Tennessee Mechanic’s Lien Rights & Everything You Should Know
It’s the home of the Grand Ole Opry, Music Row, Graceland, Great Smoky Mountains National Park, the Belmont Mansion and even Justin Timberlake! It’s Tennessee. Securing mechanic’s lien rights on Tennessee projects can be challenging. In today’s post we will break down the requirements to put you on the path to payment!
Tennessee Mechanic’s Liens
In Tennessee (TN), the preliminary notice requirements are dictated by the project type (commercial or residential) and who you contracted with (directly with the owner or another member of the ladder of supply).
If you are furnishing to a private commercial project & you contracted directly with the owner, you should serve a notice upon the owner prior to commencing the project. As the prime contractor, you may record your contract to have priority over subsequent conveyances.
If you are furnishing to a private commercial project & you contracted with the prime contractor or a subcontractor, you should serve a notice of non-payment upon the owner and prime contractor within 90 days from the last day of EACH month in which materials or services are provided.
Yikes, that’s a mouthful!
Here’s an example:
If you furnish February 7, 2019 your notice of non-payment for your February furnishing is due May 29, 2019. (90 days from February 28 is May 29.)
Now, if you are paid for your February furnishing before the May 29th deadline, then you don’t need to serve a notice of non-payment.
TN courts have ruled the notice of non-payment must be received within the 90-day period. This means, the document must be in the hands of the required parties by the 90th day – you can’t simply drop it in the mail on day 90.
Residential projects are a bit different. First, it’s important to understand that a residential project is defined as owner-occupied one-, two-, three-, or four-family dwelling units.
Unlike its commercial counterpart, for those furnishing to residential projects, a notice of non-payment is not required for months furnished but unpaid. HOWEVER, you will only have mechanic’s lien rights on a residential project if you contract directly with the owner.
Mechanic’s lien deadlines in TN are dictated by project completion or abandonment. For commercial projects, you should file the lien and serve a notice of the lien on the owner within 90 days after completion or abandonment of the project or 30 days from the date the notice of completion was filed.
For residential projects, you should file the lien and serve a notice of the lien on the owner within 90 days after completion or abandonment or 10 days from the date the notice of completion was filed.
Calculate your deadlines conservatively!
Knowing the date of project completion can be difficult, to say the least. We recommend calculating your mechanic’s lien deadline 90 days from your last furnishing date.
TN statute provides an example the Notice of Lien. At face value it appears to be no big deal – it’s just a form. But remember, it really isn’t JUST a form – to have a valid lien you must complete and properly record the document with correct required information! (see 66-11-112. Preservation of priority of lien for subsequent purchasers or encumbrances — Abandonment — Lien on structure with water furnished by well — Form for notice of lien)
Our research shows less than 1% of your projects will go to suit.
In the unlikely event you need to file suit to enforce your mechanic’s lien, you should file suit within 90 days from the date the lien is served upon the owner. If you are contracting directly with the owner, you should file suit within 1 year from completion or abandonment of the project.