Archive for the ‘Filing Requirements’ Category

Leasing Equipment in Louisiana? How To Protect Your Lien Claim

On July 20, 2011 Author By Wolfe Guest
You are in the business of leasing heavy equipment to contractors. You are beginning to provide more and more machinery to jobsites. You just hit your first snag with payment. What do you do?

Chances are you are stuck in rough spot and have to defer to your contract for remedy. There is likely no answer for you under the lien law – unless you filed a notice of lease agreement with the owner within the appropriate time frame.

Lessors often do not learn about the dreaded notice provision until after they have been bitten by a bad customer. Both the Private Works Act and the Public Works Act each require that the Lessor of equipment to a construction project provide advance notice to the owner of the equipment’s use and existence at the jobsite.

Luckily, satisfaction of this requirement is quite simple. Under both Acts, a Lessor of movables (equipment, vehicles, etc.) must “deliver a copy of the lease to the owner not more than ten days after the movables are first placed at the site of the immovable for use in the work.” La. R.S. 38:2242(c). If the job is private and not public, you must also provide a copy of the lease to the contractor. La. R.S. 9:4802(G)(1).

The official comment for subsection G of La. R.S. 9:4802 states that the purpose of this law is to give notice to the owner and the contractor that equipment being used by a contractor is leased and thus potentially creating liability under the Private Works Act.

Though the type of delivery is not specified, it is commonplace to use hand delivery or certified mail. If hand delivery is utilized, it is important that the courier fill out a simple affidavit specifying what was delivered, when it was delivered, who it was delivered to, and where it was delivered.

Finally, the Notice of Lease Agreement does not have to be in any specific form – simply a copy of the contract should suffice. We do prefer that you use a cover sheet to inform the owner and contractor of the purpose of the delivery, reserving your rights under either La. R.S. 9:4802 (Private Works) or La. R.S. 38:2242 (Public Works).

Think Different To Send Notices of Lease Easily

So, now you know about this notice of lease requirement…but really, does your company have the time or attention to detail required to send these notices to each and every customer every time you sign a rental agreement?  It’s likely that you either don’t have the time, or if you can make the time, that it’s a waste of time for your company.

Think different about these notices…how about outsourcing them?

A company like Zlien (which was started by Wolfe Law Group founder Scott Wolfe Jr) is in the business of sending notices like the Louisiana Notice of Lease. They have many equipment rental companies who simply send them a copy of each new rental agreement, and Zlien prepares and sends the preliminary notice for them, keeping evidence of its delivery and a copy of the notice for you to access within your account at anytime.  It’s a great alternative to trying to send all of these complex notices yourself, and can be done so it will actually save you money.

Posted in:     Filing Requirements, Louisiana, Mechanics Lien  /  Tags: , , , ,   /   1 Comment

Washington Law Protects Contractors from Dangers of Frivolous Lien Statute

On July 19, 2011 Author By Wolfe Guest

A quick word from the construction law case files:

The Court of Appeals, Division 1, out in Washington state, has refused to deem a construction lien as frivolous based upon the complexity of the construction contract at dispute. The court in SD Deacon Corp. of Washington v. Gaston Bros. Excavating, Inc., decided back in May of 2009, that the state’s “frivolous lien” statute, coded under RCW 60.04.081, requires a more in-depth analysis of factual circumstances surrounding the substance of the contract and the lien.

The court in SD Deacon further reasoned that a court can only evaluate in a frivolous lien proceeding are, by way of example, whether the lien was properly filed, signed by the proper party, properly served, and meets the statutory form requirements. Issues of substance of the lien (i.e. the contract amount, amount due or change orders) are issues which require more substantive proceedings to analyze factual circumstances.

Because the frivolous lien procedure codified in RCW 60.04.081 does not provide for such proceedings, a party seeking to extinguish a lien filing will be unsuccessful in attempting to show to the court that the lien was frivolous.

Essentially, the court’s rule is that the “lien must be so devoid of merit that the claim has no possibility of succeeding” and that “there must be findings supporting the conclusion that the lien is invalid beyond legitimate dispute.”

The Court’s ruling provides some hope for “fringe” contractors who’s claims hold some element of uncertainty, but who desperately need the security provided by a lien in order to collect payment from an uphill contractor or owner.

The frivolous lien statute was enacted to prevent fraudulent claims against contractors, by awarding successful parties attorneys fees. The ruling in the case shows that the award of fees will not be granted unless your lien fails to meet statutory form requirements.

Posted in:     Filing Requirements, Mechanics Lien, Washington  /  Tags: ,   /   Leave a comment

Washington Court of Appeals Confirms It’s Tough To Argue Around the Model Disclosure Statement Requirements

On November 15, 2010 Author By Scott Wolfe Jr

In previous posts, I’ve written about the requirement for contractors contracting with property owners to provide a Model Disclosure Statement (Requirement in RCW 18.27.114(1)).

A case decided Division III of the Court of Appeals last year addresses a challenge to this act made by a contractor, and highlights just how difficult it is for folks to argue that the Model Disclosure Statement is not required on a qualifying project.

In this case, AWR Construction v. Labor & Industries, a contractor contracted to replace the roof of an apartment building. The owner of the apartment building – while not acting as a contractor on the project – was actually a registered contractor.

The Model Disclosure Statement must be provided whenever a contractor contracts with an owner. It is not required when a contractor is contracting with other contractors, suppliers, or the like.

AWR Construction’s argument here was that the property owner was a registered contractor, and thus, the disclosure requirement did not apply.

While this at first may sound like a clear position, there’s actually a decent justification behind the argument. The Model Disclosure Statement is required for the public’s interest, to disclose certain things to the public that is not known by them…but is known by contractors (i.e. that a lien can be filed against a project by subs, even after payment to the prime).

So, if the purpose of the statute is to disclose this type of information to the public, then why require this disclosure to a registered contractor?

Ordinarily, the disclosure need not be delivered to other contractors. The Court of Appeals found this was not the case, however, when the registered contractor was acting in the role of an owner, and not a contractor – as was the case here.

The disclosure requirement has nothing to do with the parties’ actual registration (or lack thereof), but everything to do with the role of the contractor’s customer. If the client is the owner of the property, the disclosure must be sent.

Therefore:   Send Model Disclosure Statement…or Else!

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Posted in:     Filing Requirements, Washington  /  Tags: , , ,   /   Leave a comment

Model Disclosure Statement Required in Washington To Protect Lien Rights When Contracting With Owner

On October 26, 2010 Author By Scott Wolfe Jr

Ask yourself these three questions:

1)     Are you a contractor of any sort?

2)     Did you or do you contract directly with the property owner on any construction project(s)?

3)     Is the residential project’s contract more than $1,000.00, or commercial project’s contract less than $60,000.00?

If you answered yes to these three questions, pay very close attention here.   You must deliver a Model Disclosure Statement to the property owner before beginning work.

The Model Disclosure Statement is furnished to contractors by the Washington Department of Labor and Industries.   It’s very, very easy to fill-out.

You must furnish the form to the property owner, have the property owner sign it, and keep a copy of the signed form in your files for a “minimum of three years.”

If you fail to do this, not only do you lose the right to file any mechanics lien on the project, but you can also be fined by the Labor & Industries, and may be in violation of Consumer Protection laws.

Unfortunately, too few contractors in the State of Washington are aware of this requirement.   If you do business directly with property owners, get your hands on this form and present it to the owner at the beginning of every project.

Download the form from the Labor and Industries by Clicking Here.

Posted in:     Filing Requirements, Regulations  /  Tags: , , ,   /   Leave a comment

Are Mechanic Lien Laws Changing Across The Country To Require More Notice?

On September 24, 2010 Author By Scott Wolfe Jr

I read an article in the Multi-Housing News Online about the mechanic lien law changes in California set to become effective January 1, 2011, that quotes a California construction attorney, John C. Pytel, Esq., saying this referring to the increase in notices required under the new laws:

In fact, in addition to the relatively minor changes taking effect Jan. 1, California’s own lien statutes look like they will be subjected to a major overhaul effective July 31, 2012. This seems to be the crest of a national trend as more and more property owners fall victim to confusing lien laws in a turbulent housing market.

Is Mr. Pytel correct here? Are we at the crest of a national trend that will result in stricter notice requirements for mechanic lien claimants, and thus more protection for property owners?

I will stay this, in support of Mr. Pytel’s comment and prediction, there have been a few pieces of legislation across the country that increase the notice requirements on residential projects. See examples in California, Missouri, Illinois and Virginia – all happening in the past year or so.

However, I’m not sure I completely agree with Mr. Pytel.

So many states don’t require notice at all, and the changes have been isolated to those states that already have notice requirements. These requirements were just tweaked a bit to try to make things easier and clearer, and not necessarily to add any layers of required notification.

What do you guys think – are we at the crest of a national trend requiring more notice to make a lien claim?

This article was originally posted on Zlien’s topic-specific Construction Lien Blog.

Posted in:     Filing Requirements  /  Tags: , ,   /   4 Comments
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