.

Securing Bond Claim Rights in Alabama

For public projects in Alabama, payment bonds are typically required if the general contract is $50,000 or more. As a best practice, you should always attempt to obtain a copy of the payment bond when you agree to a contract or purchase order.

You are not required to serve a preliminary notice, but it’s a good idea to serve a non-statutory notice to alert parties within the ladder of supply that you are furnishing to the project.

If you furnish to the project and are not paid, you would serve a bond claim notice upon the surety no later than 45 days prior to filing suit. Then, you would file suit to enforce the bond claim after 45 days from serving the bond claim notice, but within 1 year from the date of final settlement. [Ala. Code 39-1-1]

IF and WHEN: Contingent Payment Clauses… if & when…

How quickly two small words can create a payment mess! Pay-if-paid is generally interpreted to mean that the subcontractor will receive payment from the general contractor IF the general contractor is paid by the owner. Whereas, pay-when-paid is interpreted to mean the subcontract will receive payment from the general contractor WHEN (or after/once) the general contractor receives payment from the owner.

The “IF” clause is also known as condition precedent. Payment to the subcontractor is dependent on payment made to the general contractor by the owner.

The “WHEN” clause is viewed more as a timing provision. The general contractor will pay the subcontractor within a reasonable amount of time from when the subcontractor issues its invoices. Payment under this clause is not reliant on the owner paying the general contractor.

Pay-when-paid is more desirable than pay-if-paid, because the general contractor is not relieved of paying its subcontractors under pay-when-paid.

Subcontractor Can’t Recover Claims from Surety

Keller Construction Company v. Harford Fire Insurance Company

  • Subcontractor & claimant: Keller Construction Company (Keller)
  • General Contractor & payment bond obligor: J.F. Pate & Associates Contractors, Inc. (Pate)
  • Owner & payment bond obligee: City of Spanish Fort (City)
  • Surety: Hartford Fire Insurance Company (Hartford)

City hired Pate, and Pate obtained a payment bond from Hartford. Pate hired Keller and the parties executed a subcontract. Under the terms of the subcontract, Pate could withhold retainage from Keller for the same retainage amount City withholds from Pate. Also, under the terms of the subcontract, Keller assumes the risks associated with the City not paying Pate.

Language from the subcontract, in part:

“[T]he receipt by [Pate] of payment from [the city] for the work performed by [Keller Construction] is a condition precedent to the obligation of [Pate] to pay [Keller Construction]. [Keller Construction] further acknowledges that it is assuming the risk of delay in payment or non-payment by the [city] to [Pate]. Both the condition precedent for payment and the assumption of this risk are bargained for considerations in this agreement, without which [Pate] would not have entered into this agreement with [Keller Construction].”

The words “condition precedent” are right there in the contractual language. Not only that, but the language clearly indicates that Keller is aware of and is assuming any of the payment risk. The Court’s opinion states Keller was fully aware of the conditions of the contract and understood the provisions.

Keller completed its work and Pate had remitted payment to Keller except for the retainage amount. Why? Because City did not pay Pate the retainage or the withheld funds. And according to the subcontract, if Pate was not paid by the owner, Pate did not have to pay Keller.

Keller proceeded with a bond claim and Hartford denied Keller’s claim. Hartford claimed it was not obligated to pay Keller, because the surety is only obligated to pay what the general contractor was obligated to pay. In this case, the general contractor wasn’t obligated to pay retainage, because it hadn’t been paid retainage, thus, relieving the surety of any payment obligation.

Keller tried several arguments, all of which failed, including conflicting language within the terms of the payment bond and the terms of the subcontract.

It got a bit muddy, but the gist is the court determined the two contracts (payment bond and subcontract) need to be treated separately as they fall under separate laws. Essentially, you can use payment bond language to override subcontract language.

Takeaway

Payment provisions are often strictly interpreted. If you enter into a contract, make sure you understand the terms of the contract and know that if you execute the contract you are committing to the terms. When reviewing the contract, it’s a good idea to have a legal professional also review, specifically to look for clauses that may jeopardize payment.

Washington Liens: When Frivolous is Better Than Absent!

Posted on April 8, 2019 by - Mechanic's Liens & Bond Claims

frivolous lien

This Washington Lien Was Late, Excessive, and Inaccurate. But It Wasn’t Frivolous.

Late, excessive, inaccurate, but not frivolous: sounds like a terrible report card. You know the story, right? It’s about a mechanic’s lien filed in Washington which was initially invalidated and then reinstated by the Court of Appeals. How does a late, excessive, inaccurate lien get reinstated? Well, it’s a story worth sharing! (Spoiler: because it’s not a frivolous lien!)

Project-Condo-Dry-Out

Ongoing roof construction and an untimely rainstorm created quite a mess for more than a dozen condominium units. The property management company, MacPherson’s Property Management (MPM), hired Style Corporation dba Servpro (Servpro) for clean up and restoration work.

Servpro brought in its drying equipment & the equipment remained in the impacted condominium units for approximately two months. When the condominium association failed to pay Servpro for its services, Servpro filed a single lien for $183,945.09.

Servpro filed a single lien – not a lien on the individual impacted units. Within the lien, Servpro identified the debtor as the condo association, but the lien “applied to the 20 specific units and a common storage area where Servpro provided services.” Servpro also listed the 20 condo unit owners within the lien but did not indicate or allocate specific costs to each unit – the lien was a lump sum.

“Frivolous and Clearly Excessive”

It was the line held by PMP when it sought the release of Servpro’s lien: the lien is “frivolous and clearly excessive.” The court agreed and released the lien. But what kind of story would this be if it ended there? Servpro appealed the decision.

Court of Appeals on Frivolity

Per the Court of Appeals opinion:

“A lien is frivolous if ‘improperly filed beyond legitimate dispute’ and ‘so devoid of merit that it has no possibility of succeeding.’ Even if a lien is invalid, it may not be frivolous.”

A representative from MPM provided four reasons it believed Servpro’s lien was frivolous: 1) the representative from MPM did not authorize Servpro for ongoing work 2) Servpro’s lien was filed late 3) the agreement between MPM and Servpro did not dictate a contract amount as required by statute, and 4) Servpro’s lien was factually inaccurate.

Court of Appeals shot down MPM’s four reasons

The Oxford Comma Means Frivolous is Separate from Clearly Excessive

I must say, I did not see the Oxford comma making its way into a mechanic’s lien dispute. And yet, here we are! Washington’s mechanic’s lien statue, according to the Court of Appeals, clearly treats frivolous and clearly excessive separately under RCW 60.04.081(4).

The clear distinction lies in the comma between “cause” and “or” – actually, it’s the combination of the “,” followed by “or.”

Not to be outdone by the Oxford comma, the Court of Appeals also defined “clearly excessive” based on the dictionary definitions, because statute does not offer a definition.

Because Servpro did not break down the total claim amount by the number of units and filed its lien as though it were against one property vs. varying units, it appeared (for this case) a lien for $18k+ was filed against one unit, which makes Servpro’s lien clearly excessive.

The Court of Appeals concluded

“The trial court erred by determining that Servpro’s lien was frivolous and releasing it. Although Servpro’s lien may ultimately be invalid and unenforceable, the narrow hearing authorized by RCW 60.04.081 does not allow for release of a lien based on invalidity alone.  Accordingly, we reverse the trial court’s ruling releasing the lien.

The court correctly concluded that Servpro’s lien was clearly excessive, but the court made no findings of fact about the amount by which the lien was excessive.”

What Could Servpro Have Done to Avoid this Mess?

Here are the actions Servpro could have taken to alleviate some of the issues:

  • Execute a Contract. While statute provides for an interpretation of a contact amount if it isn’t included in a contract, it may have alleviated some confusion if even an estimate was included.
  • Get the facts. Condominiums and mechanic’s liens can be a major pain. Title work can be cumbersome and expensive, but it provides critical information. If Servpro had correctly identified the property/units and allocated costs to each unit, it may have escaped the “clearly excessive” issue.
  • File a lien on time! In Washington, the mechanic’s lien should be filed within 90 days from last furnishing.

This case is on its way back to the trial court where it will likely be invalidated because of timeliness and an excessive claim, but at least we now know it wasn’t a frivolous lien.

Not-So-Peachy Mechanic’s Lien for One New York Landlord

Posted on April 5, 2019 by - In Other Commercial Credit News, Mechanic's Liens & Bond Claims

Not-So-Peachy Mechanic’s Lien for One New York Landlord

According to a recent Court of Appeals decision, enforcing a mechanic’s lien on leased property in New York does not require consent of the landlord. That is, if the lease agreement required the tenant to improve the property.

Lien on Leasehold

Landlord/tenant agreements aren’t uncommon; just drive by any strip mall or shopping plaza and you’ll see oodles of stores operated by tenants that are leasing space from the property owner.

In a lease situation, the property is owned by one party & then a second party leases or rents the space from the owner. When improvements are made to the property, depending on the hiring party (the owner or the tenant), a mechanic’s lien may attach to the property, the leasehold interest, or both the property and the leasehold interest.

For this Court of Appeals case, there is one additional variable to be considered: the language within the lease agreement between the landlord (COR) and tenant (Peaches Café LLC).

In Ferrara v. Peaches Café LLC, Peaches Café LLC (Peaches) hired Ferrara (prime contractor) to perform electrical work. Peaches hired Ferrara because the lease dictated that Peaches would need to improve the property to meet electrical specifications.

“The lease imposed certain construction requirements on Peaches [tenant] for it to operate its restaurant, including adherence to specific electrical specifications. The lease also provided that COR [landlord] approve of any improvements to the premises, that Peaches submit to COR all design plans for the electrical work, and that any improvements made become part of the realty.” – Michelle Cuozzo of Pepper Hamilton LLP

As is common in the restaurant industry, Peaches went out of business and Ferrara was stuck with an unpaid bill of $50,000. To recover the claim, Ferrara filed a mechanic’s lien against the property and eventually filed suit to enforce its mechanic’s lien.

Once suit had been filed, the property owner (i.e. the landlord) moved to have Ferrara’s lien invalidated. The owner argued the lien could only be enforced if the owner expressly consented to the work performed. The court didn’t agree; here’s a recap from Michelle Cuozzo of Pepper Hamilton LLP:

“COR [owner/landlord] argued that a contractor performing work for a tenant can only enforce a lien on the property if the landlord expressly or directly consented to the work performed. The Court of Appeals rejected this argument… [T]o enforce a lien, the landlord must “either be an affirmative factor in procuring the improvement to be made, or having possession and control of the premises assent to the improvement in the expectation that he will reap the benefit of it.” Affirmative acts by a landowner include lease terms requiring the tenant to make specific improvements to the property.”

The lease clearly required Peaches to improve the property to meet the electrical specifications. Plus, the lease included language that the landlord could “retain supervision over the work by reviewing, commenting on, revising, and granting ultimate approval for the design drawings related to the work.”

Ultimately, the landlord consented to the improvement when it incorporated the requirements within the lease. Thus, the court held Ferrara’s lien to be valid.

Retainage, Payment Bonds, and Private Projects in Texas

Posted on March 29, 2019 by - In Other Commercial Credit News

Retainage, Payment Bonds, & Private Projects in Texas

Private projects in Texas – mechanic’s lien or bond claim? Ordinarily I would say “Mechanic’s lien!” However, that may not always be the case. And be careful, because mechanic’s liens and bond claims are not the same and may require different actions.

Texas Bond Claim

In Texas, a properly recorded payment bond prevents mechanic’s liens from attaching to the property (think “bond off lien”). Author Amy Wolfshohl explains in her article The Often Overlooked Protection Provided By A Statutory Payment Bond Under Chapter 53 Of The Texas Property Code, the payment bond must meet the following criteria.

To provide the protection contemplated by the statute, the bond must:

1. be in the original contract amount;

2. be in favor of the owner—as obligee;

3. have the written approval of the owner endorsed on it;

4. be executed by:
(a) the original contractor as principal; and
(b) a corporate surety authorized, admitted, and licensed to do business in Texas;

5. be conditioned on prompt payment for all labor, subcontracts, materials, specially fabricated materials, and normal and usual extras not exceeding 15% of the contract price; and

6. clearly and prominently display the contact information for the surety.

Although the security is different – a payment bond instead of a mechanic’s lien – you protect your Texas bond claim rights similarly to how you would protect mechanic’s lien rights.

Notice of Non-Payment (Commercial): When contracting directly with a subcontractor

– Serve notice upon the prime contractor no later than the 15th day of the second month following each month in which materials or services were furnished.

– Serve notice upon the owner and prime contractor no later than the 15th day of the third month following each month in which materials or services were furnished.

The difference? Also serve the surety with a copy of the notices and subsequent lien. And, be aware, if a payment bond is not properly recorded, you must comply with the terms and conditions of the payment bond when perfecting a claim!

Interesting Fact

Did you know, for private projects in Texas, the owner is required by statute to withhold 10% retainage?

Retainage is an agreed amount of a contract price retained from a contractor as assurance that subcontractors will be paid, and the job will be completed.

Sec. 53.101.  REQUIRED RETAINAGE.

(a)  During the progress of work under an original contract for which a mechanic’s lien may be claimed and for 30 days after the work is completed, the owner shall retain:

(1)  10 percent of the contract price of the work to the owner; or

(2)  10 percent of the value of the work, measured by the proportion that the work done bears to the work to be done, using the contract price or, if there is no contract price, using the reasonable value of the completed work.

(b)  In this section, “owner” includes the owner’s agent, trustee, or receiver.

According to Wolfshohl, if the payment bond is recorded, the owner does not have to withhold retainage.

“If the owner obtains a bond that is consistent with these requirements and records it in the applicable real property records, the owner is relieved of the requirement to withhold retainage and cannot be held liable for failing to trap funds.”

Wolfshohl reminds readers, payment bonds aren’t just good for project owners, they’re good for subcontractors too!

“This is a win-win for owners and subcontractors because the subcontractor’s remedy is not limited to its proportionate share of retainage plus any trapped funds and the owner is not subjected to a multiplicity of often conflicting subcontractor claims if bankruptcy, termination, or abandonment occurs at the prime contractor level.”

Maine Mechanic’s Lien & Bond Claim Rights

Posted on March 18, 2019 by - Mechanic's Liens & Bond Claims, Preliminary Notices & Construction Credit

Here’s What You Should Know about Maine Mechanic’s Lien & Bond Claim Rights

Maine, the most northeastern state in the U.S., famous for lobsters, very chilly winters, and the backdrop for many of the terrifying novels by Stephen King. What’s scarier than a Stephen King novel? Furnishing to a construction project and not getting paid!

In a Time-Crunch?

Here’s an at-a-glance review of mechanic’s lien & bond claim deadlines in Maine:

For those with a few minutes to spare, today’s post is all about Maine, so sit back & relax, because I have a little family story to share too!

The Summer of Camping

(Not interested in my story? Skip to the next section “Maine Mechanic’s Liens”)

One summer, when I was in my early teens, my parents took my sister and me on a 3-week camping trip up through New England.

Three weeks of tent camping? I was about to spend 3 weeks in a horrifying Stephen King novel!

As a teenager I was fully committed to blow drying my hair and wearing the pinkest of lip glosses; I was less than thrilled at the prospect of sleeping in a tent in the foggy cold of Maine. Tents, port-a-potties, and bugs aside, I do distinctly remember how beautiful the sunrise was in the wee hours of the morning as we drove to the top of Cadillac Mountain in Acadia National Park.

My parents carted us through the various national & state parks, stopped for shopping at L.L. Bean, explained the importance of the geographic landscape of Camden, and asked a local resident to teach us the proper way to say Bar Harbor.

Speaking of Bar Harbor, I was reviewing MaineDOT’s website and noticed the construction on Route 3 is coming in to its 3rd year. Fortunately, lien and bond claim deadlines are not based on project completion! Which leads me to the real reason you are reading this post: lien and bond claim rights in Maine.

(Did you like that segue?)

Maine Mechanic’s Liens

Generally, there is no statutory provision requiring a preliminary notice on private commercial projects. Of course, NCS always recommends serving a non-statutory notice when no notice is required.

Residential projects are a bit different. There is a preliminary notice which may be served upon the owner at any time. It is recommended to serve the notice as early as possible as the lien, when later filed, will only be enforceable for the amount owed by the owner to the prime contractor at the time the notice is served. If no notice is served, a lien may still be filed. However, the lien will only be enforceable for the amount owed by the owner to the prime contractor at the time suit to enforce the lien is commenced.

There is one other notice remedy available. Bona Fide Purchaser: A notice may be recorded, at any time prior to the sale of the property, to protect against a bona fide purchaser taking title free of liens. If the work is ongoing, the notice must be renewed every 120 days.

Regardless of project type (commercial, residential, or a State of Maine Project), you should file the lien within 90 days from your last furnishing. Maine is a full balance lien state for commercial projects, which means the lien is enforceable for the full amount owed, regardless of payments made by the owner.

Wait. Did you catch that? A mechanic’s lien is available on a public project? In Maine, yes! Keeping reading!

But First, Maine Bond Claims

Just as with private commercial projects, public projects do not have a required preliminary notice. Again, as a best practice, always serve a non-statutory notice. In Maine, payment bonds are generally required for general contracts exceeding $125,000. Another best practice? Request a copy of the payment bond while obtaining project information – the earlier, the better.

“§871. Public Works Contractors’ Surety Bond Law of 1971 | 3. Surety bonds.  Except as provided in Title 5, section 1745, before any contract exceeding $125,000 in amount for the construction, alteration or repair of any public building or other public improvement or public work, including highways, is awarded to any person by the State or by any political subdivision or quasi-municipal corporation or by any public authority, that person must furnish to the State or to the other contracting body, as the case may be…”

You should serve the bond claim upon the prime contractor within 90 days from last furnishing (if you contract directly with the prime contractor, a bond claim notice is not required).

Yes, a Mechanic’s Lien on a Public Project!

It’s true. It goes against everything I know about lien and bond claim rights. In fact, it blatantly contradicts one of the first rules I learned “no liens on public projects.” Alas, Maine statute is as unique as the landscape of the state itself. Maine statute allows for the filing of a mechanic’s lien on public projects:

“§3251. Lien established Whoever performs labor or furnishes labor or materials, including repair parts of machines used, or performs services as a surveyor, an architect, a forester licensed under Title 32, chapter 76 or an engineer, or as a real estate licensee, or as an owner-renter, owner-lessor, or owner-supplier of equipment used in erecting, altering, moving or repairing a house, building or appurtenances, including any public building erected or owned by any city, town, county, school district or other municipal corporation, or in constructing, altering or repairing a wharf or pier, or any building thereon…”

If you need to proceed with a mechanic’s lien, you will want to refer to the guidelines for private projects.

Questions about Maine’s mechanic’s lien and bond claim rights, or even questions about my thrilling 3-week camping trip? Feel free to contact me!