Friday, January 27, 2012

Lien Law Online eLert for 1/26/2012 - Washington

January 26, 2012

In a recent case, Williams v. Athletic Field, Inc., --- P.3d --- 2011 WL 4089927 (Wash. 2011), the Washington Supreme Court reversed a 2010 Washington Court of Appeals decision that found that in order for a Claim of Lien to be valid, it must contain a proper acknowledgement pursuant to Washington’s Real Property & Conveyance Act (RCW 64.08). The acknowledgement required under RCW 64.08 identifies specific language to be used and acknowledged by a notary, which varies depending on whether the claimant is an individual or a corporation. The decision of the Washington Supreme Court found that the form of lien provided in the lien statute itself (RCW 60.04.091(2)), although ambiguous, is sufficient to establish a valid Claim of Lien even if the document is not acknowledged pursuant to RCW 64.08.

The issue that the Washington Supreme Court resolved arose in the situation where a corporate claimant relies on the form of lien provided in the lien statute alone (relied on by most claimants), which does not satisfy the specific language requirements for acknowledgement under RCW 64.08. Nonetheless, 60.04.091(2) states, in relevant part, “a claim of lien substantially in the following form shall be sufficient.” However, RCW 60.04.091(2) also states, in relevant part, that the Claim of Lien “shall be acknowledged pursuant to RCW 60.08. The court recognized that the statute was ambiguous, as it could either be interpreted as 1) creating an exemption to the acknowledgement requirement, or 2) requiring the claimant to append a certificate of acknowledgment to comply with RCW 64.08. Given this ambiguity, the court liberally construed the statute as to allow the form of lien provided in RCW 60.04.091(2), standing alone, to be sufficient to establish a valid Claim of Lien.

Accordingly, the Washington Supreme Court’s decision establishes that corporations may rely on the Claim of Lien form provided by the lien statute. Although the decision did not specifically address whether the same rules apply to individuals filing a Claim of Lien, as RCW 64.08 has separate requirements for acknowledgement by individuals, it seems likely a court would use a similar analysis to validate the sample form in the context of individuals as well. This may be a question for another day, however, and prudent practice for individuals would be to follow the sample form provided by RCW 42.44.100(1) for purposes of acknowledgement, in addition to the sample form provided in the lien statute.

Jason R. Wandler, Esquire (Contributing Author)

Oles, Morrison, Rinker & Baker

Wednesday, January 18, 2012

Lien Law Online eLert for 1/17/2012 - California

January 17, 2012

California’s legislature has revised California’ mechanics lien laws in an effort to modernize and simplify them. The majority of the changes are minor and are intended to be non-substantive, but there are a few key changes. These changes take effect on July 1, 2012. Below is a brief preview of the changes, which will be addressed in more detail in a revised California section of LienLawOnLine.

Much of the terminology regarding mechanics liens has changed. For example, under the new laws, “direct contractor” is used in place of the somewhat ambiguous “original contractor,” and is defined as “a contractor that has a direct contractual relationship with an owner.” Civ. Code § 8016. Similarly, “materialman” has been replaced with “material supplier.”

Under the new laws, all notice requirements have been standardized and relocated to a new subdivision. Civ. Code §§ 8100 – 8118. These sections govern the contents of notice, the manner of serving the notice, when notice is deemed complete, and proof of service.

The new laws create new waiver and release forms, which must be used. Civ. Code §§ 8120 – 8138.

The new laws make several changes with respect to completion. Under the new laws, “acceptance by the owner” is no longer included as a means of achieving completion. Civ. Code § 8180. Also owners will now have 15 days to record the Notice of Completion instead of the previous 10-day period. Civ. Code § 8182. Lastly, when there are multiple direct contractors, owners are now permitted to file separate Notices of Completion for each portion of the work. Civ. Code § 8186.

The new laws generally do not change the requirements of preliminary notice. However, under the new laws, direct contractors are required to give preliminary notice only to construction lenders. Civ. Code § 8200(e)(2).

Under Civil Code section 8424, mechanics lien release bonds are only required to be equal to 125% of the claim, rather than 150%, as they previously were.

The new laws provide a new procedure for judicially releasing liens, which was not previously included. Civ. Code § 8480. Included in these new procedures is a requirement that at least 10 days before petitioning for a release of lien the owner gives the claimant notice and demands a release of lien. Civ. Code § 8482. Additional new provisions include formal burden of proof requirements and the elimination of a cap on the recovery of attorney’s fees for petition for a release of lien. Civ. Code § 8488.

Deborah S. Ballati, Esquire (Contributing Author)

B. Scott Douglass, Esquire (Contributing Author)

Farella Braun & Martel, LLP