Service Area: Notice and Mechanic’s Lien Services

Ontario Construction Lien Act – Bonds

Posted on November 15, 2016 by - Mechanic's Liens & Bond Claims

The Review of Ontario’s Construction Lien Act: Surety Bonds

We’ve previously discussed the review of Ontario’s Construction Lien Act and today we’d like to briefly review the recommendations for how surety bonds could be handled under the Act.

Generally, there is no statutory provision requiring a payment bond be issued for a public project.

“Currently, statutory mandatory bond regimes for public projects only exist in the U.S. but the use of payment bonds for the protection of subcontractors and suppliers is common in Canada. Fundamentally, payment bonds are currently a North American phenomenon. However, mandatory payment bonds have been considered in some other jurisdictions.” – Chapter 10: Surety Bonds, 2.2 Mandatory Surety Bonds

Although not required, frequently public projects are bonded, which provides those furnishing to public projects the ability to secure rights in the event they are not paid. But what happens to those who furnish to a project that isn’t bonded? How can they secure their right to get paid?

Right of Recourse: Public Projects in Ontario

As mentioned above, if a public project is bonded, then claimants have an opportunity to make a claim against the bond. You should review the terms of the bond to determine the deadline for claims, but frequently the deadline is within 120 days from last furnishing materials or services.

Claimants may also have the right to a Public Improvement Lien (aka lien on funds).

What Changes Would the Review Group Like to See

The committee reviewing the Act partnered with the Surety Association of Canada and came up with the greatest recommendation: a requirement for bonds on all public projects!

  • The Act should be amended to require broad form surety bonds to be issued for all public sector projects, the form of such surety bonds should be developed in consultation with the Surety Association of Canada, and once finalized they should become Forms under the Act.
  • The Act should be amended to require sureties to pay all undisputed amounts within a reasonable time from the receipt of a payment bond claim.
  • A Regulation to the Act should be promulgated to embody a surety claims handling protocol, and that such surety claims handling protocol be developed in consultation with the Surety Association of Canada.

As noted earlier, payment bonds are not required by statute right now. In the event a party is not paid and isn’t able to file a lien on funds, the only recourse available is to go after parties individually. A requirement for payment bonds would be great news for those furnishing to public projects.

Hopeful!

Again, a required payment bond is a recommendation from the committee reviewing the Act, it’s not actual legislation…yet. Stay tuned!

Maryland Mechanics Lien Rights Are Just Ducky

Posted on November 9, 2016 by - Mechanic's Liens & Bond Claims

If It Walks Like a Duck & Talks Like a Duck, It Must Be a Maryland Mechanic’s Lien

Furnishing to a construction project in Maryland? Be cautious when securing your mechanic’s lien rights.

Ah Maryland, home of the Chesapeake Bay, which is home to hundreds of various birds, including duckies! Although its waterfowl are quite impressive, Maryland is a bit of an odd duck in the mechanic’s lien world. Being an odd duck isn’t a bad thing, but flying right to suit for your mechanic’s lien may seem a bit quackers. (Enough with the duck, I promise.)

In Maryland, Lien is Suit

Securing your right to a mechanic’s lien in Maryland is not merely the recording of a document. You actually have to petition the court for the approval to establish a mechanic’s lien. Here’s more information from The National Lien Digest:

Notice

Notice of Intention:

  • Serve notice of intention to claim lien upon the owner within 120 days after last furnishing materials or services.
  • When contracting directly with the owner, no notice is required.

In order to have lien rights on an improvement to an existing structure, the building must be repaired to the extent of 15% of its value (25% of its value if a tenant ordered the improvement).

Lien / Suit

  • File a Petition to Establish the Mechanic’s Lien within 180 days after last furnishing materials or services.
  • File a Petition to Enforce the Mechanic’s Lien within 1 year from the date the Petition to Establish the Mechanic’s Lien was filed.
  • It is recommended that the Petition to Establish and to Enforce the Mechanic’s Lien be filed at the same time.

This unique process for the approval of your petition to establish a lien may be accompanied by significant scrutiny of your claim.

In more traditional states, invalid liens can be filed quite easily (It’s illegal and you shouldn’t do it! But it happens.) because there isn’t a judge reviewing your lien and determining whether or not you can proceed with the recording. It’s typically not until the foreclosure stage that the validity of a lien is even questioned.

The Judge’s Scrutiny, Leaves Claimant without Lien Rights

The case, ARCO/Murray Nat’l Constr. Co., Inc. v. Equitable Development, LLC, Dist. Court, D. Maryland 2016, went before District Judge James K. Bredar, who dismissed the claimant’s request to establish a mechanic’s lien, because the claimant was still furnishing at the time of its request.

Equitable Development, LLC (ED) hired general contractor, ARCO/Murray Nat’l Constr. Co., Inc. (ARCO), to convert an old office building into luxury apartments and retail space. The original contract amount was $18,274,000 but with change orders, the contract amount rose to $21,095,833.

As of 1/29/16, ED had paid ARCO $19,931,333, leaving ARCO with a claim amount of $1,164,500. ARCO petitioned the court for the right to establish the mechanic’s lien. ED argued that ARCO wasn’t entitled to the lien, because ARCO didn’t comply with statute and filed their petition too early.

The court agreed.

“The pertinent language is that in § 9-105(a): “A person entitled to a lien shall file proceedings in the circuit court for the county where the land or any part of the land is located within 180 days after the work has been finished or the materials furnished.” As Equitable points out, ARCO/Murray expressly alleged that, at the time it filed its petition, it was continuing to work on the project. Thus, the work was not finished when ARCO/Murray sought to claim a lien.”

The notion of a premature filing of their lien petition was reinforced, when ARCO included unapproved change notices in its claim amount.

“The fact that ARCO/Murray included unapproved change orders to support its claim lends credence to the conclusion that ARCO/Murray’s petition was premature. If the work had been finished, then ARCO/Murray could have relied upon executed change orders to prove what it is due. Because the work was not finished, however, ARCO/Murray could not properly support its petition with executed change orders. At the time ARCO/Murray filed its petition, its work was continuing, as were the communications between the parties on work still to be done, and no final accounting had taken place.”

Takeaway

Always have documentation to support your claim (change notices, invoices, bills of lading, etc.). Strictly adhere to statute & seek legal guidance to ensure you are proceeding correctly.

Regardless of where your project is located, you should never file an invalid mechanic’s lien. You should always be prepared for your lien to be scrutinized, even if the scrutiny doesn’t happen until it’s time to foreclose the lien.

In this case, ARCO’s proverbial goose may be cooked, but it’s a recent opinion that has likely just embarked on its flight through the judicial system.

A Material Supplier Wins in Recent Nevada Decision

Posted on October 28, 2016 by - In Other Commercial Credit News

A Material Supplier Wins in Recent Nevada Decision

It’s a win for the material supplier! A recent Nevada court decision invalidated an unconditional lien waiver when the subcontractor’s check to the material supplier failed to clear, leaving the material supplier unpaid.

The Case

Cashman Equip. Co. furnished specially fabricated materials to the Las Vegas City Hall project, and signed an unconditional waiver in exchange for payment from two higher tiered contractors, Mojave Electric and Cam.

Mojave Electric paid Cam and then Cam was to pay Cashman. Unfortunately, the first check Cashman received from Cam didn’t clear because Cam placed a stop payment on the check. The second check Cashman received from Cam didn’t clear due to insufficient funds.

Cashman did what was necessary to recover its money by filing a mechanic’s lien and then suit in the amount of $755,893.89. The trial court did award Cashman some funds (just under $300k based on an “equitable analysis”) but decided Cashman’s lien was unenforceable because of the executed unconditional lien waiver.

It Went to Appeal

Cashman was vindicated when the appeals court reversed the trial court’s decision, because it deemed the enforcement of an unconditional waiver, in this case, would violate Nevada’s public policy. Here’s what the judge had to say:

“The purpose of the mechanic’s lien statutes is to ensure payment to those who supply materials and labor on a project… Enforcing the unconditional waiver here would violate Nevada’s public policy, just like the pay-if-paid provision in the contract at issue in Lehrer violated public policy. And the very clear language of NRS 108.2457(5)(e) dictates that the waiver is void and unenforceable because Cashman never received payment. Here, Cashman’s agent testified at trial that he executed the lien release believing, despite the waiver language contained in the release, Nevada law would protect Cashman if Cam’s check did not clear the bank. The parties do not dispute that Cam’s check to Cashman did not clear the bank. Therefore, the waiver is void. Just as we refused to enforce the pay-if-paid provision in Lehrer, we likewise refuse to enforce Cashman’s release.”

Above, I mentioned Cashman had received some funds. This case also addressed “equitable fault” which authors Tracy DiFillippo and Kevin Stolworthy recapped in Nevada Supreme Court Ruling Means Additional Liability for Owners, Contractors and Subcontractors.

“The Court also rejected the application of the equitable fault analysis to reduce a mechanic’s lien. The trial court had initially found that Mojave and Cashman were innocent victims but found Mojave 33 percent responsible and Cashman 67 percent responsible for Cam’s actions. Based on the percentages, the trial court reduced the mechanic’s lien. On appeal, the Nevada Supreme Court concluded that equitable fault analysis was inappropriate to reduce the amount due under the mechanic’s lien.”

Be Careful!

Lien waivers can be precarious. We’ve discussed unconditional and conditional lien waivers before, and of course would always recommend parties sign conditional waivers as opposed to unconditional.

Should I Amend My Preliminary Notice?

Posted on October 24, 2016 by - Mechanic's Liens & Bond Claims

Should I Amend My Preliminary Notice? What Does ‘Amend’ Mean? Why Should I Amend It?

You’ve heard about the Tappan Zee Bridge project, yes? Well, this project has been going on for quite some time, various parties have come on and off the job, some of the construction has been delayed, and the number of change orders is climbing. The website dedicated to this construction, indicates it will take 14 miles of span cables, 50 miles of foundation pilings, 300 thousand cubic yards of concrete and 220 million pounds of U.S. steel! Whoa!

So what does Tappan Zee Bridge have to do with today’s post?

Construction projects, large & small, are ever-changing. Contract amounts, purchase orders, delivery dates, suppliers and laborers can change at any time (even multiple times) during a construction project. If you are securing your right to a mechanic’s lien or bond claim, by serving a preliminary notice, changes like these could mean that you need to amend your notice.

What Do You Mean ‘Amend’ My Notice?

In its simplest form, to amend means to alter or change text.

If you serve a preliminary notice, there are pieces of information within the notice that are statutorily required (the ladder of supply, your contract / claim amounts, a description of the materials you are providing etc.).

In the event the required information changes after you serve your notice, you may need to send the notice again, but with the corrected or changed information.

I’m frequently asked if an amended notice looks different than a preliminary notice. The truth is, not really — it’s the same document, with an updated party, project, dollar amount etc.

OK, Why Should I Amend My Notice?

Here are a few reasons or events that may warrant the sending of an amended notice:

  • The amount of your contract increases (generally recommended when contracts increase by 20% or more)
  • There are changes to the ladder of supply (e.g. the general contractor leaves the job & a new party takes over)
  • You receive information regarding a lender
  • Mail is returned for a party that is required to receive a copy of the notice
  • You receive the Notice of Commencement that contains additional or changed information (e.g. in Georgia, statute is very particular, your notice must match the information on the Notice of Commencement)

This isn’t an exhaustive list, but does cover the most common reasons.

I Don’t Want to Take the Time or Money to Send Another Notice, It’ll Be Alright as Is

You could certainly risk it and not send an amended notice when one of the situations above presents itself. But let me remind & warn you of some things:

  • Remind: our research shows that over 95% of the time, the proper drafting & service of a preliminary notice will get you paid, with no further action required. In terms of spending, this is great news, because sending a notice costs much less than filing a lien!
  • Warn: if you opt out of sending the amended notice, you may jeopardize your rights to secure a mechanic’s lien. You have to weigh the risk: send an amended notice at a low cost or end up with an unpaid claim and no lien rights.

Best Practice

If the information in your initial preliminary notice becomes outdated, I would recommend sending an amended (up-to-date) notice. The costs associated with serving a notice are minimal, especially compared to the costs of a potential write-off.

Can Laborers File a Mechanic’s Lien in Washington?

Posted on October 4, 2016 by - Mechanic's Liens & Bond Claims

Per a court of appeals decision…yes! In the case of Guillen v. Pearson, Wash: Court of Appeals, 2nd Div. 2016, the court of appeals affirmed that those providing labor to a construction project have the right to recovery via the mechanic’s lien process.

A Bit of Background

Milestone at Wynnstone, LLC (Milestone) hired a subcontractor, ABSI Builders, Inc. (ABSI), to provide services for the “construction of exterior and interior walls, floors and roofs, and installation of trusses, sheeting, windows, and sliding doors” of an apartment complex in Puyallup, Washington.

ABSI failed to pay its employees and, in turn, the employees filed a mechanic’s lien on the property.

Can ABSI’s Employees File a Mechanic’s Lien for Unpaid Wages?

Yes. According to the court of appeals, ABSI’s employees were entitled to mechanic’s lien rights based on statute interpretation.

Who is Entitled to a Mechanic’s Lien in Washington? What is a Person?

First, we will look to statute to determine who is entitled to a mechanic’s lien in Washington.

“any person furnishing labor, professional services, materials, or equipment for the improvement of real property shall have a lien upon the improvement for the contract price of labor, professional services, materials, or equipment furnished at the instance of the owner, or the agent or construction agent of the owner.” – RWC 60.04.021

To define “person,” we turn back to the court opinion, where the court defined the term “labor” as the “exertion of the powers of body or mind performed at the site for compensation” and the term “person” as “an individual human being.”

“Here, a plain reading of RCW 60.04.021 indicates that the laborers are ‘any person furnishing labor.’ The laborers are individual human beings who constructed the framing of the buildings in exchange for compensation from ABSI.

The statute does not define ‘person’ as a licensed contractor, nor does the statute indicate that ‘person’ excludes employees of a licensed contractor. And Milestone cites no authority supporting such a limitation. Milestone’s argument that the laborers are not entitled to a lien because they are unlicensed employees would require us to read into the statute requirements that do not exist in the plain language.

Accordingly, we hold that the laborers are persons who are entitled to a lien under RCW 60.04.021.”

The court reminding us, of course, that statute should be interpreted as plain language.

ABSI’s Employees are “Persons”

Now that we have cleared up the little matter of determining that these laborers are in fact people and are entitled to a mechanic’s lien, let’s see what the court of appeals decided.

“We hold that (1) RCW 60.04.021 entitles individual, unlicensed laborers to construction liens for their labor if their work was furnished at the instance of the owner or the owner’s agent or construction agent, (2) the laborers are entitled to a lien because their labor was furnished at the instance of ABSI, which as a subcontractor was Milestone’s construction agent, and (3) based on the laborers’ unchallenged argument, the laborers timely filed and timely served their lien action…”

In other words, ABSI’s employees were entitled to the mechanic’s lien they filed and the lien was filed timely. So this case heads back to trial court for further proceedings.

Don’t Count Me Out

Although this case is not officially over, it’s a good reminder that mechanic’s lien rights are designed to protect those providing materials and/or services to a construction project. Don’t automatically assume you can’t use the mechanic’s lien process to recover unpaid monies based on your place in the contractual chain. Take the time to review statute or seek a legal opinion

Is the Subcontractor’s Foreclosure Action Out

Posted on September 19, 2016 by - Mechanic's Liens & Bond Claims

Is the Subcontractor’s Foreclosure Action Out? Here’s a Look at a Case in Utah.

In Garlett Construction, Inc. v. Leonard, Dist. Court, D. Utah 2016, the owners tried their darnedest to contest the validity of the subcontractor’s foreclosure action, but ultimately struck out.

The Players

  • Project:  Residence in Moab, Utah
  • Owners: Curtis & Genevieve Leonard
  • General Contractor: White Horse
  • Claimant/Subcontractor: Garlett Construction, Inc.

The 3 Pitches

The Leonard’s were contesting Garlett’s foreclosure action for 3 reasons.

  1. Garlett is an unlicensed contractor
  2. Garlett’s preliminary notice is defective
  3. Garlett signed lien waivers, waiving their right to enforce a mechanic’s lien

First, here’s a quick overview of the necessary steps for securing mechanic’s lien rights in Utah.
Three green icons are shown: an envelope, a municipal building, and a judge's gavel. Beneath the envelope are the words: Notice - within 20 days from first furnishing. Beneath the municipal building are the words: Lien - within 90 days from notice of completion or within 180 days from final completion if no notice of completion. Release - satisfied lien promptly and within 10 days from demand. Beneath the judge's gavel are the words: Suit - within 180 days from filing lien. Release - satisfied lien promptly within 10 days from demand.

The above is for commercial or residential projects, however, there is one additional note for those furnishing to residential projects:

“If the owner can prove compliance with the requirements of the Residential Lien Recovery Fund, the lien will have to be released. The claimant can apply to the fund for payment of the claim provided a judgment has been obtained against the debtor and the claimant is registered with the fund. Suit to enforce a claim under the Lien Recovery Fund must be filed within the earlier of 180 days from filing the lien or 270 days from completion of the original contract.” – The National Lien Digest

A Swing & A Miss

The first issue is whether or not Garlett could proceed with their foreclosure action based on the validity (or lack thereof) of their contractor’s license. Although there were minor discrepancies with their licensure, the court determined that Garlett is a licensed contractor.

Strike Two…

The second issue is whether or not Garlett’s preliminary notice was valid. The Leonards argued that Garlett’s preliminary notice was invalid because it did not comply with requirements set forth by the Residence Lien Restriction and Lien Recovery Fund Act.

Unfortunately for the Leonards, these provisions apply to the general contractor and/or real estate developer and Garlett’s contract was with the general contractor, making them exempt from these requirements.

That didn’t satisfy the Leonards and they took it one step further, stating Garlett’s notice didn’t comply with statute, because the notice filed with the State Construction Registry “indicated” that Garlett’s contract was with the owner. Again, the court sided with Garlett. It turns out, statute and the State Construction Registry aren’t 100% in sync.

“the Leonards’ ‘Unconditional Lien Waivers’ are unenforceable. ‘[T]he sole criteria for the execution of an effective lien waiver are … the execution of a “waiver and release signed by the lien claimant or the lien claimant’s authorized agent,” and the receipt of “payment of the amount identified in the waiver and release”’… The Leonards’ ‘Unconditional Lien Waivers’ do not identify any amount for which those waivers purportedly apply, nor is there any evidence of record that GCI was paid any amounts in connection with those waivers.”

Strike 3, You’re Out!

On to the third issue. In its final issue, the Leonards argued that Garlett gave up their right to foreclose their mechanic’s lien, because Garlett signed unconditional lien waivers.

Although Garlett signed these waivers, which were supplied by the Leonards, the waivers didn’t comply with statute, making them null & void.

“… the Leonards “Unconditional Lien Waivers” are unenforceable. “[T]he sole criteria for the execution of an effective lien waiver are … the execution of a `waiver and release signed by the lien claimant or the lien claimant’s authorized agent,’ and the receipt of `payment of the amount identified in the waiver and release… The Leonards’ Unconditional Lien Waivers” do not identify any amount for which those waivers purportedly apply, nor is there any evidence of record that GCI was paid any amounts in connection with those waivers.”

Garlett Pulls Ahead

At this point, Garlett is in the lead. They filed their preliminary notice, filed their mechanic’s lien & commenced a foreclosure action; all of which have been deemed valid by the courts. However, this decision is recent and will likely see more litigation.

Takeaways

  • Check state requirements for contractors’ licenses to insure you are in compliance.
  • Although the SCR has a particular format for preliminary notices, it’s important to list all parties within your contractual chain.
  • Watch the Waiver! Be cautious when signing lien waivers. The Garlett’s lucked out, because the Leonards’ waivers didn’t contain required information. But if it had contained the necessary info, Garlett could have lost all rights.

Florida: Serving a Notice to Owner

Posted on August 9, 2016 by - Mechanic's Liens & Bond Claims

Furnishing to a Construction Project in Florida? Make Sure You Serve the Florida Notice to Owner

If you are furnishing to a construction project in Florida, you should bookmark this post! This post is dedicated to serving preliminary notices in Florida and includes pertinent deadlines and requirements.

You’ve Got 45 Days

In Florida, the private preliminary notice is also referred to as the Notice to Owner (“NTO”). Those furnishing to a private project in Florida should serve notice upon the owner, and upon all parties in the contractual chain between their customer and the owner, prior to or within 45 days from first furnishing materials or services.

In Florida, the preliminary notice must be received within the 45-day period, which means that simply mailing it on the 45th day is insufficient. If you supply specially fabricated materials, your clock begins sooner, and the notice must be served prior to or within 45 days from the date fabrication begins.

Florida NTO Tidbits

  • It’s recommended you also serve a copy of the notice upon the lender when they are listed on the Notice of Commencement.
  • If you provide materials or services to a leasehold property, serve demand upon the lessor for a copy of the provisions in the lease that prohibit a lien against the property. If a copy is not provided to the claimant, the lessor’s property may be subject to a lien, rather than the claimant being limited to liening the leasehold interest.
  • On residential (single- or multiple-family dwellings of up to and including four units) improvements, a prime contractor must include a statutory notice provision in their contract.

Little known fact: When contracting directly with the owner on a private project, no notice is required. Keep in mind, just because it isn’t required doesn’t mean that serving a notice won’t help to get you paid. NCS Best Practice is to serve a notice on every project.

How Should I Serve My Notice?

With a side of rice and fresh veggies! Kidding, only kidding. I recommend serving the Notice to Owner via certified mail but Florida statute dedicates an entire section of their statute to the “Manner of serving notices and other instruments.”

Here’s a small snippet

713.18 Manner of serving notices and other instruments. —

(1) Service of notices, claims of lien, affidavits, assignments, and other instruments permitted or required under this part, or copies thereof when so permitted or required, unless otherwise specifically provided in this part, must be made by one of the following methods:

(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.

Florida Notice to Contractor – Public Projects

If you are furnishing to a public project, there are only a few differences than when furnishing to a private project. Of course, for public projects, you are securing your right to make a claim against the bond, as mechanic’s lien rights are not available on public projects. The public notice is referred to as a Notice to Contractor instead of a Notice to Owner. Plus:

  • If you are contracting with the owner on a public project, bond claim rights are unavailable.
  • If you are contracting with the general contractor on a public project, no notice is required.
  • If you are furnishing to a Department of Transportation project, you should serve the notice upon the prime contractor prior to or within 90 days from first furnishing.

Love a Quick Comparison

I’m visual and love charts and graphs explaining information, so here’s a comparison we provide to subscribers of The National Lien Digest.

As always, please remember that this information is not an exhaustive list of all things Florida; rather, it’s an outline of the steps necessary to secure your rights.

Bond Claim Rights on Louisiana Public Projects

Posted on July 25, 2016 by - Mechanic's Liens & Bond Claims

Bond Claim Rights on Louisiana Public Projects

Are you furnishing to a public project in Louisiana? Let this case be a lesson of the importance of strictly adhering to deadlines set forth by statute!

The Case

Non-Flood Protection Authority (“Owner”) is the owner of the public improvement, commonly known as James Wedell Hangar Project, at the New Orleans Lakefront Airport.

Owner hired general contractor, GM&R Construction Company (“GM&R”), who hired two subcontractors: M&M Concrete (“M&M”) and Tom Branighan (“Tom”).

The first date of importance is the date Owner filed the Certificate of Substantial Completion: May 28, 2014.

Why Does Substantial Completion Matter?

In Louisiana, unpaid parties must serve a sworn statement of amounts due upon the public entity and record it in the office of the recorder of mortgages for the parish in which the work is done. It must be recorded within 45 days after acceptance of the project or within 45 days  after a notice of default (whichever first occurs).

Back to the Case

Neither M&M nor Tom were paid in full with claim amounts of $56,572.00 and $49,729.20 respectively.

On August 18, 2014, M&M filed its statement of claim – 82 days after the filing of the Certificate of Substantial Completion. GM&R notified M&M that its claim was untimely and, subsequently, M&M sent a notification to Owner and GM&R advising that the claim would be cancelled, even though M&M hadn’t been paid in full.

On September 24, 2014 – 119 days after the filing of the Certificate of Substantial Completion – Tom served its statement of claim, but did not file it.

General Contractor Makes Bank

In early October 2014, GM&R went to the Orleans Parish Clerk of Court and obtained a “Lien and Privilege Certificate” to provide to Owner. This certificate confirmed there were no existing or prior liens. Upon receipt of this document, Owner promptly remitted final payment to GM&R.

GM&R is now paid in full.

If All Else Fails, Claim, Claim Again?

December 2014 rolled around and M&M and Tom were still unpaid even though both parties filed claims with the parish mortgage recorder. For those doing the math, we are now over 200 days from the date of substantial completion.

Fast forward to April 2015. Having not been paid, M&M and Tom filed suit against Owner to recover their monies. Owner disputed the subcontractors’ rights to file suit, based on the untimely filing of their claims.

“You’re Late!” The Court Agreed

According to the Order:

“It is undisputed that M&M Concrete and Tom Branighan did not timely file their claims in accordance with subsection 2242(B). The Non-Flood Protection Authority recorded its acceptance of work, via its “Certificate of Substantial Completion,” in the mortgage records on May 28, 2014. At the earliest, M&M Concrete served the Non-Flood Protection Authority with a sworn statement of its claim on August, 18, 2104, nearly three months later. Tom Branighan did not serve the Authority with its claim until September 24. Because M&M Concrete and Tom Branighan failed to comply with the applicable deadline, the Court grants summary judgment on the cross-claim for their outstanding debts against the Non-Flood Protection Authority.”

The Lesson

Know the various statutory deadlines BEFORE you find yourself making late claims. Track deadlines diligently and don’t risk non-payment by delaying the filing of your claim. As always, seek legal guidance!

Bonus: Louisiana Public Projects (excluding DOT projects)

Here are the notice and claim requirements for public projects in Louisiana, courtesy of The National Lien Digest©.

Notices

Notice of Non-Payment: Serve notice of non-payment upon the owner and prime contractor within 75 days from the last day of the month for EACH month in which materials were furnished, but within the period in which a sworn statement must be filed. If the notice of non-payment is not given, the sworn statement will be limited to a claim under the payment bond and will not act as a lien on the funds being held by the public entity.

  • A notice of non-payment is not required:
    • when contracting directly with the prime contractor,
    • when providing labor and materials or only labor,
    • when the general contract has not been recorded, or
    • to protect your rights under the payment bond.

Lessor of equipment: Serve a copy of the lease upon the owner and prime contractor within 10 days after the equipment is first placed on the project site.

Bond Claim

Serve sworn statement of amounts due upon the public entity, and record it in the office of the recorder of mortgages for the parish in which the work is done, within 45 days after acceptance of the project or a notice of default (whichever first occurs). When contracting directly with a subcontractor, also serve a notice upon the prime contractor within 45 days after acceptance of the project or a notice of default. The sworn statement also acts as a lien against the funds being held by the public entity.

Need help serving your notice or bond claim? NCS can help!