Mechanics and materialmen's liens Flashcards
mechanics liens:
lien rights protect contract rights
4 requirements for liens
- Furnish labor/professional services/materials/rental equipment
- improvement on real property
- pursuant to K
- with owner of real property
owner definition
person with interest in prop improved and for whom improvement is made and who ordered improvement
lienable performances
- building/altering/repairing/demolishing improvement on property excavating, clearing, landscaping
- building railroad
- furnishing materials (including trees, shrubbery)
- providing architectural, surveying or engineering services
Who’s entitled to lien to secure payment of debt?
- person who performs labor or services, OR
- funishes materials
pursuant to K with owner of prop
extent of claim
lien extends to improvement and area reasonably necessary for convenient use and occupation of building
Claim of lien must be perfected
- Service
- Filed with Clerk in county where prop is located
- Filed no later than 120 days after last furnishing of labor/materials by PKor (good faith furnishing)
- Info on claim
- Two actions by GC mechanics lien holder (#3 & Suit must be filed within 180 days from last day of work)
Info on claim
- Parties to K
- Record Owners
- Description of labor and materials
- Date of 1st & last furnishing
- Amount claimed
- Description of prop
Service details
- Prime Kors need to serve owner
- 1st tier SC need to serve owner & Prime Kor through whom subrogated lien rights are being asserted
The Lien Agent - Notice Requirement
Use of lien agent is required by statute
The Lien Agent steps
- Determine whether need a lien agent
2. Appoint lien agent before contracting for work
Lien agents are:
- company whose duty is to track info concerning party with potential lien rights
- title insurance company
Lien agent rule
parties with lien rights have to give notice to lien agent
- failure to give full & timely notice may result in loss of lien rights
Not required to appoint lien agent if:
- cost of undertaking project less than 30K; OR
2. owner is making improvements to an existing single-family residential dwelling used by owner as residence
Appointing a lien agent
required to appoint a lien agent no later than the time the owner first contracts with any person to improve prop
How to appoint lien agent
- Select lien agent from the list provided
- Post building permit at the project site conspicuously (easy to find) and continuously during construction
- If no building permit is required for the project, print the “Appointment of Lien Agent” form and post a copy of this document, which contains the contact information for the lien agent, on a sign conspicuously and continuously on the property from the beginning to the end of construction
More sub Kors
In certain circumstances, to properly perfect its rights to a claim of lien on real property, a subcontractor must serve its claim of lien on real property on both the owner and the contractor (may either use its first and last date of furnishing labor or materials, or that of the contractor-effective January 1)
Design Professionals
Architects, engineers, surveyors should provide notice to the lien agent within 15 days of first work.
- limited exception where the owner does not include the identity of the lien agent in the design contract
- If the design contract does not identify the lien agent, then the designer is deemed to have given notice at the time the owner appoints the lien agent (effective April 1)
Enforcement of sub Kor’s subrogated lien on funds - Contents of notice
- Claimants name and address
- Real property description
- Person the claimant contracted with
- Each person subject to subrogation claims
- General description of the K
- Amount of the lien claim
Enforcement of sub Kor’s subrogated lien on funds - Other rules
- Only effective upon receipt by the obligor
- Lien on funds limited by whether obligor is still holding funds (and how much $$)
