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
Friday, January 27, 2012
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
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
Wednesday, October 26, 2011
Lien Law Online eLert for 10/24/2011 - North Carolina
October 24, 2011
Effective October 1, 2011 reciprocal attorney’s fee provisions are enforceable in all NC commercial contracts. That would include ordinary construction contracts. It would also include ordinary commercial contracts in addition to the narrow category of “written evidence of indebtedness” (i.e., promissory notes) for which attorney’s fee provisions have been statutorily enforceable for years.
There are many differences of opinion about contractual attorney’s fee clauses and whether they are desirable. Legally, however, in NC where enforcement was desired, it was most likely unavailable because NC does not enforce a mere contractual attorney’s fee provision without underlying statutory authority. Arguments that ordinary construction or commercial contracts fell within existing statutory authority usually failed. This new statute, attached, provides that authority.
It remains to be seen whether or not attorney fees that are contractually enforceable can be included in a lien.
Steven D. Hedges, Esquire
Sparrow Wolf & Dennis, P.A.
Effective October 1, 2011 reciprocal attorney’s fee provisions are enforceable in all NC commercial contracts. That would include ordinary construction contracts. It would also include ordinary commercial contracts in addition to the narrow category of “written evidence of indebtedness” (i.e., promissory notes) for which attorney’s fee provisions have been statutorily enforceable for years.
There are many differences of opinion about contractual attorney’s fee clauses and whether they are desirable. Legally, however, in NC where enforcement was desired, it was most likely unavailable because NC does not enforce a mere contractual attorney’s fee provision without underlying statutory authority. Arguments that ordinary construction or commercial contracts fell within existing statutory authority usually failed. This new statute, attached, provides that authority.
It remains to be seen whether or not attorney fees that are contractually enforceable can be included in a lien.
Steven D. Hedges, Esquire
Sparrow Wolf & Dennis, P.A.
Tuesday, September 13, 2011
Lien Law Online eLert for 9/1/2011 - Texas
September 1, 2011
This is a reminder that the significant changes in Texas's lien law recently enacted by the Legislature GOES INTO EFFECT TODAY, SEPTEMBER 1, 2011.
Details of the changes were set out in an e-Lert dated July 28, 2011. The e-Lert can be reviewed by visiting LienlawOnline under Industry News.
Gregory A. Harwell, Esquire (Contributing Author)
Gardere Wynne Sewell, L.L.P
This is a reminder that the significant changes in Texas's lien law recently enacted by the Legislature GOES INTO EFFECT TODAY, SEPTEMBER 1, 2011.
Details of the changes were set out in an e-Lert dated July 28, 2011. The e-Lert can be reviewed by visiting LienlawOnline under Industry News.
Gregory A. Harwell, Esquire (Contributing Author)
Gardere Wynne Sewell, L.L.P
Monday, August 1, 2011
Lien Law Online eLert for 7/28/2011 - Texas
July 28, 2011
The Texas Legislature has made the following important changes:
Retainage Notice Requirements—HB 1390
The Legislature made significant changes to the means and timing to record a lien to secure payment of contractual retainage. Initially, prior to the passage of HB 1390, there were two, distinct types of retainage recognized under Texas law: (i) contractual retainage in prime contracts and subcontracts and (ii) a statutory opportunity for an owner to withhold 10% of the prime contract amount and create a “drop dead” date to file a lien. If this statutory retainage was withheld and no notices of indebtedness were sent from a claimant to an owner, an owner could release the remaining 10% on the 31st date after completion, relatively secure in knowing that it would not be liable to lien claims filed thereafter. These two, separate retainage concepts had separate provisions for notice and separate deadlines. Now, these concepts have been comingled.
Subcontractors and suppliers have two means to preserve the right to claim a lien for unpaid, contractual retainage. First, they can send notice letters as contractual retainage is withheld from their periodic draws. This process has not been changed. Second, they can now wait to the conclusion of their work scope and send notice of a retainage provision within 30 days of the completion or termination of their subcontract. However, the statutory change does not require the lien claimant to advise the owner of the amount of any contractual retainage, it merely requires notice that a subcontractual retainage obligation exists.
If timely notice is provided to an owner that a subcontract calls for retainage (timely meaning within 30 days after the subcontracted work is completed), the claimant can later file a lien to create a direct liability against an owner. The deadline to file the lien is a moving target, but generally ranges from 40 days after a notice of completion or a notice of termination is recorded by the owner on the entire project, to 4 months after completion of the entire project if no notices are recorded. The new HB 1390 also allows an owner to accelerate this lien-filing obligation by allowing an owner to send a written demand that the claimant file its lien (putting the claimant on a 30-day deadline to file). Unfortunately, the statutory amendment now comingles the notion of contractual retainage, statutory “safe harbor” retainage, and personal liability to an owner for debts – something that may require future legislative clarification or court interpretation to resolve.
Finally, the amendment now provides that if subcontractors have requested information of an owner during the course of a project (essentially information on completion, termination, or legal descriptions of the property), and the owner fails to provide the information in accordance with the statute, the deadline to file a lien to secure payment of contractual retainage reverts to 4 months after completion of the entire project.
The new retainage notice requirements will take effect on September 1, 2011.
HB 1456—Standardized Statutory Lien Waiver Forms
House Bill 1456 had two significant changes to existing Texas law. Initially, it prohibited the use of contractual waivers of lien rights for commercial construction projects. Further, it mandated the use of uniform statutory lien waiver forms, for both conditional and unconditional lien waivers. These are the forms to be used during the payment process on all construction projects in Texas. The residential construction industry can be exempted from the prohibition on contractual waivers of lien rights.
While the use of these standard, statutorily-worded lien waiver and release forms may reduce litigation and payment delays in the construction process, the primary goal of the statute was to invalidate contractual lien waivers and to preserve the rights of subcontractors and suppliers to file liens in the event of a failure of payment. If the lien waiver and release is not drafted and executed in a form that “substantially complies” with the language found in House Bill 1456, then it is not enforceable and does not create an estoppel or impairment of a lien or payment bond claim. However, if a subcontractor or supplier has actually been paid, a deficiency in a form would be irrelevant, as there would be no outstanding indebtedness for which a lien would be filed. In addition, this legislation prohibits a person from requiring a claimant to execute an unconditional waiver and release for a progress payment or final payment amount unless the claimant or potential claimant actually received payment in that amount in good and sufficient funds. The requirement for the use of the uniform statutory lien waiver and release language takes effect on January 1, 2012.
Mandatory Attorney’s Fees on Suit to Foreclose a Lien—SB 539
Prior to the enactment of Senate Bill 539, courts had discretion to determine whether to award costs and attorney’s fees to a successful party in a suit to foreclose on a lien or to enforce a claim against a construction-related bond. Senate Bill 539 amended the Property Code to make the award of reasonable legal fees mandatory for a successful lien claimant.
Gregory A. Harwell, Esquire (Contributing Author)
Gardere Wynne Sewell, L.L.P
The Texas Legislature has made the following important changes:
Retainage Notice Requirements—HB 1390
The Legislature made significant changes to the means and timing to record a lien to secure payment of contractual retainage. Initially, prior to the passage of HB 1390, there were two, distinct types of retainage recognized under Texas law: (i) contractual retainage in prime contracts and subcontracts and (ii) a statutory opportunity for an owner to withhold 10% of the prime contract amount and create a “drop dead” date to file a lien. If this statutory retainage was withheld and no notices of indebtedness were sent from a claimant to an owner, an owner could release the remaining 10% on the 31st date after completion, relatively secure in knowing that it would not be liable to lien claims filed thereafter. These two, separate retainage concepts had separate provisions for notice and separate deadlines. Now, these concepts have been comingled.
Subcontractors and suppliers have two means to preserve the right to claim a lien for unpaid, contractual retainage. First, they can send notice letters as contractual retainage is withheld from their periodic draws. This process has not been changed. Second, they can now wait to the conclusion of their work scope and send notice of a retainage provision within 30 days of the completion or termination of their subcontract. However, the statutory change does not require the lien claimant to advise the owner of the amount of any contractual retainage, it merely requires notice that a subcontractual retainage obligation exists.
If timely notice is provided to an owner that a subcontract calls for retainage (timely meaning within 30 days after the subcontracted work is completed), the claimant can later file a lien to create a direct liability against an owner. The deadline to file the lien is a moving target, but generally ranges from 40 days after a notice of completion or a notice of termination is recorded by the owner on the entire project, to 4 months after completion of the entire project if no notices are recorded. The new HB 1390 also allows an owner to accelerate this lien-filing obligation by allowing an owner to send a written demand that the claimant file its lien (putting the claimant on a 30-day deadline to file). Unfortunately, the statutory amendment now comingles the notion of contractual retainage, statutory “safe harbor” retainage, and personal liability to an owner for debts – something that may require future legislative clarification or court interpretation to resolve.
Finally, the amendment now provides that if subcontractors have requested information of an owner during the course of a project (essentially information on completion, termination, or legal descriptions of the property), and the owner fails to provide the information in accordance with the statute, the deadline to file a lien to secure payment of contractual retainage reverts to 4 months after completion of the entire project.
The new retainage notice requirements will take effect on September 1, 2011.
HB 1456—Standardized Statutory Lien Waiver Forms
House Bill 1456 had two significant changes to existing Texas law. Initially, it prohibited the use of contractual waivers of lien rights for commercial construction projects. Further, it mandated the use of uniform statutory lien waiver forms, for both conditional and unconditional lien waivers. These are the forms to be used during the payment process on all construction projects in Texas. The residential construction industry can be exempted from the prohibition on contractual waivers of lien rights.
While the use of these standard, statutorily-worded lien waiver and release forms may reduce litigation and payment delays in the construction process, the primary goal of the statute was to invalidate contractual lien waivers and to preserve the rights of subcontractors and suppliers to file liens in the event of a failure of payment. If the lien waiver and release is not drafted and executed in a form that “substantially complies” with the language found in House Bill 1456, then it is not enforceable and does not create an estoppel or impairment of a lien or payment bond claim. However, if a subcontractor or supplier has actually been paid, a deficiency in a form would be irrelevant, as there would be no outstanding indebtedness for which a lien would be filed. In addition, this legislation prohibits a person from requiring a claimant to execute an unconditional waiver and release for a progress payment or final payment amount unless the claimant or potential claimant actually received payment in that amount in good and sufficient funds. The requirement for the use of the uniform statutory lien waiver and release language takes effect on January 1, 2012.
Mandatory Attorney’s Fees on Suit to Foreclose a Lien—SB 539
Prior to the enactment of Senate Bill 539, courts had discretion to determine whether to award costs and attorney’s fees to a successful party in a suit to foreclose on a lien or to enforce a claim against a construction-related bond. Senate Bill 539 amended the Property Code to make the award of reasonable legal fees mandatory for a successful lien claimant.
Gregory A. Harwell, Esquire (Contributing Author)
Gardere Wynne Sewell, L.L.P
Monday, June 27, 2011
Lien Law Online eLert for 6/23/2011 - Massachusetts
June 22, 2011
Massachusetts passed a law amending the mechanic’s lien statute, which takes effect on July 1, 2011, and provides architects, landscape architects, professional engineers, licensed site professionals and land surveyors (collectively referred to below as “design professionals”) who are licensed or registered in Massachusetts with the right to obtain mechanics liens for the value of professional services. The amendments to the law apply to liens for professional services, as defined by the statute, for which any person has filed or recorded a notice of contract on an interest in real property on or after the effective date of the amendments. The amendments however do not apply to any mortgage filed or recorded before the effective date of the amendments. Prior to the new law, most architectural and engineering services were not afforded mechanic lien protection.
The following is a brief summary of the steps necessary for design professionals to obtain a lien:
(1) Have a written contract with the owner, lessee, or any one operating with the consent of the owner or lessee.
(2) Execute a Notice of Contract in the statutory form (Mass. Gen. Laws Chapter 254, § 2C) and file or record it in the registry of deeds for the county or district where the land is located no later than the earliest of 60 days after filing or recording the Notice of Substantial Completion (Mass. Gen. Laws Chapter 254, § 2A) or 90 days after the 1st tier design professionals or anyone performing professional services under him, last performed such services.
(3) File or record a Statement of Account within 30 days after the last day that a Notice of Contract may be filed or recorded.
(4) File a civil action with a verified complaint to enforce the lien within 90 days after the filing or recording of the Statement of Account. An attested copy of the complaint must be filed and recorded in the registry of deeds for the county or district where the land is located within 30 days of the commencement of the action.
There are special requirements applicable to 2nd tier design professionals working for 1st tier design professionals, including:
(1) A 2nd tier design professionals working for a 1st tier design professionals who has the right to file a lien, may file its own lien if it has a written contract and if the owner approves the lower tier design professionals subcontract in writing.
(2) The 2nd tier design professionals must follow the general process outlined above except that it must use a different statutory form for the Notice of Contract (Mass. Gen. Laws Chapter 254, § 2D) and give actual notice of the filing to the owner.
(3) The lien is limited to the amount owed by the owner to the 1st tier design professionals as of the time the 2nd tier design professionals records its Notice of Contract.
There are also special requirements for mechanics liens of lower tier design professionals working for contractors or subcontractors:
(1) The lower tier design professionals working for a general contractor or subcontractor may file a lien if it has a written contract for that work.
(2) The lower tier design professionals must follow the same process outlined above but with the Notice of Contract form provided in Mass. Gen. Laws Chapter 254, §4. The notice must be filed by the earliest of (i) 60 days after the filing of the statutory Notice of Substantial Completion; (ii) 90 days after the filing of the Notice of Termination or (iii) 90 days after the last furnishing of materials by anyone working under the general contractor. The owner must receive actual notice of the filing of the Notice of Contract.
(3) The amount of the lien is limited to the amount owed by the owner to the contactor as of the time the design professionals record its Notice of Contract.
(4) Additionally design professionals who do not have direct contracts with general contractors must serve a Notice of Identification in the statutory form within 30 days of commencing work or the amount of the lien will be limited.
Notably, the statute provides a lower priority to design professionals’ liens than contractor, subcontractor, supplier, and labor liens. The restriction does not apply to liens of design professionals hired by contractors or subcontractors.
Terri L. Pastori, Esquire, tpastori@peabodyarnold.com (Contributing Author)
Robert M. McCall, Esquire, rmccall@peabodyarnold.com (Contributing Author)
Peabody & Arnold LLP, www.peabodyarnold.com
Massachusetts passed a law amending the mechanic’s lien statute, which takes effect on July 1, 2011, and provides architects, landscape architects, professional engineers, licensed site professionals and land surveyors (collectively referred to below as “design professionals”) who are licensed or registered in Massachusetts with the right to obtain mechanics liens for the value of professional services. The amendments to the law apply to liens for professional services, as defined by the statute, for which any person has filed or recorded a notice of contract on an interest in real property on or after the effective date of the amendments. The amendments however do not apply to any mortgage filed or recorded before the effective date of the amendments. Prior to the new law, most architectural and engineering services were not afforded mechanic lien protection.
The following is a brief summary of the steps necessary for design professionals to obtain a lien:
(1) Have a written contract with the owner, lessee, or any one operating with the consent of the owner or lessee.
(2) Execute a Notice of Contract in the statutory form (Mass. Gen. Laws Chapter 254, § 2C) and file or record it in the registry of deeds for the county or district where the land is located no later than the earliest of 60 days after filing or recording the Notice of Substantial Completion (Mass. Gen. Laws Chapter 254, § 2A) or 90 days after the 1st tier design professionals or anyone performing professional services under him, last performed such services.
(3) File or record a Statement of Account within 30 days after the last day that a Notice of Contract may be filed or recorded.
(4) File a civil action with a verified complaint to enforce the lien within 90 days after the filing or recording of the Statement of Account. An attested copy of the complaint must be filed and recorded in the registry of deeds for the county or district where the land is located within 30 days of the commencement of the action.
There are special requirements applicable to 2nd tier design professionals working for 1st tier design professionals, including:
(1) A 2nd tier design professionals working for a 1st tier design professionals who has the right to file a lien, may file its own lien if it has a written contract and if the owner approves the lower tier design professionals subcontract in writing.
(2) The 2nd tier design professionals must follow the general process outlined above except that it must use a different statutory form for the Notice of Contract (Mass. Gen. Laws Chapter 254, § 2D) and give actual notice of the filing to the owner.
(3) The lien is limited to the amount owed by the owner to the 1st tier design professionals as of the time the 2nd tier design professionals records its Notice of Contract.
There are also special requirements for mechanics liens of lower tier design professionals working for contractors or subcontractors:
(1) The lower tier design professionals working for a general contractor or subcontractor may file a lien if it has a written contract for that work.
(2) The lower tier design professionals must follow the same process outlined above but with the Notice of Contract form provided in Mass. Gen. Laws Chapter 254, §4. The notice must be filed by the earliest of (i) 60 days after the filing of the statutory Notice of Substantial Completion; (ii) 90 days after the filing of the Notice of Termination or (iii) 90 days after the last furnishing of materials by anyone working under the general contractor. The owner must receive actual notice of the filing of the Notice of Contract.
(3) The amount of the lien is limited to the amount owed by the owner to the contactor as of the time the design professionals record its Notice of Contract.
(4) Additionally design professionals who do not have direct contracts with general contractors must serve a Notice of Identification in the statutory form within 30 days of commencing work or the amount of the lien will be limited.
Notably, the statute provides a lower priority to design professionals’ liens than contractor, subcontractor, supplier, and labor liens. The restriction does not apply to liens of design professionals hired by contractors or subcontractors.
Terri L. Pastori, Esquire, tpastori@peabodyarnold.com (Contributing Author)
Robert M. McCall, Esquire, rmccall@peabodyarnold.com (Contributing Author)
Peabody & Arnold LLP, www.peabodyarnold.com
Tuesday, June 21, 2011
Lien Law Online eLert for 6/21/2011 - North Carolina
June 21, 2011
The North Carolina Bar Association submitted a proposed bill for introduction in the 2011 General Assembly session, developed by the NCBA’s Construction Section, and providing by revision and amendment of the statutory mechanics lien and bond laws for changes including the following:
• A notice of commencement, as currently used in several other states, to be filed by the project owner and serving to eliminate priority claims (so-called “hidden liens”) predating project commencement
• A notice to owner, to be served by subcontractors within 30 days of first furnishing as a prerequisite to perfecting a claim of lien and to avoid the effect of recent bankruptcy court decisions in NC disallowing post-petition perfection of liens
• Statutory and legally sufficient forms for partial and final lien waivers, avoiding the effect of a recent NC trial division decision construing a partial lien waiver to be a final lien waiver
• Retention of subrogated and direct-liability claims of lien against owners and retaining the claim of lien on funds
• A requirement that second and lower tiered bond claimants on public jobs provide the general contractor with a notice of subcontract as a prerequisite to a bond claim and to protect the GC against double payment liability
The bill was introduced as House Bill 489. After initial amendment, HB 489 was converted in its third version from the set of amendments and new provisions submitted by the NCBA into an act styled “An Act Authorizing The Legislative Research Commission To Study North Carolina's Mechanics' Lien And Bond Laws.” This study commission version was passed by the House and passed a first reading by the Senate. This is the current status of the proposed legislation. With the close of the current legislative session, further action on this bill is not anticipated this year.
Steven D. Hedges, Esquire (Contributing Author)
Sparrow Wolf & Dennis, P.A.
The North Carolina Bar Association submitted a proposed bill for introduction in the 2011 General Assembly session, developed by the NCBA’s Construction Section, and providing by revision and amendment of the statutory mechanics lien and bond laws for changes including the following:
• A notice of commencement, as currently used in several other states, to be filed by the project owner and serving to eliminate priority claims (so-called “hidden liens”) predating project commencement
• A notice to owner, to be served by subcontractors within 30 days of first furnishing as a prerequisite to perfecting a claim of lien and to avoid the effect of recent bankruptcy court decisions in NC disallowing post-petition perfection of liens
• Statutory and legally sufficient forms for partial and final lien waivers, avoiding the effect of a recent NC trial division decision construing a partial lien waiver to be a final lien waiver
• Retention of subrogated and direct-liability claims of lien against owners and retaining the claim of lien on funds
• A requirement that second and lower tiered bond claimants on public jobs provide the general contractor with a notice of subcontract as a prerequisite to a bond claim and to protect the GC against double payment liability
The bill was introduced as House Bill 489. After initial amendment, HB 489 was converted in its third version from the set of amendments and new provisions submitted by the NCBA into an act styled “An Act Authorizing The Legislative Research Commission To Study North Carolina's Mechanics' Lien And Bond Laws.” This study commission version was passed by the House and passed a first reading by the Senate. This is the current status of the proposed legislation. With the close of the current legislative session, further action on this bill is not anticipated this year.
Steven D. Hedges, Esquire (Contributing Author)
Sparrow Wolf & Dennis, P.A.
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