March 8, 2010
Recent decisions of the Georgia Court of Appeals have confirmed the requirement that a valid Notice of Commencement of the construction project must set out the true owner of the property on which the improvements are being made, and that it also must include a legal description of the property being improved. The failure to correctly list the property owner and include a legal description of the property will make the Notice of Commencement invalid, thus relieving a potential remote lien claimant of the requirement to provide a Notice to Contractor to the Owner and Contractor in order to preserve lien rights. In addition, another Georgia Court of Appeals case held that the failure to file the Notice of Commencement within 15 days of physically starting work at the project site will not render the Notice of Commencement invalid, and will not relieve a remote lien claimant from its obligation to serve a Notice to Contractor, if the Notice of Commencement is filed by the time a potential lien claimant must have provided its Notice to Contractor. In other words, a late-filed Notice of Commencement, or a defective Notice of Commencement which is later correctly filed, still may be valid and enforceable as to remote lien claimants who have not supplied labor, material or equipment to the project site at the time of the filing of the proper Notice of Commencement. Although this Georgia Court of Appeals case did not specifically address the consequences of a re-filing of a Notice of Commencement to replace a previously-filed but defective Notice of Commencement, the rationale of the Court would suggest that such a re-filed Notice of Commencement will still be valid as to later-performing sub-subcontractors and suppliers to subcontractors.
For more information, contact Frank Riggs, Contributing Author of the Georgia Chapter at frank.riggs@troutmansanders.com
Frank E. Riggs, Jr., Esquire (Contributing Author)
Troutman Sanders, LLP
Monday, March 8, 2010
Friday, March 5, 2010
Lien Law Online eLert for 3/5/2010 - Oregon
March 5, 2010
The Oregon chapter of Lien Law Online has been updated and revised to account for recent changes in Oregon law. We would like to welcome our new Contributing Author for Oregon, Thomas A. Larkin, Esq who is with the firm of Stewart Sokol & Gray, LLC in Portland.
Below is a summary of Oregon's 2010 lien law updates:
Information Notice to Owner
Oregon now requires the original contractor on a residential project to furnish an “Information Notice to Owner About Construction Liens” for contracts exceeding $2,000. ORS 87.093(4). Where the contract value is initially below $2,000, but subsequently increases during the course of performance, the contractor must deliver this notice not later than five days after he / she knows or reasonably should know that the contract will exceed $2,000. Id. These provisions change the previous $1,000 minimum contract value requirement for residential improvements. Other statutory Information Notice to Owner requirements remain the same.
The Oregon Legislature redacted a provision requiring delivery of an “Information Notice to Owner About Construction Liens” not later than five days after making an oral contract for a residential improvement.
Definition of Residential Construction and Residential Property
Oregon redefined “Residential construction or improvement” to mean “the original construction of residential property and the repair, replacement, remodeling, alteration or improvement of residential property.” ORS 87.093(8)(a).
“Residential property” now includes a residential dwelling’s driveway, swimming pool, terrace, patio, fence, porch, garage, basement and other adjacent or appurtenant structure to the residential dwelling. ORS 87.093(8)( c). Importantly, this list is not a limitation on what constitutes “residential property.”
Foreclosure
The county or its officer or employee cannot be named a party to a foreclosure suit. ORS 87.083(2).
For the county to release a lien or return the money for a cash deposit to remove the lien, Oregon now requires a person to notify the lien claimant and treasurer that no one commenced a foreclosure suit within the statutory time constraints. ORS 87.088(1). Further, the notice must state that the lien claimant has fifteen (15) calendar days to object to the lien release or return of the money. Id. The notice must inform the claimant that an objection requires documentation evidencing a timely commencement of foreclosure proceedings or that the time to initiate a suit did not expire. Id. In the event of an objection, the treasurer reserves the right to decide how to distribute the money or to commence an interpleader action. Id.
The upated and revised chapter is now online. To review the bio on the new Contributing Author, Thomas A. Larkin, click here.
Contributing Author contact info:
Thomas A. Larkin, Esquire (e-mail)
Stewart Sokol & Gray LLC (website)
The Oregon chapter of Lien Law Online has been updated and revised to account for recent changes in Oregon law. We would like to welcome our new Contributing Author for Oregon, Thomas A. Larkin, Esq who is with the firm of Stewart Sokol & Gray, LLC in Portland.
Below is a summary of Oregon's 2010 lien law updates:
Information Notice to Owner
Oregon now requires the original contractor on a residential project to furnish an “Information Notice to Owner About Construction Liens” for contracts exceeding $2,000. ORS 87.093(4). Where the contract value is initially below $2,000, but subsequently increases during the course of performance, the contractor must deliver this notice not later than five days after he / she knows or reasonably should know that the contract will exceed $2,000. Id. These provisions change the previous $1,000 minimum contract value requirement for residential improvements. Other statutory Information Notice to Owner requirements remain the same.
The Oregon Legislature redacted a provision requiring delivery of an “Information Notice to Owner About Construction Liens” not later than five days after making an oral contract for a residential improvement.
Definition of Residential Construction and Residential Property
Oregon redefined “Residential construction or improvement” to mean “the original construction of residential property and the repair, replacement, remodeling, alteration or improvement of residential property.” ORS 87.093(8)(a).
“Residential property” now includes a residential dwelling’s driveway, swimming pool, terrace, patio, fence, porch, garage, basement and other adjacent or appurtenant structure to the residential dwelling. ORS 87.093(8)( c). Importantly, this list is not a limitation on what constitutes “residential property.”
Foreclosure
The county or its officer or employee cannot be named a party to a foreclosure suit. ORS 87.083(2).
For the county to release a lien or return the money for a cash deposit to remove the lien, Oregon now requires a person to notify the lien claimant and treasurer that no one commenced a foreclosure suit within the statutory time constraints. ORS 87.088(1). Further, the notice must state that the lien claimant has fifteen (15) calendar days to object to the lien release or return of the money. Id. The notice must inform the claimant that an objection requires documentation evidencing a timely commencement of foreclosure proceedings or that the time to initiate a suit did not expire. Id. In the event of an objection, the treasurer reserves the right to decide how to distribute the money or to commence an interpleader action. Id.
The upated and revised chapter is now online. To review the bio on the new Contributing Author, Thomas A. Larkin, click here.
Contributing Author contact info:
Thomas A. Larkin, Esquire (e-mail)
Stewart Sokol & Gray LLC (website)
Wednesday, January 13, 2010
Lien Law Online eLert for 1/13/2010 - Illinois
January 13, 2010
The following change in the Illinois Mechanics Lien Act is in effect for Contracts entered into after January 1, 2010:
Section 7 of the Illinois Mechanics Lien Act has been amended to require original contractors for improvements to an owner-occupied single-family residence to give the owner written notice within 10 days after recording a mechanics lien. The amendment applies only to contracts entered into after January 1, 2010. This notice requirement is the only substantive change to Section 7. Other than adding subsection (d), which contains the new notice requirement, and breaking out Section 7's previously-existing statutory language into subsections (a), (b) and (c), Section 7 remains the same.
Kenneth M. Roberts, Esquire (Contributing Author)
Kevin L. Kolton, Esquire (Contributing Author)
Schiff Hardin LLP
The following change in the Illinois Mechanics Lien Act is in effect for Contracts entered into after January 1, 2010:
Section 7 of the Illinois Mechanics Lien Act has been amended to require original contractors for improvements to an owner-occupied single-family residence to give the owner written notice within 10 days after recording a mechanics lien. The amendment applies only to contracts entered into after January 1, 2010. This notice requirement is the only substantive change to Section 7. Other than adding subsection (d), which contains the new notice requirement, and breaking out Section 7's previously-existing statutory language into subsections (a), (b) and (c), Section 7 remains the same.
Kenneth M. Roberts, Esquire (Contributing Author)
Kevin L. Kolton, Esquire (Contributing Author)
Schiff Hardin LLP
Wednesday, December 30, 2009
Lien Law Online eLert for 12/29/2009 - Michigan
December 29, 2009
Michigan Homeowner Construction Lien Recovery Fund Runs out of Money
In a sign of the times, the Michigan Homeowner Construction Lien Recovery Fund is broke, and there is currently no way to replenish its coffers.
The Michigan Homeowner Construction Lien Recovery Fund (Fund) was created under Part 2 of the Michigan Construction Lien Act (MCL 570.1101, et seq) to provide protection when the homeowner, has in good faith, paid their licensed contractor for materials and labor and the contractor failed to compensate materialmen, subcontractors, and/or laborers.
The funding problem for the Fund stems from PA 497 of 2006, an amendment to the Michigan Construction Lien Act, which repealed Section 201(2) of the Act effective January 3, 2007. This amendment, reportedly the product of a legislative compromise, eliminated the ability of the Fund to make a $50 special assessment when the Fund fell below $1 million. Instead, the Fund can only assess members a $10 annual renewal fee.
Beginning in 2006 and continuing through July, 2009, the Fund experienced an unprecedented increase in claims. This increase closely mirrored the collapse of the housing market. The Fund is currently involved in over 250 pending lawsuits involving more than 350 claims against it that total more than $18 million. In 2009, Judgments against the Fund have averaged $123,800 per month. By mid-October, there was only $524,000 remaining in Fund coffers.
On October 21, 2009, the Fund sought to consolidate all 250 of the pending lawsuits into one proceeding in Macomb County and proposed a pro rata distribution of the remaining money among all the lien claimants. The result would be pennies on the dollar. The Fund’s (interpleader) motion was heard by Judge James Biernat, Sr. on November 2, 2009, but denied several weeks later in a written opinion.
As things stand now, and absent legislative intervention, the Fund will run dry within a few months. This will leave unpaid subcontractors and suppliers to fight things out with Homeowners, who will find themselves stuck in the middle of dispute with their builder and at significant risk of paying twice for improvements to their home.
For more information, contact Peter Cavanaugh Contributing Author or visit his website -- www.MichiganConstructionLaw.com
Visit LienlawOnline.com now!
Michigan Homeowner Construction Lien Recovery Fund Runs out of Money
In a sign of the times, the Michigan Homeowner Construction Lien Recovery Fund is broke, and there is currently no way to replenish its coffers.
The Michigan Homeowner Construction Lien Recovery Fund (Fund) was created under Part 2 of the Michigan Construction Lien Act (MCL 570.1101, et seq) to provide protection when the homeowner, has in good faith, paid their licensed contractor for materials and labor and the contractor failed to compensate materialmen, subcontractors, and/or laborers.
The funding problem for the Fund stems from PA 497 of 2006, an amendment to the Michigan Construction Lien Act, which repealed Section 201(2) of the Act effective January 3, 2007. This amendment, reportedly the product of a legislative compromise, eliminated the ability of the Fund to make a $50 special assessment when the Fund fell below $1 million. Instead, the Fund can only assess members a $10 annual renewal fee.
Beginning in 2006 and continuing through July, 2009, the Fund experienced an unprecedented increase in claims. This increase closely mirrored the collapse of the housing market. The Fund is currently involved in over 250 pending lawsuits involving more than 350 claims against it that total more than $18 million. In 2009, Judgments against the Fund have averaged $123,800 per month. By mid-October, there was only $524,000 remaining in Fund coffers.
On October 21, 2009, the Fund sought to consolidate all 250 of the pending lawsuits into one proceeding in Macomb County and proposed a pro rata distribution of the remaining money among all the lien claimants. The result would be pennies on the dollar. The Fund’s (interpleader) motion was heard by Judge James Biernat, Sr. on November 2, 2009, but denied several weeks later in a written opinion.
As things stand now, and absent legislative intervention, the Fund will run dry within a few months. This will leave unpaid subcontractors and suppliers to fight things out with Homeowners, who will find themselves stuck in the middle of dispute with their builder and at significant risk of paying twice for improvements to their home.
For more information, contact Peter Cavanaugh Contributing Author or visit his website -- www.MichiganConstructionLaw.com
Visit LienlawOnline.com now!
Thursday, December 10, 2009
Lien Law Online eLert for 12/8/2009 - New Jersey
December 8, 2009
On December 3, 2009, New Jersey Assemblyman Patrick J. Diegnan, Jr. introduced a bill that dramatically revises the New Jersey Construction Lien Law, N.J.S.A. 2A:44A-1 et seq. in accordance with a March 2009 proposal by the New Jersey Law Revision Commission. Assemb. 4319, 213th Leg. (N.J. 2009).
Specifically, according to the bill’s Statement, the proposed legislation revises the Construction Lien Law, which was enacted in 1993, by:
• clarifying and adding certain defined terms, especially pertaining to the meaning of “residential,” to conform to actual construction industry usage;
• clarifying (and in some cases rearranging) procedures for the filing and amending of the lien claim and for the calculation, distribution and enforcement of the lien fund;
• amplifying provisions for discharging a satisfied lien claim;
• adopting court holdings regarding the concepts of contract price, lien fund and lien claim;
• further defining the arbitrator’s role in residential construction contract lien arbitrations;
• modifying and adding time limits for filing and perfecting residential construction contract lien claims;
• specifying the application of lien claims to community association property; and
• addressing certain ambiguities as to mortgage priorities with respect to lien claims.
The bill also revises some statutory language simply to make it easier for participants in the construction industry to use the law. The bill enhances application of the current statute and clarifies the procedures to be followed in order to process and perfect a construction lien claim.
While the bill may not move prior to the end of this legislative session, it is likely that it will be reintroduced in the next session and move as early as mid-January 2010. We will follow the progress of the proposed legislation and provide updates as new information becomes available.
Dennis A. Estis, Esquire Contributing Author
Steven Nudelman, Esquire Contributing Author
Greenbaum, Rowe, Smith & Davis LLP
On December 3, 2009, New Jersey Assemblyman Patrick J. Diegnan, Jr. introduced a bill that dramatically revises the New Jersey Construction Lien Law, N.J.S.A. 2A:44A-1 et seq. in accordance with a March 2009 proposal by the New Jersey Law Revision Commission. Assemb. 4319, 213th Leg. (N.J. 2009).
Specifically, according to the bill’s Statement, the proposed legislation revises the Construction Lien Law, which was enacted in 1993, by:
• clarifying and adding certain defined terms, especially pertaining to the meaning of “residential,” to conform to actual construction industry usage;
• clarifying (and in some cases rearranging) procedures for the filing and amending of the lien claim and for the calculation, distribution and enforcement of the lien fund;
• amplifying provisions for discharging a satisfied lien claim;
• adopting court holdings regarding the concepts of contract price, lien fund and lien claim;
• further defining the arbitrator’s role in residential construction contract lien arbitrations;
• modifying and adding time limits for filing and perfecting residential construction contract lien claims;
• specifying the application of lien claims to community association property; and
• addressing certain ambiguities as to mortgage priorities with respect to lien claims.
The bill also revises some statutory language simply to make it easier for participants in the construction industry to use the law. The bill enhances application of the current statute and clarifies the procedures to be followed in order to process and perfect a construction lien claim.
While the bill may not move prior to the end of this legislative session, it is likely that it will be reintroduced in the next session and move as early as mid-January 2010. We will follow the progress of the proposed legislation and provide updates as new information becomes available.
Dennis A. Estis, Esquire Contributing Author
Steven Nudelman, Esquire Contributing Author
Greenbaum, Rowe, Smith & Davis LLP
Thursday, November 19, 2009
Lien Law Online eLert for 11/19/2009 - Maine
November 19, 2009
The contributing author on the Maine chapter of Lienlaw Online has made some minor changes and added additional, timely, information regarding Bond Claims on State Owned Projects. For convenience, the added information regarding Bond Claims is reprinted below:
Bond Claims on State Owned Projects
Projects involving “the construction, alteration or repair of any public building or other public improvement or public work, including highways” are covered by the Maine Public Works Surety Bond Law.[23] This law applies to any contracts exceeding $125,000 for the construction, alteration or repair of a public building. Maine’s mechanic’s lien law does not cover projects on state owned property; the unpaid subcontractor or supplier’s recourse is on a payment bond issued on the project.
The Surety Bond statute requires that the bond provided on a public project contain certain minimum requirements. Specifically, the bond has to protect those who have a direct contract with the general contractor and also those who have a direct contract with a subcontractor of the general contractor.[24] In other words, the payment bond provides coverage for two tiers: subcontractors and sub-subcontractors.
At the discretion of the state, Maine also allows an irrevocable reasonable letter of credit to be posted in lieu of a payment bond. The statute contains specific requirements for the financial institution issuing the letter of credit, including the fact that the institution must be federally insured and have a bond rating of A3 by Moody’s or A− by Standard and Poor.[25]
A supplier (or subcontractor) to a subcontractor of the general contractor has specific notification requirements which must be followed. Those without a direct contract with the general contractor must provide written notice to the general contractor within 90 days of the date on which the last labor or material was furnished and suits on all bond claims must be filed within one year.[26] The notice must state the amount claimed and the name of the party to whom the material was furnished or labor supplied. This notice needs to be sent by registered or certified mail, postage pre-paid, with an envelope addressed to the contractor any place the contractor maintains a residence or conducts business. Failure to comply with the requirement of notice by registered or certified mail may not invalidate a bond claim as long as the general contractor has received actual written notice of the claim. [27]
All changes have been uploaded on the website for immediate review.
John A. Hobson, Esquire (Contributing Author)
Perkins Thompson, P.A.
The contributing author on the Maine chapter of Lienlaw Online has made some minor changes and added additional, timely, information regarding Bond Claims on State Owned Projects. For convenience, the added information regarding Bond Claims is reprinted below:
Bond Claims on State Owned Projects
Projects involving “the construction, alteration or repair of any public building or other public improvement or public work, including highways” are covered by the Maine Public Works Surety Bond Law.[23] This law applies to any contracts exceeding $125,000 for the construction, alteration or repair of a public building. Maine’s mechanic’s lien law does not cover projects on state owned property; the unpaid subcontractor or supplier’s recourse is on a payment bond issued on the project.
The Surety Bond statute requires that the bond provided on a public project contain certain minimum requirements. Specifically, the bond has to protect those who have a direct contract with the general contractor and also those who have a direct contract with a subcontractor of the general contractor.[24] In other words, the payment bond provides coverage for two tiers: subcontractors and sub-subcontractors.
At the discretion of the state, Maine also allows an irrevocable reasonable letter of credit to be posted in lieu of a payment bond. The statute contains specific requirements for the financial institution issuing the letter of credit, including the fact that the institution must be federally insured and have a bond rating of A3 by Moody’s or A− by Standard and Poor.[25]
A supplier (or subcontractor) to a subcontractor of the general contractor has specific notification requirements which must be followed. Those without a direct contract with the general contractor must provide written notice to the general contractor within 90 days of the date on which the last labor or material was furnished and suits on all bond claims must be filed within one year.[26] The notice must state the amount claimed and the name of the party to whom the material was furnished or labor supplied. This notice needs to be sent by registered or certified mail, postage pre-paid, with an envelope addressed to the contractor any place the contractor maintains a residence or conducts business. Failure to comply with the requirement of notice by registered or certified mail may not invalidate a bond claim as long as the general contractor has received actual written notice of the claim. [27]
All changes have been uploaded on the website for immediate review.
John A. Hobson, Esquire (Contributing Author)
Perkins Thompson, P.A.
Monday, November 16, 2009
Lien Law Online eLert for 11/13/2009 - California
November 13, 2009
Upcoming Changes in California Lien Law
Several subscribers have sent inquiries regarding changes in California's lien law which were recently passed by the CA legislature. In fact, changes are forthcoming, but they will not take effect until January 1, 2011.
There will be two changes in the lien law statutes in California. Under the first change, after January 2011, lien claimants will need to serve any mechanic's lien they record on the project owner along with a Notice of Mechanic's Lien to perfect their lien rights. The specific terms to be used in the Notice of Mechanic's Lien will be set forth in a revised Section 3084 of the California Civil Code. The specific wording, which must be used for the Notice of Mechanic's Lien, will be updated on the website prior to the effective date.
Under the second change, a lien claimant will need to record a Notice of Lis Pendens with the County Recorder's Office when filing a Lien Forclosure action after January 1, 2011. Specifically, the Notice of Lis Pendens will need to be recorded within 20 days after filing the Lien Foreclosure action. This change will be accomplished through a revised Section 3084 of the California Civil Code 3146.
The foregoing changes will be incorporated into the California chapter when we get closer to the changes going into effect.
Deborah S. Ballati, Esquire, Contributing Author
B. Scott Douglass, Esquire, Contributing Author
Farella Braun & Martel, LLP
Upcoming Changes in California Lien Law
Several subscribers have sent inquiries regarding changes in California's lien law which were recently passed by the CA legislature. In fact, changes are forthcoming, but they will not take effect until January 1, 2011.
There will be two changes in the lien law statutes in California. Under the first change, after January 2011, lien claimants will need to serve any mechanic's lien they record on the project owner along with a Notice of Mechanic's Lien to perfect their lien rights. The specific terms to be used in the Notice of Mechanic's Lien will be set forth in a revised Section 3084 of the California Civil Code. The specific wording, which must be used for the Notice of Mechanic's Lien, will be updated on the website prior to the effective date.
Under the second change, a lien claimant will need to record a Notice of Lis Pendens with the County Recorder's Office when filing a Lien Forclosure action after January 1, 2011. Specifically, the Notice of Lis Pendens will need to be recorded within 20 days after filing the Lien Foreclosure action. This change will be accomplished through a revised Section 3084 of the California Civil Code 3146.
The foregoing changes will be incorporated into the California chapter when we get closer to the changes going into effect.
Deborah S. Ballati, Esquire, Contributing Author
B. Scott Douglass, Esquire, Contributing Author
Farella Braun & Martel, LLP
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