Dinsmore & Shohl LLP
  March 31, 2020 - United States of America

Construction Impacted by Coronavirus? Know Your Lien Rights
  by Andrew R. Kwiatkowski, Jeffrey M. Stacko, Michael J. Weber, Grace Winkler Cranley, Andrew B. Clauss, Jason S. Lambert, Mark C. Bissinger, R.J. Cronkhite, Jacob A. Manning, Joshua M. Link

The current coronavirus crisis has created unprecedented challenges for those in the construction industry. While many states have exempted construction activities from their shelter-in-place or stay-at-home orders, projects have nonetheless been impacted and cash flow from owners or contractors may slow or halt.

As a result, contractors, subcontractors, and suppliers must be vigilant to protect their ability to receive payment on projects where cash flow might become problematic. One such way to ensure payment is by availing oneself of the various states’ mechanics’ lien laws. Mechanics’ lien laws vary from state to state but often have rigid requirements. Subtle differences in notice, service, and filing requirements can make or break one’s ability to preserve their lien rights.

Dinsmore’s construction law practice group is prepared to navigate industry members through these turbulent times. Our group members’ practices span the United States, and we have an intricate understanding of the mechanics’ lien laws in a variety of jurisdictions. We can help you preserve your lien rights and ultimately collect payment when you have not been fully compensated for labor or materials supplied on a project.

Below you’ll find the pertinent information for individual states mechanics’ liens laws and the contact information for a Dinsmore lawyer experienced in preparing mechanics’ liens in those states.

 


COLORADO

Contact: Andrew ClausEmail

Who Can File a Lien?

“Every person who furnishes or supplies laborers, machinery, tools, or equipment in the prosecution of the work, and mechanics, materialmen, contractors, subcontractors, builders, and all persons of every class performing labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used in construction, alteration, improvement, addition to, or repair, either in whole or in part…” C.R.S. § 38-22-101(1).

Pre-Lien Notice?

Required. Anyone wishing to preserve a lien must serve a written Notice of Intent to File a Lien Statement. C.R.S. § 38-22-109(3).

Pre-Lien Notice: To Whom Must It Be Served?

The Notice of intent to lien must be served “upon the owner or reputed owner of the property or the owner's agent and the principal or prime contractor or his or her agent.” C.R.S. § 38-22-109(3).

Pre-Lien Notice: Time to Serve

Notice must be given at least 10 days before the time of filing the lien statement with the county clerk and recorder. C.R.S. § 38-22-109(3).

Time to File Lien

Period can be extended by filing a notice of lien identifying the property by legal description, address, or other means; the name of the person with whom the claimant has contracted; and the claimant’s name, address and telephone number. Filing of the notice extends the deadline to file a lien statement until four months after the completion of the structure or other improvement or six months after the date of filing the notice, whichever occurs first. C.R.S. § 38-22-109(10).

Information Required To File Lien

A lien statement must include:

  1. Name of the owner or reputed owner of the property (if the name is not known to the claimant, it must include a statement stating such);
  2. Names of the persons claiming the lien, who furnished laborers or materials or performed labor for which the lien is claimed, and the contractor when the lien is claimed by a subcontractor;
  3. A description of the property to be charged with lien in sufficient detail to identify the property; and
  4. A statement of the amount due or owing to the claimant.

The lien statement must be signed and sworn to by the claimant.

C.R.S. § 38-22-109(1).

When Must Lien Be Served?

The lien statement must be served with the written Notice of Intent to File a Lien Statement at least 10 days before filing the lien statement with the county clerk and recorder. C.R.S. § 38-22-109(3).

To Whom Must Lien be Served?

Lien statement must be served “upon the owner or reputed owner of the property or the owner's agent and the principal or prime contractor or his or her agent.” C.R.S. § 38-22-109(3).

Comments

BACK TO TOP


FLORIDA

Contact: Jason LambertEmail

Who Can File a Lien?

Contractors, subcontractors, sub-subcontractor, material suppliers, architects, landscape architects, interior designers, surveyors, mappers, or civil site contractors.

Pre-Lien Notice?

Pre-Lien Notice: To Whom Must It Be Served?

Pre-Lien Notice: Time to Serve

Time to File Lien

Information Required To File Lien

All information required by the statutory form, including dates of first and last furnishing, dates of service of the notice to owner (if applicable) total contract amount and amount due, property description, and property owner’s information.

When Must Lien Be Served?

To Whom Must Lien be Served?

Comments

Liens cannot be renewed. You must file suit within 12 months of recording, otherwise the lien goes away.

BACK TO TOP


ILLINOIS

Contact: Michael Weber, Grace CranleyEmail

Who Can File a Lien?

Any contractor, subcontractor, supplier, laborer, architect, engineer, or surveyor—of any tier—who provides an improvement to real property. 770 ILCS 60/1.

Pre-Lien Notice?

General contractors and other parties with a contract with the owner: Not needed.

Subcontractors and suppliers: Yes. To preserve lien for work for an existing owner-occupied single family residence, must give notice personally or by certified mail, return receipt requested. 770 ILCS 60/21(c); 770 ILCS 60/24(a).

For work on other projects, must be provided within 90 days after completion of work or delivery of material. 770 ILCS 60/24(a).

If any money due is not paid within 10 days after notice is served under §§ 5, 24, and 25, then claimant may file a claim for lien or file a complaint. 770 ILCS 60/28.

Laborers: Yes. To preserve lien for work for an existing owner-occupied single family residence, must give notice personally or by certified mail, return receipt requested. 770 ILCS 60/21(c); 770 ILCS 60/24(a).

For work on other projects, must be provided within 90 days after completion of work. 770 ILCS 60/24(a).

If any money due is not paid within 10 days after notice is served under §§ 5, 24, and 25, then claimant may file a claim for lien or file a complaint. 770 ILCS 60/28.

Pre-Lien Notice: To Whom Must It Be Served?

General contractors and other parties with a contract with the owner: Not needed.

Subcontractors and suppliers: For work for an existing owner-occupied single family residence, must be provided to the occupant or his agent, if any, within 60 days after providing the first labor or material. 770 ILCS 60/21(c).

For work on other projects, must be provided to owner of record or his agent or architect, or the superintendent having charge of the building or improvement and to the lending agency, if known. 770 ILCS 60/24(a).

Laborers: For work for an existing owner-occupied single family residence, must be provided to the occupant or his agent, if any, within sixty (60) days after providing the first labor or material. 770 ILCS 60/21(c).

For work on other projects, must be provided to owner of record or his agent or architect, or the superintendent having charge of the building or improvement and to the lending agency, if known. 770 ILCS 60/24(a).

Pre-Lien Notice: Information Required

The requirements for notice for work on existing owner-occupied single family residences are set forth in 770 ILCS 60/21

The requirements for notice for work on other projects are set forth in 770 ILCS 60/24

Time to File Lien

On private projects: to enforce a lien to the prejudice of any other creditor, incumbrance, or purchaser, claimant must either file suit to enforce a lien or record the claim for lien within four months of the last day of work or provision of materials. 770 ILCS 60/7.

On public projects, a claimant can place a lien on those portions of the funds for the project that are held by or on behalf of the public entity at the time of the notice. 770 ILCS 60/23.

Information Required To File Lien

On private projects:

1. Property address and legal description.

2. Name and address of lien claimant and property owner.

3. Contract amount, including extras, less payments made.

4. First and last days of providing work or material.

5. Hourly rate, including fringe benefits and withholdings (laborers only).

6. Proof of Service of Notice of Furnishing, if required (see above).

7. Must be notarized.

770 ILCS 60/7.

On public projects;

1. Identify the claimant’s contract

2. Describe the work done by the claimant

3. State the total amount due and unpaid as of the date of the notice

4. Must be sworn and notarized.

770 ILCS 60/23.

To Whom Must Lien be Served?

A contractor for improvements of an owner-occupied single-family residence must give the owner written notice within 10 days after recording a lien against any property of the owner. 770 ILCS 60/7(d)

On public projects, a claimant must notify the clerk or secretary, as the case may be, of the public entity by written notice of the claim for lien as well as the contractor. 770 ILCS 60/23

Comments

Critical: On a private project, the lien claimant must file suit to foreclose on the lien within two years after completion of the contract. 770 ILCS 60/9

On a public project, the lien claimant must commence proceedings within 90 days after service a notice of lien. 770 ILCS 60/23(4)

Claims for wages as laborers under 770 ILCS 60/21 and 770 ILCS 60/22 are preferred liens

Upon written demand of the owner, lienor, or any person interested in the real estate, or their agent or attorney, served on the person claiming the lien, requiring suit to be commenced to enforce the lien suit shall be commenced within 30 days or the lien shall be forfeited. 770 ILCS 60/34.

BACK TO TOP


KENTUCKY

Contact: Mark BissingerEmail

Who Can File a Lien?

Contractors, subcontractors, sub-subcontractors, material suppliers, equipment lessors, and licensed design professionals (architects, engineers, real estate brokers, land surveyors) who contracted directly with the owner. (KRS § § 376.010, 376.075)

Note: lien, in the aggregate, cannot exceed the contract price of the original contractor. (KRS § 376.010(1))

Pre-Lien Notice?

Pre-Lien Notice: To Whom Must It Be Served?

Pre-Lien Notice: Time to Serve

Time to File Lien

Information Required To File Lien

  1. Name and address of the claimant ( if claimant is a corporation, the name and address of its process agent);
  2. Statement of amount due, with all credits and setoffs;
  3. Description of property sufficiently accurate to identify it;
  4. Name of owner, if known; and
  5. Whether the labor was performed/ materials were furnished by contract with the owner or with a contractor or subcontractor. (KRS § 376.080(1))

When Must Lien Be Served?

To Whom Must Lien be Served?

Comments

To preserve the lien, contractor or subcontractor must file suit within 12 months of filing the statement of lien. (KRS § 376.090(1)).

BACK TO TOP


MICHIGAN

Contact: R. J. CronkhiteEmail

Who Can File a Lien?

Any contractor, subcontractor, supplier, laborer, architect, engineer, or surveyor—of any tier—who provides an improvement to real property. MCL 570.1107.

Pre-Lien Notice?

General contractors and other parties with a contract with the owner: Not needed.

Subcontractors and suppliers: Yes. MCL 570.1109(1).

Laborers: Yes. MCL 570.1109(2).

Pre-Lien Notice: To Whom Must It Be Served?

General contractors and other parties with a contract with the owner: Not needed.

Subcontractors and suppliers: Must be provided to the owner and general contractor, if any, within 20 days after providing the first labor or material. MCL 570.1109(1).

Laborers: Must be provided to the property owner and general contractor, if any, within 30 days after providing the first labor or material. MCL 570.1109(2).

Pre-Lien Notice: Information Required

The requirements are set forth in statute MCL 570.1109(4). See the attached form.

Time to File Lien

Within 90 days of the last day of work or provision of materials. MCL 570.1111. The lien must be recorded in the office of the register of deeds for each county where the real property to which the improvement was made is located. MCL 570.1111(1).

Information Required To File Lien

  1. Property address and legal description.
  2. Name and address of lien claimant and property owner.
  3. Contract amount, including extras, less payments made.
  4. First and last days of providing work or material.
  5. Hourly rate, including fringe benefits and withholdings (laborers only).
  6. Proof of Service of Notice of Furnishing, if required (see above).
  7. Must be notarized.

A recommended lien form is set forth in MCL 570.1111(2).

To Whom Must Lien be Served?

Property owner or the owner’s designee by personal or certified mail, within 15 days of recording the lien. MCL 570.1111(5).

Comments

Critical: The lien claimant must file suit to foreclose on the lien within one year after the lien was recorded or the lien is forever lost. MCL 570.1117.

Further, general contractors and other parties contracting directly with the property owner cannot foreclose on a lien without first having provided a Sworn Statement to the property owner. MCL 570.1113(1).

BACK TO TOP


NEW JERSEY

Contact: Joshua LinkEmail

Who Can File a Lien?

Any contractor, subcontractor or supplier who provides work, services, material or equipment pursuant to a contract, shall be entitled to a lien for the value of the work or services performed, or materials or equipment furnished in accordance with the contract and based upon the contract price.

(N.J. Stat. § 2A:44A-3)

Pre-Lien Notice?

Commercial: Not required. However, claimant’s wishing to gain priority may provide a Notice of Unpaid Balance. If this notice is given, claimant’s lien will relate back and attach to owner’s interest as of the date the notice was served.

Residential: Yes. All claimants must provide Notice of Unpaid Balance and Right to File Lien.

(N.J. Stat. § 2A:44A-20; N.J. Stat. § 2A:44A-21)

Pre-Lien Notice: To Whom Must It Be Served?

Commercial: If provided, to the clerk of the county in which the property is located. Notice of Unpaid Balance may also be given to the owner or other interested parties, but is not required.

Residential: Notice of Unpaid Balance must be provided to:

(N.J. Stat. § 2A:44A-20; N.J. Stat. § 2A:44A-21)

Pre-Lien Notice: Time to Serve

Commercial: If provided, notice must be provided before the lien claim is filed (i.e. 90 days following the date the last work, services, material or equipment was provided for which payment is claimed).

(N.J. Stat. § 2A:44A-6; N.J. Stat. § 2A:44A-20)

Residential:

  1. Claimant shall first file a Notice of Unpaid Balance and Right to File Lien by lodging for record the Notice within 60 days following the last date that work, services, material or equipment were provided for which payment is claimed.
  2. Once it is lodged for record (i.e. filed with the clerk of the county in which the property is located), it must be served upon all other recipients within 10 days.
  3. Unless the parties have otherwise agreed in writing to an alternative dispute resolution mechanism, within 10 days from the date the Notice of Unpaid Balance and Right to File Lien is lodged for record, the lien claimant must also serve a demand for arbitration and fulfill all the requirements and procedures of the American Arbitration Association to institute an expedited proceeding before a single arbitrator.
  4. Upon determination by the arbitrator that there is an amount which, pursuant to a valid lien shall attach to the improvement, the lien claimant shall, lodge for record the lien claim within 10 days of the claimant’s receipt of the determination.

(N.J. Stat. § 2A:44A-21)

Time to File Lien

Commercial: Within 90 days following the date the last work, services, material or equipment was provided for which payment is claimed.

(N.J. Stat. § 2A:44A-6)

Residential: Within 10 days of receiving from the arbitrator a copy of the determination supporting the lien, and not later than 120 days following the last date that work, services, material or equipment was provided for which payment is claimed.

(N.J. Stat. § 2A:44A-6; N.J. Stat. § 2A:44A-20; N.J. Stat. § 2A:44A-21)

Information Required To File Lien

“Lien Claim Form” must be filed in the manner and form provided by N.J. Stat. § 2A:44A-8. The Lien Claim Form requires the following:

(N.J. Stat. § 2A:44A-8)

When Must Lien Be Served?

Within 10 days following the lodging for record of a lien claim.

However, the service of the lien claim outside the prescribed time period shall not preclude enforceability unless the party not timely served proves by a preponderance of the evidence that the late service has materially prejudiced its position.

(N.J. Stat. § 2A:44A-7)

To Whom Must Lien be Served?

Claimant shall serve the completed and signed lien claim on the owner, or community association, and, if any, the contractor and subcontractor against whom the claim is asserted.

(N.J. Stat. § 2A:44A-7)

Comments

The copy of the lien served by claimant must be marked “received for filing” or have a similar stamp with a date and time or other mark indicating the date and time received by the county clerk.

Service can be effected by personal service as prescribed by the New Jersey Rules or by: (1) simultaneous registered or certified mail or commercial courier whose regular business is delivery service; and (2) ordinary mail addressed to the last known business or residence address of the owner or community association, contractor or subcontractor. A lien claim served upon a community association need not be served upon individual “unit owners.”

Note that service of the Notice of Unpaid Balance and Right to File Lien is also effected in accordance with the foregoing.

(N.J. Stat. § 2A:44A-7; N.J. Stat. § 2A:44A-21)

BACK TO TOP


OHIO

Contact: Andrew KwiatkowskiEmail

Who Can File a Lien?

Every person who performs work or labor in furtherance of any improvement by virtue of a contract with the owner, part owner, or lessee and every subcontractor, laborer, or materials suppler who furnishes material to an original contractor or subcontractor. (R.C. § 1311.02)

Pre-Lien Notice?

(R.C. § 1311.05(A))

Pre-Lien Notice: To Whom Must It Be Served?

(R.C. § 1311.05(A))

Pre-Lien Notice: Time to Serve

(R.C. § 1311.05(A))

Time to File Lien

(R.C. § 1311.06)

Information Required To File Lien

(R.C. § 1311.06)

When Must Lien Be Served?

For all lien claimants, the lien must be served by certified mail within 30 days after filing the affidavit. If certified mail service cannot be completed, then service must be completed by posting the lien in some conspicuous place on the premises within 10 days after the expiration of the 30 days. (R.C. § 1311.07)

To Whom Must Lien be Served?

All lien claimants must serve the lien upon the owner or lessee (or his designee). (R.C. § 1311.07).

Comments

Liens filed continue in force for six years unless released, invalidated, or an action is brought to enforce at some time earlier. (R.C. § 1311.13(C)).

BACK TO TOP


PENNSYLVANIA

Contact: Jeff StackoEmail

Who Can File a Lien?

Contractors and subcontractors. Claim must exceed $500. Subcontractors’ rights to lien on residential property are more limited. (49 P.S. §§ 1301, 1303, 1201(5)).

Pre-Lien Notice?

Pre-Lien Notice: To Whom Must It Be Served?

Pre-Lien Notice: Time to Serve

Time to File Lien

Information Required To File Lien

“Claim” including:

  1. Name of claimant and whether claimant is a contractor or subcontractor;
  2. Name and address of the owner;
  3. Date of completion of claimant’s work;
  4. If claimant is a sub, the name of the person with whom he contracted, & the dates on which preliminary notice and formal notice were given;
  5. If a claimant is a contractor under a contract for an agreed sum, an identification of the contract and a general statement of the labor or materials furnished;
  6. A detailed statement of the kind and character of the labor or materials furnished and the prices charged;
  7. The amount claimed to be due; and
  8. A description of the improvement.

(49 P.S. § 1503).

When Must Lien Be Served?

To Whom Must Lien be Served?

Note: An affidavit of service must be filed within 20 days of accomplishing service. (49 P.S. § 1502(a)(2)).

Comments

Statute distinguishes between residential and commercial projects but only with regards to waiver.

To preserve the lien, contractor or subcontractor must file suit within two years of filing the lien. (49 P.S. § 1701(b)).

BACK TO TOP


WEST VIRGINIA

Contact: Jacob ManningEmail

Who Can File a Lien?

Contractor (who erects, builds, constructs, alters, removes or repairs any building or other structure, or other improvement appurtenant to any such building or other structure, or who alters or improves the real property whereon the same stands), or subcontractor, materialman (furnishing materials, equipment, or other supplies to contractor, subcontractor, or owner), workman, artisan, mechanic, laborer or other person who performs any work or labor or provides services (to contractor, subcontractor, or owner), or architect, surveyor, engineer, or landscape architect.

Pre-Lien Notice?

None required. However, before beginning work or furnishing any material, a subcontractor, material supplier, mechanic, or laborer may provide a preliminary notice to the owner that if he is not paid by the person employing him, he will look to the owner for payment. If a preliminary notice is provided, the person providing it need not serve notice on the owner after completion, as described below.

Pre-Lien Notice: To Whom Must It Be Served?

None required. If a preliminary notice is provided by a subcontractor, material supplier, mechanic, or laborer, it must be provided to the owner.

Pre-Lien Notice: Time to Serve

None required. If a preliminary notice is provided, it must be provided before beginning work or supplying material.

Time to File Lien

Information Required To File Lien

When Must Lien Be Served?

To Whom Must Lien be Served?

Comments

BACK TO TOP

 




Read full article at: https://www.dinsmore.com/publications/construction-impacted-by-coronavirus-know-your-lien-rights/