MECHANICS LIENS
General Information
I. Distinction Between Original Contractors, General Contractors, and Subcontractors
A contractor performing work at a specific job site may be deemed the General Contractor, or an Original Contractor. He can likewise be considered to be a Sub-Contractor at a separate and distinct job site, despite the fact he is performing identical work or service. Because of this it is important that we elaborate upon this distinction.
A. Original Contractor:
If a Contractor is dealing direct with the owner or his agent, but is not hired to manage or oversee the work of subcontractors also working at the real estate, he is considered to be an Original Contractor.
B. General Contractor:
If a Contractor is hired directly by the Owner, or Owners Agent to oversee, manage, and contract with subcontractors for the improvement of real estate, he is considered to be the General Contractor.
C. Sub-Contractor:
A Sub-Contractor is anyone who is employed by, or is working under the direction of the General Contractor, or still yet under the direction of a fellow Sub-Contractor.
II. Timing and Perfection Requirements
A. General and Original Contractors:
In effort to have impact upon the interests of the owner and third parties, such as mortgage companies, both General and Original Contractors must record their claim for lien within four (4) months pursuant to completion of their work at the specific job site. Should the General or Original Contractor fail to record their lien in the county for which the work was done, within the four (4) months as specified, they can still impose a lien against the property, however its impact will be limited only to the owner's interest in the real estate only, and not upon those of third party lenders. General and Original Contractors have two (2) years from the date of completion of their work to file suit to foreclose upon the real estate.
B. Sub-Contractor:
In effort to preserve his lien rights, the Sub-Contractor must, as called for in Section 24, serve his notice upon the Owner and the General Contractor, in addition to lending institutions or individuals who may have an interest in the real estate, and should do so via certified or registered mail. Additionally, the Sub-Contractor should record his Mechanics Lien in the County where the work was done within four (4) months from the last day of work. In doing so, the Sub-Contractor will have the greatest possible impact upon the party or parties withholding funds, by advising these parties prior to periodic or final payouts. If you have provided the General Contractor or Owner with Partial or Final Waivers of Lien, (as is a common practice in the construction industry) and the General Contractor fails to pay you for the work performed, it is advisable that you place the Owner of the real estate, the General Contractor, and the Title Company, (if applicable) on notice that you have not been paid, and the notices should be sent via certified or registered mail. This should be done even if you have surpassed the 90 day rule requirement. While this is not a full proof method of protecting your interest in the real estate, it may alert some of the more reputable parties associated with the job site of your dilemma, who may in turn place the pressure required to prompt payment from the General Contractor, prior to completion of the job. The Sub-Contractor has two (2) years from the date of completion of this work to file suit to foreclose on the real estate.
60 Day Notification to Single Dwelling, Owner Occupied Residences
When performing work upon owner occupied, single dwelling residences, the Sub-Contractor must serve his notice of lien with sixty (60) days from the first day of providing labor or materials to said job site, and should do so via certified mail. Notices issued pursuant to the sixty (60) day requirement are valid, but do not affect any prior payments made by the owner. NOTE: The Sub-Contractor should still follow the 90 day rule and file his notices accordingly to all mandatory parties.
III. MECHANICS LIENS ON FUNDS FOR CITY, COUNTY, AND STATE PROJECTS
Because it is not feasible to place a Mechanics Lien on Municipal Real Estate there have been laws put in place which enable a Sub-contractor to place a lien on the funds due and payable on partially or completed projects. This holds true provided the Sub-Contractor serves notice upon the relevant municipal body, and the General Contractor of this claim, via written notification. Pursuant to serving said notice, the Sub-Contractor shall within ninety (90) days, file a complaint or suit against the funds. Failure to do so within the ninety (90) days allotted shall terminate your lien rights against the funds.
IV. BOND CLAIMS, PUBLIC & PRIVATE
Public Construction - Pursuit of the Payment Bond
The Contractors notice of claim must be filed within 180 days subsequent to the claimants last day of furnishing materials or labor. Notice should be served upon the department awarding the contract as well as the bonding company. A copy of the notice should likewise be sent to the General Contractor awarded the job. All notices should be sent via certified mail return receipt requested. Suit may be filed 120 days subsequent to the Contractors last day having performed labor or furnishing materials.
Private Construction - Pursuit of the Payment Bond
While there currently is no statute requiring a General Contractor to obtain a bond on private jobs, responsible and educated owners often times require the General Contractor to obtain one prior to initiation of work. Depending on the language contained therein, the bond may contain specific provisions requiring the General Contractor to substantiate payment to all Sub-Contractors who are a party to the job. Ultimately the dilemma faced by the Sub-Contractor is in interpreting the language of the bond in that there was intent to benefit the Sub-Contractor.
Federal Projects - Pursuit of the Payment Bond
If the Sub-Contractor has furnished materials or labor on a Federal Project he must serve written notice upon the General Contractor via registered mail within ninety (90) days from the last day work was performed or materials furnished. Suit must be brought forth within one (1) year from the last day work was performed or materials furnished.
MECHANICS LIENS-DISCLAIMER
Any information contained within this website should in no way be construed as legal advice. Guidance Recovery Services, LLC (GRS) is a document preparation service. No employees of GRS are Attorneys and therefore we do not purport to in any way, shape or form to provide legal counsel to our clients.
GRS cannot guarantee accuracy, and assumes no responsibility for errors or omissions attributed to inaccurate information obtained from public offices such as County Recorders, Assessors, Title Companies, City, Town and Village municipalities. It should be expressly understood that GRS cannot guarantee that additional 3rd parties which did not appear on the title record at the time of the initial tract search will be identified in the Mechanics Lien document, nor can GRS guarantee that any new owners will be identified and named on the Mechanics Lien document pursuant to a conveyance of the property after the initial tract search is performed.
It is the express responsibility of the customer to have competent legal counsel review all Mechanics Lien documents prepared by GRS. It is the responsibility of the customer to verify all the information contained in any and all documents prepared by GRS to ensure that the information provided by the customer is correctly represented in the body of the document(s) prepared by GRS.
GRS accepts no liability for inaccurate information provided to GRS which result in the slander of title. It is the responsibility of the customer to provide GRS with correct corporate entity names and copies of any and all contracts and proposals pertinent to the Mechanics Lien document preparation.
GRS reserves the right to refuse orders due to conflict of interest situations, complexities of Real Estate, Mass Tracts of Land, Shopping Malls, Condominiums, and Mechanics Lien Claims in excess of $50,000.00.
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