Avoiding Traps for the Unwary: What Nevada Claimants Must Know about Mechanic’s Liens in Bankruptcy

By: Tracy M. O’Steen and James Patrick Shea

This article assumes that the debtor is the owner of the real property where the services and/or materials were provided. Different issues may arise if the debtor is not the owner, but rather the general contractor with respect to the construction project. This article does not address such issues.

Nevada state law provides a fairly straightforward process for perfecting mechanic’s liens. Under Chapter 108 of the Nevada Revised Statutes (“NRS”), there are specific steps to follow. In its most simplified version, in Nevada a claimant must (1) record its notice of lien[1], (2) properly serve the notice of lien[2], and (3) foreclose on the mechanic’s lien through court action[3]. However, when a bankruptcy comes into play, there are some traps that may befall the unwary. Understanding how the perfection and foreclosure of a mechanic’s lien is altered by the Bankruptcy Code requires a basic understanding of both Nevada construction law and bankruptcy law. Certain provisions of the Bankruptcy Code modify some of the basic concepts generally understood to be true in the area of mechanic’s lien law.

Perfecting a Mechanic’s Lien Post-Petition:

What happens when a claimant has provided goods and/ or services for a construction project, but before the claimant has either been paid or perfected its mechanic’s lien, the owner of the project files for protection under the Bankruptcy Code? Typically, once a bankruptcy petition has been filed, the “automatic stay” under 11 U.S.C. § 362(a)(4)[4] prohibits “any act to create, perfect or enforce a lien against the property of the estate.” This would seem to be a straightforward prohibition against taking any action to file and perfect a mechanic’s lien covering pre-petition goods and/or services. An unwary claimant may then stop all efforts to perfect and enforce its mechanic’s lien once a bankruptcy has been filed, and then lose those lien rights as a result. However, Bankruptcy Code Section 362(b)(3) specifically carves out an exception for perfecting a mechanic’s lien post-petition. This section states that the automatic stay does not apply to “any act to perfect, or to maintain or continue the perfection of, an interest in property to the extent that the trustee’s rights and powers are subject to perfection under § 546(b) of [the Bankruptcy Code].[5]

Section 546(b)(1), in turn, limits the Trustee’s powers to avoid liens by providing that those powers are subject to any “generally applicable law” that would permit “perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection.” In other words, most bankruptcy courts agree that state mechanic’s lien statutes that allow a supplier of labor and materials to assert a lien relating back to the time such labor or materials were first provided fall within the scope of § 546(b)(1). Under Nevada law, a mechanic’s lien may relate back to a pre-petition date if that date is when the labor and materials were originally supplied[6]; therefore, the act of recording and perfecting a mechanic’s lien under such circumstances is not subject to the automatic stay. That being said, the claimant may still want to seek a comfort order from the bankruptcy court prior to taking such an action and is encouraged to file a proof of claim regarding its lien as well.

Impact of the Automatic Stay on Actions to Foreclose a Mechanic’s Lien:

Even if a mechanic’s lien is perfected, whether that perfection occurred pre-bankruptcy or post-bankruptcy, the automatic stay will impact a claimant’s ability to either initiate or continue a suit to foreclose on the mechanic’s lien. The Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals has specifically concluded that the commencement of a foreclosure suit by the claimant post-petition violates the automatic stay.[7] This creates a major problem in Nevada since the procedure to enforce a properly perfected mechanic’s lien is the commencement of a foreclosure lawsuit within six months from the date the lien is recorded. Of course, a claimant may always seek relief from the automatic stay to commence or continue an action to enforce its lien. However, as an alternative, the Bankruptcy Code allows a claimant to preserve its rights by taking the substitute action of giving notice of its right to enforce the mechanic’s lien. It is recommended that this notice be filed in the bankruptcy case within the same time frame the claimant would be required to commence its action to foreclose the mechanic’s lien under Nevada state law. In Nevada, that time frame is six months from the date the Mechanic’s Lien is originally recorded.[8]

The Notice Required by § 546(b)(2):

Unfortunately, although the Bankruptcy Code requires the claimant to file a notice in the bankruptcy court to preserve its state law lien rights, the Bankruptcy Code fails to provide specific guidance as to what constitutes the requisite notice. The notice requirements under § 546(b)(2) differ from jurisdiction to jurisdiction, and unfortunately, there are no reported cases in Nevada dealing with the sufficiency of the § 546(b)(2) notice. However, the Ninth Circuit has concluded that the filing of a secured Proof of Claim is not sufficient to satisfy the § 546(b)(2) notice to maintain the mechanic’s lien nor is the recording of the lien itself.[9] Something more must be done to maintain the perfection of the mechanic’s lien or it will expire within the statutory six month period.[10] The guiding principle seems to be that the notice should inform the court and debtor that the creditor would have commenced the foreclosure action had bankruptcy not intervened. Despite some courts holding that oral notice or out-of-court action evidencing an intent to assert and enforce a lien can be sufficient, most courts conclude that § 546(b)(2) requires that something in writing be filed in the bankruptcy case.[11] A claimant should, at a minimum, file a pleading in the bankruptcy case that expressly provides that (1) the claimant has a right to assert a mechanic’s lien under applicable state law; (2) it intends to assert and enforce such a lien; and (3) it is authorized to do so under Bankruptcy Code provisions. The filing of this notice should preserve the claimant’s lien rights through the duration of the bankruptcy case.

Tolling of the Foreclosure Deadline:

Assuming the claimant has taken all the proper steps to preserve the lien, a majority of courts, including the Ninth Circuit Court of Appeals, agree that § 108(c) of the Bankruptcy Code tolls the deadline for commencing a foreclosure action to enforce a mechanic’s lien.[12] A claimant who timely records a mechanic’s lien under Nevada law and files the required notice under § 546(b)(2) in lieu of commencing a foreclosure action, has at least 30 days after the termination of the automatic stay (which may occur upon dismissal of the case or abandonment or surrender of property) to commence or continue its foreclosure action.[13] It is important to note that § 108(c) of the Bankruptcy Code only operates to toll the time period for commencing or continuing a civil action to foreclose the mechanic’s lien, and cannot be used to extend the time period for filing the original lien or the § 546(b)(2) notice discussed above.

Conclusion:

Claimants are cautioned to seek counsel if they have provided labor and materials with respect to a construction project and the property owner files for bankruptcy protection. In order to assert, perfect and maintain their lien during the bankruptcy case and avoid traps for the unwary, careful attention should be paid to the requirements of Nevada’s mechanic’s lien statute and the Bankruptcy Code. Otherwise, claimants risk waiving their mechanic’s lien rights.

Tracy O’Steen is an attorney in Armstrong Teasdale’s Financial and Real Estate Services practice group. She counsels clients on bankruptcy matters, distressed loans, commercial loan transactions, receiverships, landlord tenant disputes and other related commercial litigation. Mr. O’Steen can be reached by phone at 702.678.5070 or by email to tosteen@armstrongteasdale.com.

James Patrick Shea is a partner in Armstrong Teasdale’s Financial and Real Estate Services practice group and the immediate past president of the American Bankruptcy Institute. He has more than 30 years of experience advising financial institutions, landlords, vendors and other creditors in business bankruptcy proceedings. Currently, he serves as Special Counsel to the Chapter 7 Trustee in the Fountainebleau mechanic’s lien litigation. Mr. Shea can be reached by phone at 702.678.5070 or by email to jshea@armstrongteasdale.com.

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Footnotes:

1 NRS 108.226.
2 NRS 108.227.
3 NRS 108.223; NRS 108.239.
4 Unless otherwise stated, all section references in this article refer to sections of the United States Bankruptcy Code.
5 In re Orndorff Construction, Inc., 394 B.R. 372 (Bankr. Ct. M.D.N.C. 2008) (“An action to perfect a materialman’s lien is excepted from the automatic stay by Section 362(b)(3)”). See also In re Richardson Builders, Inc., 123 B.R. 736, 738 (Bankr. W.D. Va. 1990); In re Victoria Grain Co. of Minneapolis, 45 B.R. 2, 6 (Bankr. Minn. 1984).
6 NRS 108.222 (amount of lien); NRS 108.225 (a lien under this chapter is preferred to any lien recorded after the commencement of construction of a work of improvement).
7 In re Baldwin Builders, 232 B.R. 406 (9th Cir. B.A.P. 1999).
8 NRS 108.223.
9 In re Baldwin Builders, 232 B.R. at 413-14 (9th Cir. B.A.P. 1999).
10 NRS 108.223; In re In re Baldwin Builders, 232 B.R. at 413-14.
11 See In re Baldwin Builders, 232 B.R. at 413-14 (collecting cases).

 

President’s Blog: CMA Membership Budget Guide for 2017, by Mike Mitchell, CAE

 

CMA President and CEO Mike Mitchell
CMA President and CEO Mike Mitchell

All too often, our members tell us that they want to take advantage of all of CMA’s benefits but they say they do not have the budget to do so. For companies on a calendar fiscal year, here’s your opportunity to begin planning for those budget worthy benefits for 2017. Even if your next fiscal year extends well into 2017, it’s never too early to start your wish list.

If your company is one of the 600+ members that participate in one of CMA’s 51 Industry Credit Groups, then you know how valuable it can be to have unlimited access to anscers Credit Reports, RFIs, Credit Alerts, and the knowledge and experience of other credit professionals in your industry. In the past year, CMA group members have submitted more than 45,000 RFIs, warned other group members with more than 6,800 Credit Alerts (which included NSF and bankruptcy information), and shared countless stories about best practices in credit. Many credit group members have reported that they still find their credit groups and the shared trade payment experience the fastest and most economical way to conduct timely due diligence on prospective customers and effectively manage existing customer accounts. The unique combination of industry trade data, insider knowledge about common customers and industry best practices often recoups your dues many times over in helping group members minimize risk and grow revenue.

Before you budget, consider whether you are getting the best value possible for your credit information needs. Let CMA’s experts help you analyze your current credit reporting product mix – we might be able to save you money (and help you get better results) by suggesting a different report or mix of products that better meet your company’s risk assessment requirements while staying within budget. In addition to credit bureau contracts, CMA has several transactional credit report products priced to deliver maximum value at minimum cost. We have also seen usage for the NACM NTCR increase significantly over last year. Only CMA members have access to the millions of tradelines in the NACM National Trade Database (many of which are only available in this report), and at only $14.95 each, the NTCR reports are a great value for an initial credit check. CMA’s anscersX multi-bureau report combines proprietary scores and data elements from all three major credit bureaus (Dun & Bradstreet, Experian, Equifax) to give you a comprehensive look at the payment history of your customer or prospect ($69 per report). Be sure to budget for some anscersX reports to supplement your existing credit reports.

If you are a construction supplier, consider how using CMA’s Lien Filing Service can save you time and money. With more than 30 years of experience providing services ranging from preliminary notices to lien warning notices, mechanics liens, bond claims and stop notices, CMA has hundreds of clients across the United States who value the personalized, unlimited support from CMA’s caring and knowledgeable staff. You might be interested in CMA’s new Construction Credit Report, providing title data, public record data, active trade lines, credit analysis and scores, collection agency activity and links to state contractor information. The report, which is the only all-inclusive report of its type, runs $29.95 per report.

CMA’s collections partner, AG Adjustments, offers third-party collection services at competitive rates on a contingency basis.

If you’re looking for professional development help for your staff, CMA is again offering NACM Certification Courses for the CBA (Credit Business Associate) and CBF (Credit Business Fellow) designations starting in January. These will only be offered once next year, unless there is sufficient participation for additional classes. If you plan to get certified in 2017 or early 2018, you’ll need to register for the Certification Courses now and budget accordingly ($899-$995 per course). Information for all professional development events can be found on CMA’s website and on anscers.com under the Education tab.

CMA will continue to offer its standard webinar program, which includes several series on topics such as collections, advanced lien law and credit reporting. Our webinars typically cost $49 for CMA members and $69 for non-members, but some may be free to CMA members, depending on the topic.

We hope this list is helpful as you consider your needs for 2017.

Are there other credit-related services that you’re looking for that we currently don’t offer? Feel free to reach out to me by responding to this blog. Thank you for reading, and we look forward to your increased participation with CMA in 2017!

CMA Hosts Joint Construction Meeting in Los Angeles

20161013_105403

On October 13, CMA held its first ever joint construction credit meeting, allowing CMA member companies from different vertical industries who sell to the construction industry to get together to talk about common job accounts. In addition, Chris Ng, Esq., spoke to the group on a series of construction law related topics, including the legalities related to job accounts. Amongst the activities at the event included a discussion of best and worst practices, which really hit home with many of the companies who participated. Thanks to all who attended.

What’s a Defective (or Improper) Mechanic’s Lien, and How Does it Impact the Construction Project, by Sergey Garanyants

In certain instances, a mechanic’s lien filed by a contractor, subcontractor or material supplier can become either “improper” or “invalid” under relevant lien statutes, or “defective” on its face. In such cases, the owner is entitled to remove and/or discharge the mechanic’s lien so that the property is no longer burdened by it.

Many states provide for a different process to properly record a lien against a residential property, as compared to a commercial property. Nevertheless, the process of discharging an improper or invalid lien is largely the same.

Some of the most common situations that give rise to a defective lien occur when: 1) the lien claim is without basis, 2) the amount of lien claim is excessive or misstated, 3) filing of the lien claim was not performed in accordance with the relevant lien law statute, or 4) filing of the lien claim was not performed in time prescribed by the relevant lien law statute. In such situations, lien claimants generally forfeit their lien rights, and, in some instances may forfeit additional or subsequent remedies.

Moreover, many states mechanic’s/construction lien statutes punish contractors, subcontractors and suppliers who willfully fail to remove or release such improper lien claims, especially, if the notice of invalid lien was given by a party challenging its validity.

If it has been determined that your lien claim is invalid or improper, you must first provide the appropriate notice to the property owner challenging the validity of your lien and, in some situations, to the general contractor. Once such notice is given, lien claimants generally are allowed some period of time to discharge or release their lien claims by making appropriate filing with the state’s real estate records. The period of time to release an improper lien varies depending on the state. If the improper lien was not released, a property owner may file a complaint with the court in the state where the lien was recorded. Many state statutes will allow property owners, who were forced to pursue court action to remove or release an improper lien, to recover court costs and legal fees incurred in pursuing such action.

Source: “Removing Invalid Construction Lien”, the National Lien law Review, September 15, 2016, http://www.natlawreview.com/article/removing-invalid-construction-lien, Copyright © 2016, Stark & Stark.

Sergey Garanyants runs CMA’s Construction Forms Filing Services, helping CMA members in the construction industry protect their lien rights in all 50 U.S. states. For information about CMA’s construction forms filing services, visit http://creditmanagementassociation.org/services/construction-forms-filing/

Why Are Lien Waivers Important?, by Sergey Garanyants

Lien waivers and releases, which were once just a way for owners and general contractors to make sure they wouldn’t have to pay for the same work or material twice, are now became something much more broader affecting much more than just a mere mechanic’s lien rights.

Mechanic’s liens (a.k.a. construction liens) are designed to provide additional protection and way to ensure payment for contractors, subcontractors or suppliers for the work provided or material supplied. A mechanic’s lien essentially gives the person or company an interest in the property equal to the unpaid amount, affecting the owner’s ability to convey or transfer the property free and clear without paying the amount owed. While such laws aim to protect contractors and subcontractors, it also creates a risk for property owners and real estate developers of paying for the same work or material twice. In an attempt to protect themselves, developers, property owners and contractors are now increasingly insistent on the practice of obtaining a signed waiver or release of lien rights to the extent actually paid, as condition to furnish any payments to contractors and subcontractors working on the project. However, signing such waivers may directly or indirectly cause for contractors and subcontractors to “sign away” many of their rights to dispute contractual and related project issues.

Modern-day construction lien waivers and releases became much broader than simply addressing mechanic’s liens. In some instances, signing a release not only waives the right to file a mechanic’s lien, but also waives the ability to file claims for any other related issues, such as breach of obligations by a party to a contract, delays caused by mismanagement of the project, or additional expenses incurred. Contractors, subcontractors and suppliers should remember to preserve their own rights when executing any construction waivers or releases. For example, if a subcontractor is concerned about underpayment, it could refuse to accept payment until the general contractor has been paid in full, or the subcontractor could accept payment, but note on the release that it was reserving the right to make certain additional claims.

Many projects usually only have one general contractor, and each general contractor knows all of its subcontractors or suppliers, each of whom may be eligible to file a mechanic’s lien. However, many state construction lien laws are now allowing tier 2 and tier 3 subcontractors, including suppliers and others with whom the general contractor has no direct relationship, to file mechanic’s liens, thus creating a much larger and potentially unknown number of parties that are able to create liability on the project. That is why many general contractors require their subcontractors to acquire signed lien releases from all other subcontractors and suppliers on a periodic basis before issuing any payments. One of most common issues challenging the ability to secure signed lien releases on a monthly basis is the struggle of many companies to maintain enough cash flow to make all of their payment obligations in time. It can be easy for companies to find themselves in a difficult situation in which they can’t afford to pay their subcontractors or suppliers right away, and, in the same time, they can’t obtain payment from the general contractor or the owner without first providing a signed release stating in turn that they have already paid everyone.

It is vital that general contractors and subcontractors review the proposed contractual language carefully in order to ensure the appropriate cash flow and lines of credit, so they are able to fulfill their payment obligation when required. Carefully review the exact terms of any release or waiver you are expected to sign. Exercise care before accepting any payment, particularly if the payment is not for the full amount owed. Most importantly, always remember that lien waivers are separate obligations, and no matter how unfair the underlying result may be, courts are very likely to uphold provisions of signed waiver or release.

Source: Joshua R. Lorenz: “Mechanic’s Lien Waivers Place Burden on Contractors and Subcontractors; Construction Law”, the Legal Intelligencer (Online), September 6, 2016; Copyright 2016 ALM Media Properties, LLC.

Sergey Garanyants runs CMA’s Construction Forms Filing Services, helping CMA members in the construction industry protect their lien rights in all 50 U.S. states. For information about CMA’s construction forms filing services, visit http://creditmanagementassociation.org/services/construction-forms-filing/ 

Construction News: Mechanic’s lien on Tenant Improvement and Commercial Leasing Projects, by Sergey Garanyants

A mechanic’s lien (also known as construction lien, laborer’s lien, artisan’s lien, supplier’s lien, materialman’s lien, and professional’s lien) is a special security interest that may be acquired in property by someone who expends material, resources or labor working on that property, and is, generally, effective until the lien holder gets paid for services provided. (Definition from Cornell University Law School, Legal Information Institute as published at https://www.law.cornell.edu/wex/mechanics_lien).

In some instances, tenant improvement work may lead to a mechanic’s lien on the owner’s property. Due to the fact that mechanic’s lien laws are not uniform in each state, there are many factors to consider when your company is getting involved with tenant improvement projects.

In Missouri, a contractor performing work for a tenant may acquire mechanic’s lien rights on a landlord’s property interest if certain factors surrounding the landlord-tenant agreement are present, including (but not limited to) the “mandated nature to perform a complete build-out” of the premises by tenant, and whether such “improvements are required and completed under the control of the owner with the view of improving the property.” See Crafton Contracting Co. v. Swenson Construction Co., No. ED102910 (Mo. App. E.D. April 12, 2016); see also Missouri Revised Statute § 429.010.

In Minnesota, a property owner is not subject to a mechanic’s lien for improvements contracted by another if the owner gives “adequate notice of the owner’s intent not to be bound” by such contract. See Marksman Const. Co., Inc. v. Mall of Am. Co., C0-97-1030, 1997 WL 757392 (Minn. Ct. App. 1997); see also M.S.A. § 514.06. This practice is also known in some states as the “Notice of Non-responsibility” and may require to be properly recorded by the owner with the county land records in order to be enforceable.

In Virginia, generally, a mechanic’s lien in tenant improvement projects extends only to that portion of property on which the laborer or materialman has worked, precluding the lien from extending to the entire building or property. See Elder-Jones, Inc. v. Byers, Inc., 23 Va. Cir. 40 (Va. Cir. Ct. 1990); see also VA Code Ann. § 43-20.

Similarly, Texas laws support the proposition that a lien on real property cannot be established simply by nature of a construction contract between a tenant of the property and the laborer or materialman, and the mechanic’s lien should attach only to the leasehold interest of the tenant, and not to the entire land interest of the owner. See 2811 Associates, Ltd. v. Metroplex Lighting and Elec., 65 S.W.2d 851, 852 (Tex. Ct. App. 1989).

In Maryland, a mathematical formula, estimating the value of improvements made to leased premises as compared to the value of entire building, will be used to determine if a mechanic’s lien is “substantial enough” to be placed on the entire building or property. See MD. Real Prop. Code Ann. § 9-103; see also Hurst v. V & M of Virginia, Inc., 293 Md. 575 (Md. App. 1982).

Given the complexities of the mechanic’s lien laws, it important to obtain all the relevant information on the tenant improvement project in order to better protect your lien rights and avoid becoming subject to various limitations. Please contact CMA’s Forms Filing team if you have questions.

Source: Krista C. McCormack, “Tenant Improvements Lead to Mechanic’s Lien on Owner’s Property”, Commercial Leasing Law and Strategy: Pg. 3, Vol. 29, No. 3, September 1, 2016, Copyright 2016 ALM Media Properties, LLC.

Sergey Garanyants runs CMA’s Construction Forms Filing Services, helping CMA members in the construction industry protect their lien rights in all 50 U.S. states. For information about CMA’s construction forms filing services, visit http://creditmanagementassociation.org/services/construction-forms-filing/

A Contractor Will Serve 45 Days in Jail for Wrongful Lien Against Residential Property, by Sergey Garanyants

If you supply materials or labor to construction projects, make sure that you protect your company’s lien rights under the law. In doing so, remember that it is crucial to file liens properly and in a timely fashion.

A Wisconsin contractor will serve 45 days in jail and will pay a $3,505.46 fine for wrongfully filing the lien against residential property in Winnebago County, Wisconsin. According to the Oshkosh Northwestern, a 51-year-old owner of the local construction company illegally filed a construction lien on the residential home without giving proper notice to the homeowners as required by Wisconsin Construction Lien Laws. The homeowners discovered the wrongfully recorded lien when they contacted a financial institution in the attempt to refinance their property.

The contractor has been convicted with criminal slander of title after a jury determined he illegally filed a lien against the owners without properly notifying them. Moreover, the Winnebago County Circuit Court ordered the contractor to pay a $3,505.46 fine, and imposed additional restrictions on the contractor’s personal and business affairs, which included such obligations as – to inform potential customers about the conviction; to not have or use alcohol, drugs or paraphernalia; to submit a DNA sample; to not control any bank accounts; and to undergo any additional necessary counseling as may be required.

According to the contractor, he did notify the property owners but later lost the paperwork that would prove the fact that proper notice was given, and subsequently released the lien. “It’s amazing that, as a contractor, I can go to somebody’s house … and they decide they’re not going to pay for 50 percent of it, and then all of a sudden they can be suing me.” – the contractor told USA TODAY NETWORK-Wisconsin.

Source: Nathaniel Shuda – The Oshkosh Northwestern, USA TODAY NETWORK-Wisconsin, as published on November 24, 2015, August 6, 2016 and August 12, 2016.

Sergey Garanyants runs CMA’s Construction Forms Filing Services, helping CMA members in the construction industry protect their lien rights in all 50 U.S. states. For information about CMA’s construction forms filing services, visit http://creditmanagementassociation.org/services/construction-forms-filing/

Southern California Joint Construction Group Meeting Planned for October

construction building 2

Attention Southern California construction-related companies: if you sell on job accounts, CMA has created an opportunity to meet with credit managers from other construction industry credit groups to discuss current jobs and common accounts.

The meeting will take place Thursday, October 13 at 9:00am. Members of the Aluminum Suppliers, Electric, Glass and Metal, Wholesale Roofing, HVAC SoCal, SoCal Building Materials, Building Materials Manufacturers, Steel Warehouse, are invited, but other companies who have common accounts with those industries are also welcome to join. As a bonus, guest speaker Christopher Ng, Esq. of Gibbs Giden will speak on a construction-related topic. The meeting will take the place of the regularly scheduled October group meeting for those groups.

For more information, contact Diana Escobar at 818-972-5300.

CMA Welcomes Sergey Garanyants to Construction Forms Filing Department

Sergey Garanyants
CMA is proud to announce the hiring of Sergey Garanyants to manage its Construction Forms Filing Services (CFFS) team and offerings in CMA’s North Las Vegas office. Sergey, who obtained his Juris Doctor Degree from Loyola University New Orleans – College of Law, Class of 2015, offers his law background to help companies protect their lien rights under the law.

 

With a background in corporate legal counseling, commercial litigation, corporate governance, contracts & transactional practice, alternative dispute resolution, intellectual property & information technologies, administrative law & compliance, Sergey’s skill set is sure to provide additional value to companies filing preliminary notices, mechanics liens, bond claims, stop notices and other services to ensure they get paid on their construction jobs.

 

Sergey can be reached at 702-259-2622 or sgaranyants@emailcma.org.

Lien Laws and Construction-Related Webinar/Seminar Series Coming in 2016

For construction-related businesses, filing preliminary notices, intent to liens and mechanics liens, and more, can be a necessary, but tedious and time-intensive process. CMA’s Construction Forms Filing Service offers assistance with helping companies ensure future mechanics liens rights. In order to showcase some of these services and inform our customers, we invite you to join CMA’s Amber Jackson, who has 10+ years of expertise in construction forms filing, as she reviews a myriad of tools available through CMA’s Construction Forms Filing Service, and the many tools that CMA offers for companies in the construction industry in a free webinar on January 26.

Additionally, there will be a number of additional webinars and seminars, hosted by licensed attorneys, which will cover state-specific lien law provisions and procedures that will help as well, beginning with California basic lien law on February 4. More states will be added to our education program soon.

To sign up for these sessions, click here.

CA Mechanics Lien Law Revisions and Forms

SACRAMENTO — The Contractors State License Board (CSLB) is reminding licensees of revisions that were made to the state’s mechanics lien laws on July 1, 2012. Legal revisions mainly change the wording and format of the mechanics lien notice. Because of the changes, CSLB has updated release forms to reflect the new language. Contractors can use these documents to protect their lien rights on construction projects. The forms are available on the CSLB website (www.cslb.ca.gov).

The 20-Day Preliminary Notice is now simply called Preliminary Notice. In addition, the wording of the Notice to Property Owner statement, required as part of the Preliminary Notice, has changed. Subcontractors and suppliers should use the newly worded Notice for private home improvement projects. The Preliminary Notice should be delivered to the homeowner in person or by certified, registered, or express mail, or overnight delivery, with a receipt of the mailing as proof. You may give notice any time before work starts or products are delivered, and up to 20 days after. If you give notice more than 20 days after work or delivery, your lien rights only apply to the work or products provided 20 days before the notice was given, and anytime thereafter.

The Notice of Mechanics Lien wording also changed in the new law. This notice must accompany the lien claim and be sent via certified, registered, or first class mail, with a certificate of mailing as proof. Failure to send the properly worded Notice with the lien claim could result in the lien being unenforceable.

The conditional and unconditional lien release forms also have changed. Make sure subcontractors and suppliers sign the new conditional forms as progress payments are owed, and when the project is finished before they are given final payment. Have them sign the new unconditional release forms after they receive progress payments and their final payment. The new law gives homeowners 15 days instead of 10 to file a Notice of Completion with the County Recorder. If a notice is filed, the contractor has 60 days and subcontractors have 30 days to record a lien. If no notice is filed, all parties have 90 days to record a lien.

Download the forms and statements:

Unconditional Waiver and Release Upon Partial Payment (750)

Unconditional Waiver and Release On Final Payment (627)

Conditional Waiver and Release On Progress Payment (608)

Conditional Waiver and Release Upon Final Payment (496)

Preliminary Notice statement (568)

Notice of Mechanics Lien (497)

 

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