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.

 

Lien Law Online eLert for 11/4/2013 - Kentucky

21. Two relevant cases:

PBI Bank, Inc. v. Schnabel Found. Co., No. 2011-CA-001135-MR (Ky. App. Jan. 25, 2013) – equitable tolling applied to allow untimely lien statement to relate back to a prior lien statement that the county clerk had wrongly refused to file.  **Case is “to be published” but hasn’t been yet**

Schnabel Foundation Company (“Schnabel”) provided labor and materials on the Harrods Creek Overlook Condominiums project in Prospect, Kentucky (the “Project”).  The Project was owned by Premier Land Company (“Premier”).  Premier obtained a mortgage on the property from PBI Bank, Inc. (“PBI”). 

Schnabel’s last day of work was August 27, 2007.  On February 22, 2008, Schnabel’s counsel mailed a lien statement to the Jefferson County Clerk for recordation.  The clerk refused to file the statement because Schnabel’s counsel had not signed as the preparer of the statement. 

When Premier defaulted on its mortgage, PBI moved for foreclosure on May 20, 2008 and named Schnabel as a defendant.  Nine days later, on May 29, 2008, Schnabel recorded its Mechanic’s Lien (which included a signature by the preparer). 

Schnabel and PBI moved for summary judgment on the enforceability of the lien.  The court first examined whether the February 22, 2008 lien statement was improperly rejected by the Jefferson County Clerk.  KRS 382.335(1) requires that lien statements must include “the name and address of the individual who prepared the instrument” and must be signed by the individual who prepared them.  The appellate court determined that Schnabel’s attorney had signed the lien statement and had included a “‘prepared by statement’ listing [the attorney’s] name and address” but had not signed separately as the preparer.  “KRS 382.335(1) does not require that the preparer of the statement sign the instrument in a specific form or location.  It only requires that the person who prepared the instrument execute his signature by ‘affixing a facsimile of his on the instrument.”  Id. at slip op. 4.  Therefore, because Schnabel had signed the first lien statement, the court determined that it had been improperly rejected by the County Clerk. 

The court then examined whether equitable tolling would allow the untimely second lien statement to relate back to the improperly rejected first lien statement (the second lien statement was untimely because it was filed more than six months after Schnabel’s last day of work, in violation of KRS 376.080).  As Schnabel “could not force the county clerk to perform official duties and file the [first lien statement],” the Court of Appeals affirmed the application of equitable tolling and thereby the lower court’s judgment in favor of Schnabel.  Id. at slip op. 5. 

Dreamers, LLC v. Don’s Lumber & Hardware, Inc., No. 2009-CA-000978-MR (Ky. App. Jan. 11, 2013) – examination of notice requirement **Opinion is not to be published**

The Dreamers, LLC (“Dreamers”) purchased materials from Don’s Lumber & Hardware, Inc. (“DLH”) on credit and incorporated those materials into the construction of a new house in Radcliff, Kentucky.  Dreamers sold the completed house to Appellant Glenda Hoffman. 

When DLH was not paid for its materials, it filed a Mechanic’s Lien against the house and later sued to foreclose the lien.  The case was before the Court of Appeals on several grounds, including the Appellants’ claim that summary judgment was improper because DLH had failed to comply with the notice provisions of KRS 376.010(3) and (4).  The Court of Appeals found no merit in this argument, explaining that the record showed that DLH had given notice to Hoffman within sixty days of last performing work on the property.  Therefore DLH had complied with the requirements of KRS 376.010(3) and (4). 

S2. Statutory discussion of Kentucky Fairness in Construction Contracting Act applicable to mechanics liens

A.J. Manion (Contributing Author)

Manion Stigger LLP

Lien Law Online eLert for 11/4/2013 - Mississippi

November 4, 2013 

 

"On October 10, 2013, the United States Court of Appeals for the Fifth Circuit in Noatex Corp. v. King Constr. of Houston, LLC, 2013 U.S. App. LEXIS 20656 (5th Cir., Oct. 10, 2013) held that Mississippi’s Stop Payment Notice statute, Miss. Code Ann. §85-7-181, is an unconstitutional violation of procedural due process. Accordingly, since only those who have a direct contractual relationship with the owner, his agent, or his representative are afforded the protection of a lien, subcontractors and suppliers to general contractors currently do not have any type of lien or payment protection rights." 

 

David Mockbee, Contributing Author

Mockbee Hall & Drake, P.A.

Lien Law Online eLert for 9/10/2013 - Louisiana

September 10, 2013

This past year the Louisiana legislature enacted a handful of amendments which have changed the notice requirements and time for enforcement of certain lien claimants under the Private Works Acts. The most important change is that a lien claimant is now required to file suit within one year of the recordation of its Statement of Claim or Privilege, whereas before the deadline to file suit to enforce the claim was one year after the expiration of the time to file a lien.  In addition, lessors of movables are now required to provide the owner and contractor with a signed copy of the lease agreement identifying the terms of rental and of payment.  Lastly, recent jurisprudence which addressed the requirement of itemization in a Statement of Claim or Privilege prompted legislative changes to clarify that unpaid invoices are required to be attached to a Statement of Claim or Privilege only if the lien specifically states that such invoices are attached.

H. Bruce Shreves (Contributing Author)

Peter S. Thriffiley, Jr. (Contributing Author)

Simon Peragine Smith & Redfearn LLP

Lien Law Online eLert for 9/4/2013 - Virginia

September 4, 2013

VIRGINIA LIEN LAW CHANGE   Please note that there has been a change to Virginia’s lien law.  Lien claimants that provided labor for the construction of an improvement must hold a valid license or certificate from the Virginia Board of Contractors in the proper class of license for the value of the work performed in order to have a valid lien.  The claimant must have the license when the work is performed.  It will not be sufficient to obtain a license after the work is performed, but before the lien is filed.  The forms for mechanics’ liens by general contractor, subcontractor and sub-subcontractor that can be linked from the Virginia Chapter have been modified to add lines necessary to establish the existence of the claimant’s contractor’s license or certificate.

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

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