Mechanic’s Lien Law Changes on the Way
Kegler Brown Construction Alert November 13, 2002
The Senate Commerce & Labor Committee on November 12, 2002 passed unanimously Amended House Bill 514, which corrects certain perceived inequities in the Mechanic's Lien Law in favor of contractors, subcontractors and suppliers in the following respects:
- It confirms that contractors who excavate, cleanup or remove hazardous waste or materials have lien rights.
- It confirms that no notice of furnishing need be served by a subtrade before the notice of commencement is recorded. We experienced instances where the owner who was supposed to record the notice of commencement before work begins would actually record it after the end of the project and then argue that lien rights had expired if a subtrade did not ultimately serve a notice of furnishing.
- Service of any mechanic's lien related documents is perfected if:
- it is admitted to have been received by the recipient;
- the claimant proves by preponderance of the evidence that the recipient received it; or
- the document mailed is presumed received three days after it is mailed unless there is proof to the contrary ("the mail box rule" is adopted
These reforms make service easier to prove and avoid the perceived inequity associated with a number of cases where notice of furnishings were not served by certified mail (with a receipt) even though the owner admitted having received it. In those circumstances, the courts were invalidating the mechanic's lien because there was no written receipt even though there was no dispute that the owner in fact received the document.
In short, H.B. 514 is designed to avoid certain inequities experienced by contractors, subcontractors, and suppliers through gamesmanship by certain owners and make the statutes consistent with their original intent. It is anticipated that the H.B. 514 will soon become law.