Mechanics and materialmen's liens

Question 1

mechanics liens:

Answer 1

lien rights protect contract rights

Question 2

4 requirements for liens

Answer 2

1. Furnish labor/professional services/materials/rental equipment
2. improvement on real property
3. pursuant to K
4. with owner of real property

Question 3

owner definition

Answer 3

person with interest in prop improved and for whom improvement is made and who ordered improvement

Question 4

lienable performances

Answer 4

• building/altering/repairing/demolishing improvement on property excavating, clearing, landscaping
• building railroad
• furnishing materials (including trees, shrubbery)
• providing architectural, surveying or engineering services

Question 5

Who’s entitled to lien to secure payment of debt?

Answer 5

• person who performs labor or services, OR
• funishes materials
  pursuant to K with owner of prop

Question 6

extent of claim

Answer 6

lien extends to improvement and area reasonably necessary for convenient use and occupation of building

Question 7

Claim of lien must be perfected

Answer 7

1. Service
2. Filed with Clerk in county where prop is located
3. Filed no later than 120 days after last furnishing of labor/materials by PKor (good faith furnishing)
4. Info on claim
5. Two actions by GC mechanics lien holder (#3 & Suit must be filed within 180 days from last day of work)

Question 8

Info on claim

Answer 8

• Parties to K
• Record Owners
• Description of labor and materials
• Date of 1st & last furnishing
• Amount claimed
• Description of prop

Question 9

Service details

Answer 9

• Prime Kors need to serve owner

- 1st tier SC need to serve owner & Prime Kor through whom subrogated lien rights are being asserted

Question 10

The Lien Agent - Notice Requirement

Answer 10

Use of lien agent is required by statute

Question 11

The Lien Agent steps

Answer 11

1. Determine whether need a lien agent

2. Appoint lien agent before contracting for work

Question 12

Lien agents are:

Answer 12

• company whose duty is to track info concerning party with potential lien rights
• title insurance company

Question 13

Lien agent rule

Answer 13

parties with lien rights have to give notice to lien agent

- failure to give full & timely notice may result in loss of lien rights

Question 14

Not required to appoint lien agent if:

Answer 14

1. 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

Question 15

Appointing a lien agent

Answer 15

required to appoint a lien agent no later than the time the owner first contracts with any person to improve prop

Question 16

How to appoint lien agent

Answer 16

• 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

Question 17

More sub Kors

Answer 17

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)

Question 18

Design Professionals

Answer 18

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)

Question 19

Enforcement of sub Kor’s subrogated lien on funds - Contents of notice

Answer 19

1. Claimants name and address
2. Real property description
3. Person the claimant contracted with
4. Each person subject to subrogation claims
5. General description of the K
6. Amount of the lien claim

Question 20

Enforcement of sub Kor’s subrogated lien on funds - Other rules

Answer 20

• Only effective upon receipt by the obligor

- Lien on funds limited by whether obligor is still holding funds (and how much $$)