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Big thank you to our friend Christopher Hill who operates the Construction Law Musings blog for allowing me to become his blog's first three-time Guest Post Friday writer.

This morning, Musing's published a blog post I wrote titled "A Lien By Any Other Name Can Sound Just As Sweet."  

The article provides readers with a broad overview of the lien-like remedies available to them, as they differ based upon the classes of projects. In large part, the article explains the difference between a traditional lien (filed against the property on private projects) and a "claim" type of lien (filed against a bond on a state and federal project).

Of course, this post only skims the surface, but sometimes, it's the basic information that is needed to help folks understand the details. And why is it important to understand these details? The article on Musings concludes with that answer as follows:

Regardless of what class of project you’re working on, a lien-like remedy is probably available to you in the event of non-payment. However, it’s critical to understand the different remedies available at the onset of construction, for each remedy carries different pre-lien or pre-claim requirements.

Take a look at the article by clicking him, and be sure to subscribe to Christopher's blog which posts great information relevant to those in the construction industry.

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We've said it before, and we'll say it again:  Mechanic Lien statutes (in all states) are hyper-technical.   Litigators familiar with the lien statutes must tread carefully when making lien claims...and those unfamiliar with the statutes must be more careful.

A 2007 Washington Appeals decision underscores this point.   In DBM Consulting Engineers, Inc. v. United States Fidelity and Guaranty  Company, a contractor won its suit against a defendant but was still unable to recover on the lien's bond.   Why?   Because the contractor "failed to obtain judgment upon the lien, only obtaining a judgment on the breach of contract claim."

The background to this suit is that a contractor filed suit against a client for its failure to pay a debt, and the client subsequently recorded a lien bond to free up the property for sale.  The contractor then won it's lawsuit against the client...but when it moved to recover against the bond, its claim was denied.

The appeals court provided this pithy conclusion:

A lien bond does not eliminate a lien entirely. A lien bond releases the property from the lien, but the lien is then secured by the bond. While the applicable foreclosure process depends on whether the lien is secured by property (which can then be sold) or by a bond, in either situation, the lien must be foreclosed upon before the lienholder is entitled to recover on the lien. So in order to be entitled to payment on the bond, DBM needed to foreclose its lien. Because DBM did not obtain a judgment foreclosing its lien, Travelers is not obligated to pay on the lien bond.

A fellow construction firm in the Pacific Northwest, Carney Law, discusses the DBM decision on its website saying that the Court's holding "is yet another application of the familiar canon that the mechanics' lien statute is strictly construed to determine whether the lien attaches."   It is also another application of the canon that the statues are hyper-technical, with a slew of traps for the unwary. 

While this example is from Washington, the same general principals hold true in Louisiana and elsewhere:  wade through mechanics lien statutes carefully.   

 

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Louisiana lien laws are codified in La. R.S. 9:4801, which is referred to as the Louisiana Private Works Act.  While the state has some notice requirements, it is generally a non-notice state [read about notice requirements for Louisiana here].

But what happens when a lien is filed improperly?

Depending on your perspective, it's either fortunate or unfortunate that parish recording offices are required to file mechanic's lien upon presentation. 

So...if a subcontractor liens a project for $10 million when he's only owed $35.00, the lien is recorded.   If a laborer liens a project five years after its substantially complete, the lien is recorded.  Or if the lien fails to include information required by law, it is still recorded.

While the construction or mechanic's lien may be legally improper, it gets on the books, and that means it can have the effect of preventing a sale, transfer or refinancing of the property.

The Private Works Act provides a procedure by which any interested party can dispute the validity of a construction lien.  If they are successful at removing the lien, the Act provides the disputing party the ability to recover attorneys fees and costs.

Scott Wolfe recently published a Legal Guide on the national lawyer ranking website, Avvo.com.  The guide is titled "How to Dispute a Construction Lien in Louisiana," and guides an interested party through these three steps:

1)  Answer the Obvious Question:  Is the Lien Improper?  [read common mistakes]

2)  Make Written Demand for Cancellation of the Lien [see template letter]

3)  File Suit to Demand Removal of the Lien [see similar lawsuit]

Read the legal guide in full at Avvo.com by clicking here.

Wolfe Law Group frequently works with clients who dispute the validity of construction and mechanics liens in Louisiana and Washington.   Contact us today for more information about how to demand the cancellation of a construction or mechanic's lien filed against your property, or on your project.

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Last week Express Lien, LLC published an article about the Public Works Act and how claims against state owned and operated projects can be perfected. The article served as an introduction to the process of perfecting a claim against the state-affiliated agency as well as any contractors up the ladder. Though the article served as an introduction to the state-wide practices, Wolfe Law Group has decided to open its discussion of state public works claims by starting at the top of our nation's lien food chain - The Miller Act.

The Miller Act is the federal law requiring contractor surety bonds on federal construction projects (40 U.S.C. Section 3131-3134). This law requires a contractor on a federal project to post two bonds: a performance bond and a labor and material payment bond. Simply, the contractor must provide legal assurance that (a) the job gets completed and (b) the persons working get paid.


Specifically, the Miller Act provides that all projects for the improvement of federal lands, or federally operated lands, on a contract of at least $100,000.00, shall required that the contractor furnish the federal government with (a) a performance bond in an amount that the contracting officer regards as adequate for the protection of the federal government; and (b) separate payment bond for the protection of suppliers of labor and materials. The amount of the payment bond shall be equal to the total amount payable by the terms of the contract unless the contracting officer awarding the contract makes a written determination supported by specific findings that a payment bond in that amount is impractical, in which case the amount of the payment bond shall be set by the contracting officer. The amount of the payment bond shall not be less than the amount of the performance bond.

Further, many states have enacted "Little Miller Acts," which are often referred to as the "Public Works Act." Louisiana's act can be found at La. R.S. 38:2212, et seq., and Washington's similar law can be found under Title 39 of the Revised Code of Washington.

A claim pursuant to the federal Miller Act is relatively simple. Such a claim must be made within 90 days from the last date of performance or delivery of materials on the job, HOWEVER this requirement can be waived if in fact the claimant has contracted (has privity) directly with the general contractor holding the bond. Since the claim is required to be made against the party holding the bond, the notice is rendered moot.

In the instance that you, as a subcontractor or supplier, have not been able to file a claim within the 90 day period, but you did contract directly with the general and prime contractor, you can perfect your claim simply by bringing suit within 1 year of the completion of your performance, to foreclose the claim against the liable parties, who in this case would be the general contractor, surety and the owner.

Therefore, you cannot rest upon a failed attempt to get the claim made within the 90 day period. Do not assume that your rights to payment against the surety are not perfected and contact an attorney in order to ensure that you still have rights.

In the next installments, we will discuss the state public works laws and the process for reviewing bonds, making claims and collecting amounts due.

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We all know that Contractors generally benefit from the lien laws of each state. Those statutes are construed liberally providing the Contractor with the wiggle room to argue their right to restrain the title to your property.

But what about owners? What can owners do to prevent an unexpected lien? One of the most popular trends in investment and business is the leasing of property for rental income. If done correctly, a personal investor can provide adequate supplemental income, or in some rare occasions, more than enough to live well without having to work.

But how do you manage your lessees? How do we ensure that an unexpected lien doesn't derail your prized investment? The Courts have devised a rule of law in Washington, and other states, to put Contractors on notice of the owner's hold over the property.

The question a Court will ask is, whether or not the lessee is a statutory agent of the lessor for purposes of binding the property to a debt for construction. Under the Court's test, a statutory agency is created by a lessor's requirement that tenants provide necessary improvements, or erect structures on the property.

This authority can be bestowed by way of the lease. In Seattle Lighting Fixture Co. v. Broadway Cent. Mkt., 156 Wash. 189 (Wash. 1930), the Court devised the theory that requiring a lessee to perform improvements made the lessee a technical agent for purposes of binding the land to debts protected by the lien law. What further complicates this matter is that in Seattle Lighting, the lessor had actually included a lease provision that waived the lessee's right to bind the lessor to any debt. The Court stated that though this provision sought to protect the lessor from the lessee's debts, it could not overcome the effect of the lessee's obligation to provide improvement for the benefit of the lessor -even though the lessee had an option to buy!!!

What do we learn from this holding? The Courts are not willing to override the powerful lien law statutes when the owner wants some value added to its property. This desire to add value goes hand in hand with the Contractor's right to a privilege over the property for non-payment.

So how can the homeowner protect itself? First, refrain from requiring any tenants to perform improvements. An owner should get those task completed itself and manage the construction work so that it can be aware of potential claims and be in the driver seat for settlement negotiations.

If you want the lessee to provide improvements, ensure that the lease is clear in stating that "any and all improvements are to be made for the sole benefit of the lessee. Lessee is provided with the opportunity to perform improvements for the sole purpose which the lessee intends to use the premises." Bengel v. Madison Corp., 29 Wn.2d 779 (Wash.1948). A provision or similar provision distinguishes between work which benefits the property and work which benefits the tenant - an important difference to highlight.

A lessor should file a copy of its clear liability prohibitive lease with the local public records. Along with this, a lessor should file a simple and large print notice in the following form:

NOTICE OF NO LIEN RIGHTS

Notice is hereby given to all persons and entities that the undersigned and its property will not be responsible for the payment of any labor performed upon or material or supplies furnished for or used upon these premises known and described as _______________(Address or Legal Description of Property)

Notices such as the one above have been proven to work in other states as well. At the least, the notice should provide adequate public notice to all contractors that the owner of the property has no obligation for debts caused by the lessee.

This is not all bad news for Contractors and Suppliers. Often Contractors can benefit from the public record. It is always important to pull a copy of the record in order to determine the terms of a lease in the event you are performing work for any person other than the owner of the property. The first question should always be: Are you the owner? Even if they purport to be the owner, it never hurts to review the record of a piece of property in order to determine the extent of other debts, privileges and encumbrances on the land which could disturb not only your lien rights but also your ability to recover under your contract.

Contractors can access property public records via Lexis Nexus, Westlaw or local and governmental databases available online. The most reliable source is always the record itself and that can be found at the county Recorder's Office. If you do your homework, you will likely save yourself a considerable headache down the road.

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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).

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How To Dispute a Construction Lien in Louisiana or Washington

Filing a construction lien is incredibly simple, and here is a secret: when filing, no one checks to ensure that the property owner actually owes the claimant any money.

In fact, anyone with the wherewithal can actually draft a lien document and file it against any property owner. Not only will the parish or county recorder file the instrument....they must file the instrument.

Every state has some mechanism within its laws to prevent an abuse of this process, and usually a property owner of aggrieved party can recover attorneys fees and penalties from the party making the improper filing. Practically speaking, however, utilizing these proceedings to remove a lien can cost thousands and take months...and while you may get the lien instrument removed, you just as well may not.

This post explores the disputing of a construction lien.

What Makes A Lien Improper Anyway?
Before discussing what you can do to remove an improper lien, it's prudent to highlight what exactly makes a lien improper in the first place.

Some common things that make a construction lien invalid:

• Failure to adequately describe the property - i.e. filing without a legal property description;
  
  
• When required, failing to provide the proper notices. In both Louisiana and Washington, in certain circumstances a contractor, subcontractor or supplier must provide property owners with "notice" of lien rights. If the liening party fails to provide these notices, it may forfeit its lien rights.
  
  
• "Shooting for the Moon" - In the heat of the moment, a contractor may lien a project for an unreasonable sum (interests, attorneys fees, the cost of his time in dealing with the collection, etc., etc.). By "shooting for the moon," the contractor weakens his claim as a whole.
  
  
• Failure to meet all of the content requirements. Washington and Louisiana lien statutes are specific about what must be contained within a lien document...and the absence of any one component can be fatal to the claim.
  
  
• Timeliness. In Louisiana and Washington and in virtually every state, a construction lien must be filed within a very specific timeframe. If the lien is filed just one day late, it is invalid.
  

What Does Not Make a Lien Improper? An Important Distinction


It's important to distinguish between a dispute related to the construction lien itself and a dispute related to the underlying construction work addressed by the lien.

While both Louisiana and Washington provide mechanisms for property owners to dispute a construction lien as being improperly filed, these dispute proceedings will mostly only address the procedural appropriateness of the lien. It will not, in other words, consider whether the contractor's work was done well or properly, whether the contractor "overcharged," or decide any other substantive dispute between the contractor and the property owner.

In determining whether someone has abused the liening process, the courts will simply consider whether they had a right to file the instrument...not whether they will prevail in trial related to the underlying obligation or contract. In Washington, for example, court's have even go so far as to state that "a lien is frivolous only if it presents no debatable issues and is so devoid of merit that it has no possibility of succeeding." Intermountain Elec., Inc. v. G-A-T Bros. Constr., Inc., 115 Wn. App. 384, 62 P.3d 548 (2003).

That court goes on to sum up its findings with a phrase very applicable to this portion of our discussion, that "every frivolous lien is invalid, but not every invalid lien is frivolous."

What to Do with an Improper Lien
The procedures for dealing with an improper lien are very similar in Louisiana and Washington.

In Louisiana, the procedure for disputing a lien is a two-step process, and is outlined within La. Rev. Stat. 9:4833. First, you are required to notify the other party of the lien defects and make a formal demand for its removal; and Second, if the lien isn't removed, you file a petition requesting the court to compel its removal.

The "warning" letter is mandated by 9:4833 (A), and requires that you provide the liening party a period of ten (10) days to remove the inscription before proceeding against them. If the liening party fails to cancel the inscription within the 10-day warning period, you are directed to bring a "mandamus" action under La. Rev. Stat. 44:114(B) to compel the Parish Recorder to cancel the lien inscription.

According to Louisiana procedural rules, a mandamus action should be set for hearing within 2 to 10 days from service of the defendant. Unfortunately, however, the hearing is rarely that speedy as a practical matter. You should be prepared to wait for 20-75 days.

In Washington, the procedure for disputing a lien is outlined with R.C.W. 60.04.081, which labels improper liens as "frivolous claims."

It's a one-step proceeding in Washington, allowing an owner to immediately apply to the appropriate superior court by motion for an order directing the claimant to appear in court to show cause why the lien is proper. The hearing date according to §60.04.081 can be no earlier than 6 days and no later than 15 days following service of the motion.

A Washington lien is considered "frivolous" if it is made without reasonable cause or clearly excessive. The filed motion shall state the grounds upon which relief is asked, and shall be supported by the affidavit of the applicant or his or her attorney setting forth a concise statement of the facts upon which the motion is based.

Award of Attorneys Fees

Generally speaking, the laws in both Louisiana and Washington provide that a party disputing an improper lien may recover attorneys fees if they prevail in having the lien removed. Each state, however, has its own twist.

In Louisiana, attorneys fees may be recovered by the party challenging the lien if: (a) they sent the required 10-day notice as per La. R.S. 9:4833(C); (b) the lien is ordered invalid and removed; and (c) the claimant filed the lien with actual malice and in bad faith.

It is usually this third requirement that prevents a Louisiana litigant from being awarded attorneys fees, as it is quite difficult to show that the contractor was being purposefully malicious when filing the construction lien. In practice, Louisiana courts only grant attorneys fees when actual malice and bad faith can be demonstrated.

In Washington, on the other hand, there is no requirement that the lien be filed with actual malice or in bad faith, or that any "pre-litigation notice" be provided. However, §60.04.081 is interesting in that it grants attorneys fees and costs to the winner of the proceedings, regardless of whether that is the contractor or the property owner!

§60.04.081 seriously raises the stakes of lien dispute litigation in Washington. If an owner instigates the proceedings and loses, he or she may be stuck with the claimant's attorneys fees bill. As such, while a property owner can dispute a construction lien in Washington state, he or she should be very careful about taking that step - especially since Washington courts overturn liens only when they present "no debatable issues and [are] so devoid of merit that it has no possibility of succeeding."

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It seems that a hundred things can go wrong when filing a construction lien. We've heard horror stories from clients of filing liens against the incorrect property, in the wrong parish or county, or for the wrong amount entirely!

It is of course possible to make a mistake when preparing or filing your construction lien. This begs a very important question: How do you fix it?

In Washington and Louisiana, the recorder's office will require you to file an "amended" instrument, which is, for the most part, simply a new lien.

If the "error" or "mistake" is critical enough to compromise the validity of your lien, the amended lien must also be filed within the statutory lien period! If your mistake invalidates your lien, and your amendment is filed after the lien period...your first lien will be invalid because of the error and your second lien will be invalid because it's untimely.

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In the world of construction liens, the word "Notice" gets frequent use. The technical nature of each state's notice requirements, however, are often misunderstood.

In general, there are 2 types of "notices" required by lien statutes: Preliminary Notice & Notice of Intent to Lien.

Preliminary Notice vs. Notice of Intent to Lien
A "Preliminary Notice" must usually be provided to the notified party before work begins on a construction project, or within a certain time frame from when materials and/or materials are first furnished.

A "Notice of Intent to Lien," on the other hand, must usually be provided to the notified party before filing a lien, usually 7-15 days before the filing.

As you can see from these simple definitions, the requirements are extremely different. And it's safe to assume that if your project and state requires notice, the failure to send it will result in the forfeiture of your company's lien rights.

When Is Notice Required?
Every state's requirements are different - and unfortunately, quite technical. Not only does the technical nature of lien statutes make them difficult to understand and interpret, but they also result in sometimes absurd consequences.

Here are some general notice trends:

• Frequent Rule #1: Almost every state has notice requirements when work is being performed on an "owner-occupied" residence. In theory, this is to protect homeowners from getting burned and having to pay contractors twice. Some states (like Pennsylvania) even prohibit liens against single family homeowner residences. If you're working on an "owner-occupied" residence - check your state's lien laws.
  
  
• Frequent Rule #2: The further down the chain you are, the more likely notice is required. Across the nation, there are more notice requirements for subcontractors than prime contractors, and more notice requirements for sub-subcontractors and suppliers than 1st tier subcontractors. If you're contracting with a subcontractor - check your state's lien laws.

Louisiana Notice Requirements
Here is some short-hand rules on Louisiana's notice requirements for Private Works:

• General Contractor (those contracting with an owner) must file a "Notice of Contract" with the Parish recorder if the project's contract price exceeds $25,000.00. The notice must be filed before first furnishing labor and/or materials to the project.
  
  
• When "improvement" work (i.e. not new construction) is being performed on an "owner-occupied" residence, the person contracting with the property owner must provide a "Notice of Lien Rights" to the property owner, and have the owner sign the same.
  
  
• Lessors of movables (who did not contract with the property owner) must deliver a "Notice of Lease" to the property owner and general contractor within 10 days of delivering the movables to the jobsite.
  
  
• On all residential projects, Sellers of movables (i.e. suppliers) must deliver a "Notice of Nonpayment" to the property owner at least 10 days before filing a construction lien.
  
  
• On all projects where a Notice of Contract has been filed, sellers of movables must deliver a "Notice of Nonpayment" to the property owner and the general contractor at least 10 days before filing a construction lien.
  

You can learn much more about Louisiana Lien Laws through the many resources provided by Wolfe Law Group, including:

Construction Lien articles published on the Wolfe Law Group Construction Law Blog.

Forms Available:
Notice of Lien Rights (for generals on owner-occupied improvement work)
Notice of NonPayment (for suppliers)
Notice of Lease (for lessors)

Washington Notice Requirements
Here is some short-hand rules on Washington's notice requirements for private construction projects:

• You are required to send written notice of a right to claim a lien to the property owner in every circumstance except: (1) if you contract directly with the owner or owner's agent; (2) if you are a laborer making a claim based solely on labor; or (3) if you are a subcontractor who contracted with the prime contractor.
  
  
• An exception applies if the project is "improvements to existing owner-occupied single family residences," in which case you must send notice to the property owner unless you contracted with him/her.
  
  
• The form of the "notice" is provided for by Washington Statutes: click here.
  

• A lien is only valid as to services, or materials performed or delivered 60 days before the notice is delivered to the property owner (for most projects), and 10 days before the notice is delivered in new construction single-family-residence projects.
  

How to Send Notice
In general, notices should be sent via hand delivery or certified mail with return receipt requested. You should keep affidavits of delivery or mailing to later prove that the notices were in fact sent and received. If a notice requires signature, you'll likely have to hand-deliver the notice.

There are legal document services that will properly prepare and send out construction lien notices. Express Lien, Inc., for example, prepares and delivers construction notices for contractors across the nation, and they keep copies of the notice and proof of delivery on their servers with client access. Their website is http://www.expresslien.com.

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We've published a good deal of information about why you should lien a non-paying project, what you're required to do to preserve your rights to lien, and more....but it's about time we explained what exactly comprises the construction lien itself. We're even going to provide you with a form.

Picky, Picky, Picky
One reason you should always consider engaging counsel or a third party provider to draft and file your construction lien is because the lien statutes in Washington and Louisiana are extraordinarily technical. The statutes governing private construction liens are very specific about what each lien should contain, and the failure to include this information can be fatal to your lien claim.

Not only must your lien meet substance requirements, but it must also meet rigorous form requirements. To make matters worse, the "form" of the lien may change from county-to-county or parish-to-parish.

Needless to say, be very careful when drafting your construction lien, as even typographical errors can ruin your lien's validity.

The Guts of a Louisiana Lien
So, what exactly must a Louisiana lien contain?

The Louisiana Private Works Act, in La R.S. 9:4822 (G) provides that a construction lien:

(1) Shall be in writing;

(2) Shall be signed by the person asserting the same or his representative;

(3) Shall reasonably identify the immovable with respect to which the work was performed or movables or services were supplied or rendered and the owner thereof;

(4) Shall set forth the amount and nature of the obligation giving rise to the claim or privilege and reasonably itemize the elements comprising it including the person for whom or to whom the contract was performed, material supplied, or services rendered.

Although the law in Louisiana previously required construction liens to be notarized and sworn to, the comments to LA R.S. 9:4822 make it clear that "[t]he requirement that the statement be sworn to has been abrogated."

Furthermore, remember that the requirement to "reasonably identify the immovable" requires more than a municipal address. Although the court and statute has not mandated a legally property description, a legal property description suffices as a reasonable identification. Click here to read our article about property descriptions in liens.

Want to see a Louisiana lien form? Take a look at one here. Read our disclaimer.

The Guts of a Washington Lien
So, what exactly must a Washington lien contain?

R.C.W.§ 64.04.091 provides that a notice of claim of lien:

The notice of claim of lien:

(1) Shall state in substance and effect:

(a) The name, phone number, and address of the claimant;

(b) The first and last date on which the labor, professional services, materials, or equipment was furnished or employee benefit contributions were due;

(c) The name of the person indebted to the claimant;

(d) The street address, legal description, or other description reasonably calculated to identify, for a person familiar with the area, the location of the real property to be charged with the lien;

(e) The name of the owner or reputed owner of the property, if known, and, if not known, that fact shall be stated; and

(f) The principal amount for which the lien is claimed.

and

(2) Shall be signed by the claimant or some person authorized to act on his or her behalf who shall affirmatively state they have read the notice of claim of lien and believe the notice of claim of lien to be true and correct under penalty of perjury, and shall be acknowledged pursuant to chapter 64.08 RCW. If the lien has been assigned, the name of the assignee shall be stated. Where an action to foreclose the lien has been commenced such notice of claim of lien may be amended as pleadings may be by order of the court insofar as the interests of third parties are not adversely affected by such amendment.

Unlike in Louisiana, a construction lien in Washington must be notarized.

Furthermore, refer to Wolfe Law Group's article on identifying property within mechanic's liens before filing a Washington lien with a simple municipal address to identify the property.

Want to see a Washington lien form? Take a look at one here. Read our disclaimer.

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When filing a mechanic's lien on a construction project, it is of course critical to identify the property within your lien. While a seemingly simple task, the laws in nearly every state are very specific about how property is identified...and the consequences of small mistakes can be fatal.

In Louisiana and Washington, for example, the statutes and case law governing private construction liens clearly require a "property description" that is more specific than a municipal address. While the law does not explicitly require a "legal property description," it is clear from the court's interpretation of the laws that a legal property description is sufficient and a municipal address is not.

Since both Louisiana and Washington courts are not reluctant to dismiss a lien when simple formalities - such as the property description - are overlooked, to ensure your lien's validity a legal property description should be used.

What Is A Legal Property Description?
Perhaps the best way to explain legal property descriptions is to demonstrate what it is not; A legal property description is not a simple address.

Accordingly, if you put something like this on your lien to identify a property, your lien is likely invalid:

123 Main Street
Seattle, WA 98134

If you were given a legal property description and a driving map, you'd probably have a very difficult time finding the property. This is because legal property descriptions typically speak in the language of county recorder offices, and not in the common directional parlance of everyday life. A legal property description looks less like the above and more like this:

Subdivision: Breatheway
Range: 105
Lot: 66
County: King
Square: 4-A

Want the technical definition?

A legal description (also referred to as land description, property description or land boundary description) is "a written statement recognized by law as to the definite location of a track of land by reference to a survey, recorded map or adjoining property."

How To Get the Legal Property Description

In many construction contracts (including AIA contracts), the contracting party in the higher tier is responsible for providing the legal property description to the lower tier party upon request. While very infrequently employed, most contractors have the right to make a simple RFI and acquire this valuable information.

It is sometimes better to make this RFI before work begins, as you'll be less likely to get a party's cooperation after a dispute arises. And since there are strict time limitations as to when you can and cannot lien, it is valuable to have this information at hand while things are smooth.

If you do not have the ability to request this as per your contract, or if you're unable to get the information for practical reasons, there are of course other ways to acquire a legal property description, including:

• Go to the county records office, and pull the Act of Sale for the property. This document will likely have the property description within.
  
• Use a service to acquire the legal property description. There are many online services such as www.HomeInfoMax.com. If you are filing a construction lien, companies like ExpressLien.com will draft the lien and acquire the legal property description for you.
  
• An attorney may have access to county or parish records to acquire this information.

Common Mistakes and Problems

Sometimes, finding a legal property description can be very difficult.

Depending on your location, the records of the county or parish may or may not be complete or easy to use. If your address is in an area that has been recently subdivided or sold, the legal property description might be "up in the air" or otherwise difficult to obtain. Finally, property on corners or with multiple addresses may be difficult to find.

In our experience, we've even encountered instances when the municipal address used by a property owner is not the actual or correct address of the property, and as such, not likely to lead you to a correct legal property description.

In short, you should be careful when acquiring a legal property description as there are many tricks to the trade and many pitfalls for the unwary. Legal property descriptions are very precise, and very fickle. Since the stakes are high (the validity or invalidity of your construction lien), pay close attention as to how you describe the liened property.

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Wolfe Law Group founding member, Scott G. Wolfe, Jr., published two Legal Guides this week with the lawyer rating service, Avvo.com.

The two guides relate to construction lien law in Washington state.

The first article, Construction Liens in Washington State, presents a general overview of the lien law landscape in Washington.

The second article, Filing a Construction Lien in Washington State, specifically discusses the lien filing process in that jurisdiction.

Both articles are great resources for any Washington contractor to learn a little more about construction liens and its legal requirements. Remember also that Wolfe Law Group's blog has multiple articles in common parlance related to construction liens and the prelien requirements in Washington and Louisiana...just visit our Construction Liens page by clicking here.

The Avvo.Com Legal Guides"provide basic, important information about everyday legal issues. Written by qualified attorneys and Avvo staff writers, Legal Guides help you understand your legal situation better and know what to do about it."

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If you're interested in filing a construction lien, it's important to understand the "Notice Requirements" of your state's lien laws. In many instances, to preserve your company's right to lien a construction project, state law requires that you send "notice" of your work to the property owner and/or general contractor before work ever begins on the construction project.

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In Washington State, Contractors are aware of the burdens placed upon them by Labor & Industries. While these conditions and requirements are often necessary to preserve the integrity of the building industry, they are often confusing, vague and difficult to locate.

A common and extremely valuable tool to preservation of payment in contracting is the right and power to lien a project. Wolfe Law Group has written several articles which can be found on this website, its public blog and its public wiki, related to the practice of lien preservation and enforcement. Briefly, a lien is a privilege over a piece of property which secures a person's right to payment. If you provide materials, supplies, labor or other qualifying services to improve a parcel of property, you may have a legal right to recover the debt owed to you against the actual property improved. In that sense, a lien operates similar to a mortgage.

Lien claimants have been warned that there are preparatory requirements which must be fulfilled prior to filing a lien. You may read about the basic requirements put upon contractors under RCW 60.04, by clicking here:

Washington Lien Law

Unfortunately for contractors, but fortunately for homeowners and small commercial developers or builders, RCW 18.27, the chapter dealing with the registration of contractors, requires additional obligations of the contractor prior to starting a project.

Under 18.27.114, a contractor must provide an owner with a Model Disclosure Statement prior to initiating work valued at over $1,000.00 on four or less residential units or homes. Additionally, any commercial project under the price of $60,000.00 places the same obligation upon the contractor.

A copy of the Model Disclosure Statement can be found by clicking right here. This document should be provided to the owner prior to the initiation of work and the contractor should secure the signature of the owner on a copy which should be retained for at least three years.

Wolfe Law Group suggests that as a contractor, you should include a copy of this form, along with the Notice of Lien forms found here, in each of your contracts, or if your company uses a simple proposal, order, or initial invoice, along with that document.

The failure to satisfy RCW 18.27.114 could result in a lien filing being deemed improper or even illegal, and the owner recovering its attorney fees and filing costs from yourself as filer.

Many of you may wonder: "Have I lost my right to lien a project because I failed to deliver this form?" There is no definitive answer to this question. However, a review of RCW 18.27.090, illustrates that certain persons are exempt from the protections of Chapter 18.27.

Under RCW 18.27.090(5), "sale of any finished products, materials or articles which do not become fixtures" is exempt. Therefore, it seems that materials bought and consumed at the site would be exempt.

Further, under RCW 18.27.090(11), "an owner who contracts for a project with a registered contractor..." Additionally, several cases have indicated that Courts are willing to permit contractors to satisfy the purpose of 18.27.114 through other means.

So, it seems that your outstanding projects may be safe. But, recent changes in the law in 2007 have aimed at gearing down on contractor freedom, tightening the bolts on the requirements of 18.27.114. Therefore, we cannot stress enough the importance of including this document in your initial bid, order, agreement or contract.

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Andrea Goldman, a construction attorney in Massachusetts, recently placed an interesting post about the strengths of construction liens on her blog, "Home Contractor vs. Homeowner."

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Lien statutes are complex and technical in every state, but throughout the country common themes and policies emerge.

If you're in the construction industry, it's important to know these policies, and specifically it's important to know how to use a lien and how liens can help your business.

1. Liening a project starts before work even begins

The urgent need to lien a project usually strikes a company after a job's completion, but in many situations preserving lien rights requires serious consideration before work even begins and any dispute arises.

While pre-lien requirements are not applicable to every project and organization, one of the most common liening mistakes is for an organization to neglect pre-lien requirements and thereby abandon their lien rights.



The most common pre-lien requirement is the need to give the property owner notice of the lien laws.

Simply stated, the laws in most states require a contractor to notify the property owner that it may lien the project if it is not paid.

The notice must be delivered - in most cases - before services are rendered or materials are delivered.

An article on Louisiana notice requirements, plus some applicable forms, can be found here.

An article on Washington's requirements, plus some applicable forms, can be found here.

One common misunderstanding about lien notices is that they are only required to be sent before liening a project.

Do not fall prey to this myth.

Lien notices, when required, most always require delivery before work begins, and not simply before the lien is filed. If you fail to preserve your lien rights with the proper notices, you'll forever lose your right to lien that construction project.

2. Your lien rights won't last forever, or for very long

If there is any delay in getting paid on a construction project consider filing a lien immediately. Many companies lose their right to lien a project because they wait too long to file.

The window of opportunity to file a lien is short, and once you're time expires, you lose this powerful collection tool forever.

If payment isn't on-time, protect your company's interest in the property, and file your lien immediately.

3. A lien is the first step, not the last step

After filing a construction lien, you will certainly have more work ahead in attempting to collect.

In many cases, a construction lien by itself will result in prompt payment. In these cases you will likely be charged with the duty of canceling the lien.

This can be as simple as drafting a final letter and sending it to the property owner, or executing and notarizing a formal lien cancellation certificate (depending on state requirements).

If the lien does not produce payment, it will be necessary to take an additional collections step. Contrary to popular belief, construction liens are not permanent. In fact, they normally don't last very long at all and they cannot be renewed.

After filing a lien, if not immediately paid you will need to bring an action in court to "foreclose" or "enforce" the lien in some way. This process essentially converts your construction lien into more formal and permanent "judgment." The judgment can be executed by seizing property and through other techniques.

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This article is written by ExpressLien.Com and is reproduced here with permission. ExpressLien.Com is a document preparation service and is not an attorney, a substitute for legal advice or an entity offering law services.

Are you uncomfortable by one customer's delay in paying for construction work? Are you putting off liening a project because your uncomfortable with the process or unsure of how to proceed?

Everyday, ExpressLien.Com helps contractors like you to understand the process of liening a construction project. Liening is simple, and it can be done within 10 minutes by giving us a call or filling out our online form.

Take the step, and learn how easy and inexpensive it can be to stop writing off so many losses! Here are just three reasons why it's critical to lien a non-paying construction project.

Number One: You Can Only Have One Chance to Lien a Construction Project
Contractors have a unique and powerful legal remedy in construction liens...but not for long. Once your liening period has expired, you'll never get the chance to put a lien on that project again.

If you want to pursue your legal remedies without filing a lien, you'll be required to file a regular lawsuit for breach of contract - a process that may take years and cost you thousands. A construction lien is an adverse legal step against the non-paying party that only costs $235.00 (plus filing fees), and it places a restriction against the property that you can normally only achieve after years of litigation.

You only get one shot at filing your construction lien. Check your state's time requirements at ExpressLien.com.

Number Two: Liens Freeze Funds
Are you a subcontractor afraid that the contractor is getting paid from the property owner but not disbursing the funds down the ranks? Do you have to pay your material suppliers and subcontractors while being told from the contractor that it hasn't been paid by the owner?

Although the law does not require a freeze in funds, as a practical matter, filing a lien as a subcontractor against the property owner almost always causes the property owner to stop making further payments to the contractor. As a result of this "freeze" in funds, there is pressure on the contractor to pay the liening sub.

Many construction projects run into cash-flow concerns. Filing a construction lien is one way to prevent that cash-crunch from affecting your company.

Number Three: Get All Parties Involved
If you're unable to get paid on a construction project, you have a legal remedy under contract law against the person who hired you. If you contracted with a general contractor, for example, you could sue the general contractor for payment if it refuses to pay your company for its services. Since you did not contract with the property owner, however, you would be unable to sue him or her.

Construction liens, however, completely changes who is liable to you for your consturction services. With a properly filed construction lien in the above example, you'd be able to file a lawsuit not only against the general contractor, but also against the owner. The owner may even be liable to you regardless of whether the general contractor had been paid for your work!

Clearly, this is a very powerful legal tool for contractors. Instead of relying on just one party to make payment to your company, a construction lien can make it possible for many parties to have liability for one party's non-payment.

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It's difficult to stress how beneficial filing a lien can be for your company when attempting to collect on a non-paying project. However, this begs the very important, and sometimes difficult to answer question: Are you legally entitled to lien?

In virtually every state, including Washington, the lien statutes are drafted with a certain balance. On the one hand, the statutes were created to grant those involved with the construction of a project a privilege on the properties they build or improve. On the other hand, however, the statutes have mechanisms within to protect the property owners from being liened improperly, or otherwise without notice.
Unfortunately, the notice requirements are oftentimes confusing and technical. It is important, however, that your organization understand these requirements. If you lien a project without following these notice procedures, you will have filed an improper lien, and this could subject you to owing the property owner damages, penalties and/or attorneys fees.

The notice requirements in Washington are actually quite clear - the general rule is simply that everyone is required to provide notice to the owner (and/or contractor) except for those who are specifically excluded.

This post breaks the notice requirements into two categories. Category one is the catch-all, and regards all types of projects that do not fall into category two. Category two regards construction projects for the improvement of an existing owner-occupied residential property.

Category One - The "Catch All"
Category one projects are all of those projects that do not fit within category two. This, therefore, includes every commercial project, and virtually every new residential project.

Washington statutes provide that written notice of a right to claim a lien must be given to the owner or reputed owner in every circumstances except:

1) Persons or companies who contract directly with the owner or owner's agent;

2) Laborers for any claim that is based solely on labor; and

3) Subcontractors who have contracted with the prime contractor

To properly deliver notice, the notice must be in writing and must be given to the owner either through certified or registered mail and/or personally delivered.

For the sake of clean record-keeping, it's a good practice to send the notice via certified mail with return receipt requested, and to keep record of the certified mail number. If you send the notice via hand delivery, you will want to get signed acknowledgment of receipt to later prove that the notice was sent.

Category two projects are very limited in scope. They include only improvements to existing owner-occupied single family residences.

The following are examples of Category Two projects:

• Improvement of kitchen to existing structure on a single family residence that is owned by the person occupying the home;
• Adding a new room or new addition to existing structure on a single family residence that is owned by the person occupying the home.

The following are examples of projects that are not Category two projects:

• Improvement of kitchen to an existing structure on a single family residence that is occupied by a tenant, and not the owner of the property;
• New construction of owner-occupied residence.

When a project can be classified as a "Category Two" project, notice is required from the following parties:

1) Persons who do not contract directly with the owner-occupier, or their agent.

Therefore, if you are a handyman and you contracted directly with the owner, you would have the right to file a lien without providing the owner with a notice of lien rights. However, if you are a subcontractor hired by a handyman to do electrical work in a category two project, you would be required to provide notice of lien rights.

Summary
The goal of the Washington statute's notice requirements is to protect the owner from being liened by a contractor who is not authorized to perform work on the property and/or by a contractor with no direct link to the owner.

When a contractor is hired by the owner directly, there is no need for that contractor to notify them that work is being performed at their property; the owner should know this as a result of the contract.

When not hired directly by the owner, however, to satisfy the purposes of the statute the contractor is usually required to provide notice to the owner that work is being performed. There are a few exceptions, as above-noted.

What is Notice?

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It's difficult to stress how beneficial filing a lien can be for your company when attempting to collect on a non-paying project. However, this begs the very important, and sometimes difficult to answer question: Are you legally entitled to lien?

In Louisiana, the lien statutes are drafted with a certain balance. On the one hand, the statutes were created to grant those involved with the construction of a project a privilege on the properties they build or improve. On the other hand, however, the statutes have mechanisms within to protect the property owners from being liened improperly, or otherwise without notice.

Unfortunately, the notice requirements are oftentimes confusing and technical. It is important, however, that your organization understand the notice requirements of the Private Works Act.

If you lien a project without following these notice procedures, you will have filed an improper lien. Filing an improper lien subjects you to owing the property owner damages and attorneys fees.

Contracting with the Owner / Resident

Notice is required whenever you are working on a residential project, and you contract directly with the owner of the property, who also lives in the residence.

The type of notice required is called the "Notice of Lien Rights." A copy of an example of this notice is available by clicking here.

This notice, again, is required when the following elements are present:

1) Work is being done on a residence;

2) You contracted directly with the owner of the residence. In other words, you are not a subcontractor on the project;

3) The owner lives in the residence.

The Notice of Lien Rights to be sent to owners in residential projects is very important, because the law requires that it be provided before work begins, and not as a condition to your construction contract.

Lessor of Equipment or Other Movables

If you are leasing equipment or other movable items to any party in a construction project, you are required to deliver a copy of the lease agreement to those who are not parties to that agreement within 10 days of the equipment's delivery.

For example, if you lease equipment to a subcontractor, you are not required to deliver an additional copy of the lease to the subcontractor within 10 days of delivery because they will - presumably - already have a copy of the lease. However, you would be required to send a copy of the lease to the general contractor and the owner.

This puts those other parties on notice that you have leased equipment/movables to someone for the work at the jobsite, and if such notice is sent, you will have preserved your right to file a lien in the case of non-payment.

Seller of Movables / Materials / Equipment / Etc.

Whenever you sell supplies, or any type of movable property, you are entitled to file a lien on the property where those supplies are incorporated (if they are used in construction of the improvement).

If the materials sold are incorporated into a commercial project, there are no notice requirements.

If the materials sold are incorporated into a residential project, and you would be liening a residence, LA RS 9:4802(G)(2)-(3) requires that you deliver a notice of nonpayment to the owner of the property at least ten (10) days before filing the lien. The notice must:

A) Be served by certified mail, return receipt requested;

B) Contain the name and address of the seller of movables (you);

C) Contain the general description of materials / movables provided;

D) Contain a description sufficient to identify the immovable property against which the lien may be placed;

E) Contain a written statement of the seller's rights (your rights) for the total amount owed, plus interest and recording fees.

If you sold the materials/movables to a subcontractor on the project, the notice must be sent certified, return receipt mail to both the owner and the general contractor.

Conclusion

This blog post discusses the most important and prominent notice requirements within the Louisiana Private Works Act.

If you are looking to lien a non-paying construction project, you should familiarize yourself with the Private Works Act and consult with an attorney to ensure that you meeting all the requirements to filing.

Contact Wolfe Law Group today to learn more about liens and lien requirements in Louisiana. Wolfe Law Group focuses its practice on serving the construction industry, and we can help your company best prepare itself for future non-paying projects.

Links to Usable Files:

Notice of Lien Rights

Example Notice Letter for Sellers of Movables / Materials

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Read Below to Learn:

1. Special Considerations for General Contractors when Filing Liens


2. Importance of Filing Notice of Contract to Preserve Lien Rights


3. Special Requirements to Lien Private Residences


4. The Value of a Contractor's Lien


5. Penalties and Perils of Filing Liens Improperly
   

The Louisiana Private Works Act contains the legal requirements for general contractors to reserve and file "liens." If you're a small general contractor doing work in Louisiana, its critical for you to familiarize yourself with the contents of this Act and the special requirements applicable to general contractors to file liens.

While a subcontractor can typically lien any job by filing the proper documents within 30 or 60 days after stopping work, a general contractor lacks this kind of luxury. In most circumstances, a general contractor must begin preserving its rights to file a lien before any work begins on the jobsite.

Contracts More Than $25,000.00

If a construction contract exceeds $25,000.00, the general contractor must file a "Notice of Contract" with the proper recording office before beginning any work. Failure to file this document forfeits the general contractor's lien privileges. If the general contractor later files a lien on the project, the lien will be filed improperly and removable at the general contractor's expense.

Construction on Residential Properties

If your general contracting company is doing work on a residential building, you may be required to comply with the Resident Truth in Construction Act to preserve your lien privileges.

The Residential Truth in Construction Act mandates that the general contractor have any homeowner sign a rather lengthy "Notice of Lien Rights" waiver before work begins on a residential project. Failure to get this document signed results in a forfeiture of a general contractor's lien rights. For purposes of this Act, a "residence" is defined as a dwelling occupied by its owner.

General Lien Requirements

Additionally, all the typical lien requirements apply to generals, including: timelines, necessity of a legal property description, identification of the parties and their mailing addresses, statement of when payment of the price is to be made and descriptions in general terms of the work to be done.

Importance of These Precautions and Filing a Lien

Taking the necessary precautions to preserve your right to lien a project is important and imperative. Liens are a priceless tool for your company to promptly collect on its account receivables and protect you company's ability to get paid for its work.

Failure to understand and to meet the conditions of the Private Works Act can be fatal to your lien privileges. An improperly filed lien - while perhaps on the books - is a legal liability for your organization. An interested party can easily remove an improperly filed lien and the removal of the lien will quite possibly be at your company's expense.

Wolfe Law Offices is experienced in filing liens and helping your construction company smoothly complete and collect on projects. Contact our offices today to discuss how we can help your organization.

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While subcontractors often feel that they are at the bottom of the construction world's food chain, nearly every state protects them against non-payment with powerful lien laws. To utilize the force of these laws, however, its imperative to understand their scope and requirements.

In Louisiana, the Private Works Act allows a subcontractor to lien a project to ensure prompt payment from both general contractors and property owners. While the actual filing of a lien is important, it's only the first step and it alone may not result in payment.

There is really no way to "enforce" a lien. A lien is simply a way for the contractor or subcontractor to protect its rights for payment. The step itself, however, is very important. Filing a lien formally notifies the property owner that the general contractor is not timely paying its laborers, and more importantly, that legal action can be commenced against them if a payment is not timely received.

Accordingly, if a subcontractor does not timely file a lien on a project, it cannot later seek payment from the owner of the property for the unpaid work. However, if a lien is timely filed, not only can the subcontractor bring suit against the general, but it may also sue the property owner directly. The lien, in other words, puts all parties on notice that there is unpaid work.

The significance of knowing and following lien laws is it will help your company to be more efficient in the collection of payment on projects. Lien laws are very technical and strict in Louisiana. The Private Works Act requires liens to be in writing, signed by the person asserting the claim, reasonable as to the amount owed with the amount itemized as best as possible. The lien must include a legal property description and description of work completed, and filed with the clerk of court or recorder of mortgages in the parish where the property is located.

While the Lien Laws are crafted to strongly favor subcontractors in a construction project, they do require careful attention to detail. It is very important to file the lien within the appropriate amount of time, which, depending on the project, is either thirty or sixty days, and to follow-up after filing.

When used correctly, liens are a powerful tool for subcontractors, and properly filed liens will ensure that those parties controlling the money do not abuse those who are working hardest on the projects.

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