Lien Law Online Elert for 4/8/2013 - Illinois

On February 11, 2013, Governor Quinn signed House Bill 3636 into law, effective immediately. The bill addresses two sections of the Illinois Mechanics Lien Act (the “Act”): Section 16 and Section 34. With respect to Section 16, House Bill 3636 overturns the controversial Cypress Creek decision (LaSalle Bank National Association v. Cypress Creek 1, LP, 242 Ill. 2d 231 (2011)) and clarifies how to apportion foreclosure proceeds under the Act between lenders and contractors. The amended Section 16 of the Act reads as follows: No incumbrance upon land, created before or after the making of the contract for improvements under the provisions of this act, shall operate upon the building erected, or materials furnished until a lien in favor of the persons having done work or furnished material (hereinafter "lien creditor") shall have been satisfied, and upon any questions arising between incumbrancers and lien creditors, all previous incumbrances shall be preferred only to the extent of the value of the land at the time of making of the contract for improvements, but shall not be preferred to the value of any subsequent improvements, and each lien creditor shall be preferred to the value of all the subsequent improvements erected on said premises, whether or not provided by the lien creditor, and the court shall ascertain by jury or otherwise, as the case may require, what proportion of the proceeds of any sale shall be paid to the several parties in interest. All incumbrances, whether by mortgage, judgment or otherwise, charged and shown to be fraudulent, in respect to creditors, may be set aside by the court, and the premises freed and discharged from such fraudulent incumbrance. When the proceeds of a sale are insufficient to satisfy the claims of both previous incumbrancers and lien creditors, the proceeds of the sale shall be distributed as follows: (i) any previous incumbrancers shall have a paramount lien in the portion of the proceeds attributable to the value of the land at the time of making of the contract for improvements; and (ii) any lien creditors shall have a paramount lien in the portion of the proceeds attributable to the value of all subsequent improvements made to the property. The amended Section 16 settles the dispute created by Cypress Creek by giving contractors preference over a prior incumbrancer to the extent of all improvements to the property, including improvements provided by other contractors. House Bill 3636 also amended Section 34 of the Act. Section 34 allows an owner to serve on a mechanic's lien claimant a notice to proceed to file suit and if not done in thirty days the lien is extinguished. The notice that is given must provide a warning in at least 10 point bold face type: Failure to respond to this notice within 30 days after receipt, as required by Section 34 of the Mechanic's Lien Act, shall result in the forfeiture of the referenced lien.

Lien Law Online eLert for 4/3/2013 - Ohio

April 3, 2013 The following article was written by our Ohio Contributing Author, Russell O'Rourke and is reprinted with permission. Ohio Mechanic's Lien Law: Top 4 Reasons to Serve a Notice of Furnishing #1 Getting Paid Faster DO serve a Notice of Furnishing ("NOF"). Without the NOF the only person that really knows that you are working on the project is the one that hired you. The NOF gives you the opportunity to make sure that all the right people (the people who are responsible for assuring that subs and suppliers are paid) know, too. The NOF gets you on the right lists, the lists that the owner and the contractor look at when they are getting ready to make the next payment to the companies that work for them. When you serve an NOF you ARE on that list and before they make the payment, they want to know that you are being paid for your work (partially because most people are good people and they want the people who do the work to be paid, and partially because they know you have lien rights and the LAST thing they want is for you to file an Ohio Mechanic's Lien. #2 Maintaining Your Mechanic's Lien Rights If you are working on or supplying material to a construction project in Ohio (with some exceptions for homeowner involved residential projects) a Notice of Commencement ("NOC") has likely been filed. If an NOC has been filed and if you are a subcontractor or supplier, you MUST serve an NOF if you want to assure that you have the right to file an Ohio Mechanic's Lien to protect your right to be paid by claiming a security interest (the Lien) in the property you improved. Your ultimate right, if you are not paid, is to foreclose on the property. Without having served your NOF, you have no ability to file your mechanic's lien to be able to exercise this right. Often just the threat of filing a mechanics lien by your attorney is enough to bring the parties to the table to get you paid. If that does not work, filing the lien gets you in the right line for consideration when the property is being sold or refinanced. All else failing, you can still file suit to force the issue. #3 Being a Professional Subcontractor or Supplier, Serve Your Notice of Furnishing The Ohio Mechanic's Lien Law was changed over 20 years ago to include the Notices of Commencement ("NOC") and Notices of Furnishing ("NOF"). It is a part of doing business as a professional subcontractor or supplier. Owners and contractors are increasingly sophisticated and EXPECT that you will SERVE AN NOF. Actually, they will be more surprised if you don't. Some subcontractors and suppliers are concerned that a contractor or owner will be upset if they are serve an NOF. Again, it is a part of the construction business, as much as a construction contract is. People think it is strange if you do your work on a handshake, this is the same. It isn't personal, it's business. You will also look more professional to your banker if you do follow all the rules and properly serve your NOFs. #4 Serving Your Notice of Furnishing on Time, but if You Didn't, Remember, Better Late Than Never The Ohio Mechanic's Lien law requires that for full lien rights, that is lien rights that cover ALL of your labor and/or materials, you must serve your NOF within 21 days of your first day that you supplied labor or materials on the project. If you are late, you lose one day of lien rights (the labor and/or materials you supplied on that day) for every day you are late. If you serve your NOF on day 22, is it too late? No, for 2 reasons: First, unless you only supplied labor or materials on day 1, at least you will cover your claim for the time after that day. Second, even if you are VERY late, the contractor and the owner are less worried about whether you served it on time than they are about the headache they may have if you aren't paid. Even if you are late, service of the NOF is likely to get you paid. If you have completely missed your lien rights and you aren't being paid, you still have a contract claim against your customer and an equitable claim against the others. R. Russell O’Rourke, Esquire (Contributing Author) O’Rourke & Associates Co., LPA

Lien Law Online eLert for 1/31/2013 - North Carolina

January 31, 2013 Please keep in mind that changes to North Carolina’s Mechanic’s Lien and Public Bond Law took effect on January 1, 2013. North Carolina has also enacted substantial changes that will introduce a new requirement for a “lien agent” that take effect on April 1, 2013. The changes to the North Carolina law were quite extensive and we recommend that everyone read the North Carolina chapter so that you are up to date on the changes and new requirements including necessary changes to the most commonly used forms. Steven D. Hedges, Esquire (Contributing Author) Sparrow Wolf & Dennis, P.A

Lien Law Online eLert for 1/21/2013 - Wyoming

January 21, 2013 We are pleased to welcome Jason H. Robinson with Babcock Scott and Babcock, PC as the new contributing author for the Wyoming chapter of LienlawOnline. The Wyoming chapter and forms have been updated and are now available online. You can learn more about Mr. Robinson by visiting his profile here. We look forward to providing you with up to date information regarding Wyoming’s lien law in the future. Click here to review the revised Wyoming chapter and forms. Wyoming Chapter Jason H. Robinson, Esquire (Contributing Author) Babcock Scott & Babcock, P.C

Lien Law Online eLert for 1/2/2013 - New Hampshire

January 2, 2013 Changes in New Hampshire’s Lien Law Statute that gives lien rights to architects, engineers, land surveyors and others furnishing “professional design services” went into effect January 1, 2013. The New Hampshire chapter has been updated to reflect this change as well as other changes which include a recent Superior Court decision which restricts lien rights in certain cases. Click here to access the New Hampshire chapter which includes the changes. Frank P. Spinella, Jr., Esq (Contributing Author) Hall, Morse, Anderson & Spinella, P.C.

Lien Law Online eLert for 1/2/2013 - Iowa

January 2, 2013 Significant revisions to Iowa’s lien law went into effect January 1st, requiring a re-write of the Iowa chapter of LienlawOnline and revisions to the Iowa forms. The revised chapter and forms will be published online later in the week. New and/or revised forms in the chapter are: • MECHANIC'S LIEN • VERIFIED STATEMENT OF ACCOUNT FOR MECHANIC’S LIEN • NOTICE TO OWNER OF MECHANIC’S LIEN FILED AFTER 90 DAYS • NOTICE TO GENERAL CONTRACTOR/OWNER-BUILDER BY SUBCONTRACTOR/SUPPLIER OF LABOR OR MATERIALS TO A SUBCONTRACTOR (COMMERCIAL PROJECTS ONLY) • LANGUAGE TO BE INCLUDED IN GENERAL CONTRACTOR’S WRITTEN CONTRACT WITH RESIDENTIAL OWNER (Effective 1/1/2013) • CERTIFIED STATEMENT OF NOTIFICATION SUPPORTING MECHANIC’S LIEN (COMMERCIAL PROJECTS ONLY) • CLAIM FOR MATERIAL OR LABOR UNDER IOWA CODE CHAPTER 573 • NOTIFICATION BY MATERIAL SUPPLIER (PUBLIC IMPROVEMENTS ONLY) • PETITION TO FORECLOSE MECHANIC’S LIEN • CERTIFICATION OF NOTIFICATION BY MATERIAL SUPPLIER (PUBLIC IMPROVEMENTS ONLY) • RELEASE AND SATISFACTION OF MECHANIC'S LIEN • WAIVER OF MECHANIC'S LIEN If you are a subscriber and need any of the forms identified above prior to them being published online later in the week, please send us an email request and we will forward you files in Microsoft Word® format. (Lienlaw Online publishers) Iowa Chapter and Forms by: Jodie McDougal, Esq. (Contributing Author) Elisabeth Meyer, Esq. Davis Brown Law Firm

Lien Law Online eLert for 9/11/2012 - Texas

September 11, 2012 The forms for waiving lien rights for progress payments and final payments have been updated to expressly include a place for a notary’s signature. As happens in the creation of statutes, there is a conflict in the statutory changes that went into effect in 2012 that mandate the exclusive forms to use as lien waivers. Section 53.281 of the Texas Property Code provides that for a waiver of lien to be valid it must utilize the new statutory form and be notarized. However, the new forms found later in the statute – which must be utilized – do not include a place for execution by a notary (referred to as a ‘jurat’ when the author swears to the veracity of the information or simply an acknowledgement where only the signing is verified). Thus, it is unclear whether the mandated form should be followed (without a notary signature) or whether the text of section 53.281 should be followed, and the statutory form altered to insert a notarization blank. However, this conflict should be practically irrelevant. If payment is not made to the person executing the waiver, then the waiver is invalid regardless of its format, and a lien can likely be asserted. But if payment in full has been made, the debt is extinguished, and no lien is needed to secure payment. Thus, the format of the form is moot. For expediency, the forms provided include a place for a notarization, should a claimant elect to follow the admonition in section 53.281. Gregory A. Harwell, Esquire (Contributing Author) Gardere Wynne Sewell, L.L.P Revised Forms now found in Texas chapter: Unconditional Waiver and Release on Final Payment Conditional Waiver and Release on Progress Payment Conditional Waiver and Release on Final Payment Unconditional Waiver and Release on Progress Payment