Monday, July 27, 2009

Lien Law Online eLerts 7/27/09 - Arkansas


Arkansas recently passed HB 1594, now Act 454, which amends Arkansas’s mechanic’s and materialmen’s lien statutes. The amendments create more certainty that property owners, particularly residential property owners, will actually receive required statutory lien notices, will provide an enforcement mechanism for contractors failing to provide homeowners with the required pre-construction notice, and provide a quick means for frivolous, improperly filed liens to be removed as a cloud on title. More specifically, the Act:

Clarifies that suppliers of drainage tiles, soil pipes, architects, engineers, surveyors, appraisers, landscapers, abstractors, and title insurance agents must follow the same notice requirements before filing a lien as material suppliers, subcontractors, and general contractors.

Provides that service by mail of the required construction notices is “complete when mailed,” and that service of such notices may also be satisfied by written third-party (e.g. UPS, FedEx) verification of delivery at any place where the owner maintains an office, conducts business, or resides.

Bars a residential contractor from bringing an action to enforce any provision of a residential contract if the contractor fails to give the required pre-construction notice to the homeowner.
Provides subcontractors and material suppliers a way to perfect a lien on a residential project if a residential contractor fails to provide the required pre-construction notice to the homeowner.
Clarifies that a subcontractor is required to provide a 75-day notice in order to perfect a lien on a commercial project.

Allows an owner, material supplier, subcontractor, or anyone interested as mortgagee or trustee in the real estate upon which improvement have been made to file suit in circuit court against a contractor or subcontractor who refuses to provide a correct list of all the parties furnishing materials or labor and the amount owed to each, or who falsely certifies that the owner has received the required preliminary construction notices. The prevailing party will receive a judgment for any damages proximately caused by the violation, costs of the action, and reasonable attorney’s fees.

Changes the amount to “bond off a lien” to the amount of the lien claim, as opposed to twice the amount of the lien claim.

Provides a procedure whereby an owner or contractor may petition the court for an expedited hearing to decide whether a lien claimant properly complied with the notice requirements.

The changes will go into effect on August 1, 2009.

Contributing Author: Allen C. Dobson Esq.
Cross, Gunter, Witherspoon & Galchus, P.C.

Wednesday, July 22, 2009

Lien Law Online eLert 6/24/2009 - Colorado

Colorado has passed legislation that affects ALL Lien Waivers entered into as of July 1, 2009. The new law modifies two (2) sections of the Colorado Revised Statutes (CRS).

The first is a section in the criminal code entitled Unlawful Activity Concerning the Selling of Land, CRS § 18-5-302. This statute deals with certain fraudulent conduct and representations made in the context of a sale of land or representations concerning the ownership of land. To this statute has now been added a new subsection (3) that imposes criminal sanctions for the failure to timely pay funds received from a construction loan where a lien waiver is signed. The new statutory language states as follows:

(3) a person who signs a lien waiver or a construction loan under section 38-22-119, CRS, and knowingly fails to timely pay any debts resulting from a construction agreement covered by the waiver commits a class 1 misdemeanor, unless there is a bona fide dispute as to the existence or amount of the debt.

The term “bona fide” generally means “real, actual, genuine and not feigned.” (Black’s Law Dictionary) Therefore, one should assume that a real and not a contrived dispute would be necessary to justify any failure to pay funds to lower-tier subcontractors or suppliers.
A class 1 misdemeanor is a crime in Colorado punishable by imprisonment of six to eighteen months, or fines of $500 to $5,000, or both.

The bill also amends the civil statute dealing with waivers in the context of mechanics liens by adding a statutory section to the current statute entitled “Agreement to Waive-Effect.” CRS § 38-22-119. This new statutory section reads as follows:

(2) An agreement to waive lien rights shall contain a statement, by the person waiving lien rights, providing in substance that all debts owed to any third party by the person waiving the lien rights and relating to the goods or services covered by the waiver of lien rights have been paid or will be timely paid.

By use of the words “providing in substance,” the statute does not dictate the exact wording required in a lien waiver, but does clearly state that words to that effect must be contained in lien waiver documents. Thus, after this statute takes effect, construction lien waivers must include language that essentially says that, “all debts owed to any third party by the person waiving the lien rights and relating to the goods or services covered by the waiver of lien rights have been paid or will be timely paid.”

The new statute has been signed by the Governor and takes effect on July 1, 2009. After that date all construction lien waivers must comply with this new statutory requirement. In addition, the failure to properly disburse funds received from a construction loan may lead to criminal action against the offending contractor or subcontractor.

Gilbert R. Egle, Esquire Contributing Author
Preeo Silverman Green & Egle, P.C.

Lien Law Online eLert 5/15/2009 - Utah

The Utah general assembly recently enacted important changes to the state’s lien statutes. The changes modify (1) the definition of final completion of an original contract and project; (2) the subcontractor preliminary notice requirements; (3) the notice of commencement filing requirements; and (4) the DOPL standardized building permit numbering system. In addition, the changes prohibit a compliance agency from deviating from the DOPL standardized building permit numbering system.

The Utah chapter has been updated to reflect these changes.

Brian J. Babcock, Esquire (Contributing Author)
Babcock, Scott & Babcock, P.C.

Lien Law Online eLert 5/4/2009 - Tennessee

Important Case Guidance - Tennessee

A decision handed down by the Tennessee Court of Appeals in Williamson County Ready Mix, Inc. v. Pulte Homes Tennessee Limited Partnership, No. M2007-COA-R3-CV, at *5-*7 (Tenn. Ct. App. Dec. 15, 2008); T.C.A. 66-11-112; T.C.A. 66-11-118(b) has clarified what a material supplier must do to perfect a lien on a project where multiple units are involved. The court determined that “where a materialman provides materials used in the construction of multiple townhome units, the lienor is required to apportion its lien and perfect a lien for each townhome unit; a ’blanket lien’ on a townhome building is not effective and does not give priority against subsequent purchasers and encumbrances of separate townhome units.”

Cameron S. Hill, Esq. (Contributing Author)

Lien Law Online eLert 4/2/2009 - New Mexico

The New Mexico House of Representatives has requested that the New Mexico legislative council assemble a task force to study and examine issues and concerns regarding the ease of placing liens upon homeowners' properties and how that has led to abuse by some contractors and subcontractors and the Stop Notice Act in the process of applying a mechanic's lien on a homeowner's property and the homeowner's ability to defend against a wrongful lien. The House of Representatives has requested that the task force report to the appropriate interim legislative committee by October 2009.

Carl A. Calvert, Esquire
Calvert Menicucci, P.C.

Lien Law Online e-lert 4/1/2009 - Georgia

Effective March 31st, significant changes in Georgia's Lien Statute went into effect. Statutory forms have been revised. Various lien law deadlines have been altered. Notice, filing and service requirements have been changed.

It is extremely important that you take note of the changes and use the new forms and filing information from this point forward. The Georgia chapter and related forms were updated on the site at midnight March 30th.

Frank E. Riggs, Jr., Esquire
Troutman Sanders, LLP