Lien Law Online eLert for 2/17/2016 - New Jersey

February 17, 2016

The New Jersey chapter of Lienlawonline.com has been updated with the latest cases through the end of 2015.  Two recent cases address the applicability of the New Jersey Construction Lien Law, N.J.S.A. 2A:44A-1 et seq., and Municipal Mechanic's Lien Law, N.J.S.A. 2A:44-125 et seq., in the context of public-private partnerships, so-called "P3 projects."  In Morris County Improvement Authority v. Power Partners Mastec, LLC, No. A-5082, 12T4, 2015 N.J. Super. Unpub. LEXIS 634 (App. Div.), certif. granted, 218 N.J. 532 (2014), the Appellate Division refused to enforce a subcontractor's liens (totaling $50 million) that it had filed under both statutes.  As it relates to the municipal mechanic's liens, the Court held that the County Improvement Authorities Law, N.J.S.A. 40:37A-127, immunized the Morris County an Somerset Improvement Authorities from municipal mechanic's liens.  As for the construction liens, the Court held that they could not attach to the municipal bond funds, because such liens may only attach to real estate (or a leasehold interest therein).  The New Jersey Supreme Court granted certification in this case and will review the interplay between the County Improvement Authorities Law and the Municipal Mechanic's Lien Law.

In EnviroFinance Group, LLC v. Envt'l Barrier Co., LLC, 440 N.J. Super. 325 (App. Div. 2015), the Appellate Division upheld the lower court's determination that construction liens on a project built on wetlands owned by the Meadowlands Conservation Trust could not be discharged.  The lower court found that the liens were properly asserted against a private leasehold interest and assets and not against the public realty.  The Appellate Division likewise rejected the exemption for the public improvement liens in the Constr! uction Lien Law ("No liens shall attach nor a lien claim be filed...[f]or public works or improvements to real property contracted for and awarded by a public entity ....") N.J.S.A. 2A:44A-5(b). The Court rejected plaintiff's argument that this provision for "improvements to real property" is not contingent upon a project being "contracted for and awarded by a public entity."

Dennis A. Estis, Contributing Author/Steven Nudelman, Contributing Author

Greenbaum, Rowe, Smith & Davis LLP

Lien Law Online eLert for 6/29/2015 - Virginia

Virginia General Assembly Bans Certain Prospective Lien Waivers

Effective July 1, 2015, Virginia law will no longer allow a general contractor to require a subcontractor, lower tier subcontractor or material supplier to waive lien rights prior to beginning work.  The legislature amended Va. Code § 43-3.C to state that no subcontractor, lower tier subcontractor or material supplier may waive or diminish its lien rights in a contract prior to furnishing any labor or materials and that such clauses entered into prior to furnishing labor or materials are null and void.  All other parties can waive their lien rights at any time, including prior to beginning work.  A general contractor could therefore still be required by the owner to waive it’s own lien rights in the contract.

John S. Morris, III Esquire (Contributing Author)

Beale, Davidson, Etherington & Morris, P.C. (www.bealelaw.com)

Lien Law Online eLert for 6/23/2015 - New Mexico

6/23/2015

Self-Service Storage Liens

Under the New Mexico Self-Service Storage Lien Act,[ a self-service storage facility owner is entitled to a lien on all personal property located at the self-service storage facility for the rent, labor or other charges incurred in relation to the property.  The lien attaches to the personal property at the time that the renter goes into default under its rental agreement and continues until such time as the default is corrected, a sale of the property is conducted or the property is otherwise disposed of.  If the renter is in default under the rental agreement for a period of five days, the owner may deny the renter access to the storage space.  If the default continues for a period of thirty days, the owner may enter into the storage space and remove the personal property to a safe place, provided that the owner has sent a notice of intent to enforce a lien to the renter’s last known address within five days of entering the space.

A notice of intent to enforce a lien for purposes of the New Mexico Self-Service Storage Lien Act must include 1) an itemized statement of the amounts due and the dates when they became due; 2) a brief description of the property subject to the lien; 3) a notification of denial of access to the property, including the name, street address and telephone number of the person who may be contacted in responding to the notice; 4) a demand for payment within a specified period of time, which cannot be less than fifteen days; and 5) a conspicuous statement that unless the claim is paid within the time stated, the personal property may be advertised for sale or other disposition and then sold to satisfy the lien.  Effective July 1, 2015, the notice of intent to enforce a lien may be made by verified mail or electronic mail, at the renter’s election made at the time of entering into the rental agreement.  If the owner provides notice by electronic mail and receives no response, return receipt or delivery confirmation within three business days, the owner must deliver notice by verified mail to the renter’s last known address.

After expiration of the time set in the notice of intent to enforce a lien, the owner must publish an advertisement for sale or other disposition once a week for two consecutive weeks in a newspaper of general circulation in the county where the self-service storage facility is located.  The advertisement must include a general description of the property to be sold, the address of the self-service storage facility, the name and last known address of the renter and the time, place and manner of sale or other disposition.

Sean Calvert, Esquire (Contributing Author)

Calvert Menicucci, P.C. (www.hardhatlaw.net)

Lien Law Online eLert for 12/12/2014 - Pennsylvania

What changes were made in the October 14, 2014 amendments and when do they go into effect?

A State Construction Notices Directory will be created for posting Owner’s Notice of Commencement, Subcontractor’s Notice of Furnishing, Owner’s Notice of Nonpayment, and Owner’s Notice of Completion.  The system applies to projects costing at least $1,500,000, referred to as “searchable projects”.  Participation in the system is optional in the discretion of the owner.  An owner of a searchable project who wants to participate must file with the Directory and post at the job site a notice of commencement prior to commencement of labor, work, and furnishing of materials, providing certain categories of information about the project.  If a searchable project owner makes the required filing and posting, a subcontractor who fails to file a notice of furnishing within 45 days after commencing work loses all rights to file a mechanics’ lien with respect to the project.

The State Construction Notices Directory will become operational on December 31, 2016.

What changes were made in the July 9, 2014 amendments and when did they go into effect?

To counter Commerce Bank/Harrisburg N.A. v. Kessler, 46 A.3d 724 (Pa. Super. 2012), the construction loan priority provision was clarified to provide that open-ended mortgages have priority over mechanics’ liens where at least 60 percent of the proceeds are intended to pay or are used to pay all or part of the costs of construction.  A definition was also added for “costs of construction” that includes most of the expenses (soft as well as hard) that are incurred in a construction project.

Subcontractors no longer have a right to lien residential properties consisting of 1 or 2 dwelling units in a single building or townhouse where the owner or tenant has paid the full contract price to the contractor.

The changes in the July 9, 2014 amendments apply to liens perfected on or after July 9, 2014, even if the visible commencement of construction preceded that date.

What changes were made in the August 11, 2009 amendments and when did they go into effect?  

The term “residential building” was replaced with “residential property” which is defined as “property on which there is or will be constructed a residential building not more than three stories in height, not including any basement level regardless of whether any portion of that basement is at grade level, or which is zoned or otherwise approved for residential development on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of the basement is at grade level, planned residential development or agricultural use, or for which a residential subdivision or land development plan has or planned residential development plan has received preliminary, tentative or final approval on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level, pursuant to the act of July 31, 1969 (P.L. 805, No. 247), known as the “Pennsylvania Municipalities Planning Code.”

Advance waivers of lien for contracts to construct residential properties are not limited by a monetary cap on the total contract price.

The changes in the August 11, 2009 amendments went into effect on October 10, 2009.

Carl G. Roberts, Esquire (Contributing Author) - Ballard Spahr LLP

Lien Law Online eLert for 12/1/2014 - Virginia

December 1, 2014

Lien Law On-line is pleased to announced that the Virginia chapter has been revised to advise that the notice to the person or entity designated on the building permit for a one or two family residential dwelling unit must include the person’s or entity’s license or certificate number issued by the Board of Contractors and the date such license or certificate was issued and will expire.

John S. Morris, III, Esquire (Contributing Author)

Beale, Davidson, Etherington & Morris, P.C.

www.lienlawonline.com

Lien Law Online eLert for 4/16/2014 - Mississippi

April 15, 2014

Please note that on April 11, 2014, Mississippi enacted a new lien law that extends lien rights to subcontractors, materials suppliers, and sub-subcontractors and material suppliers to subcontractors (http://billstatus.ls.state.ms.us/documents/2014/pdf/SB/2600-2699/SB2622SG.pdf). The new law also has a much shorter "window" within which to file a lien and suit to enforce a lien. Finally, the new law includes owner defenses and statutory lien waivers.

A revised Mississippi chapter will be available soon.  We will notify you as soon as the updated chapter is posted.

David W. Mockbee (Contributing Author)

Mockbee Hall & Drake, P.A.