Nothing in the checklist is specific legal advice. Every situation is different.
Showing posts with label mechanic's lien. Show all posts
Showing posts with label mechanic's lien. Show all posts
Thursday, October 10, 2013
A checklist for filing mechanic's liens in Iowa.
Previously, I mentioned that the state of Iowa has new requirements for filing mechanic's liens. Here is a checklist for general contractors and subcontractors to ensure they comply with preliminary requirements before foreclosing a mechanic's lien.
Monday, April 29, 2013
Mechanic's liens in five paragraphs.
I must note that the entirety of the law of mechanic's liens cannot be summarized in five paragraphs. This is just a primer on the law of mechanic's liens -- in Iowa -- although general principles of lien law typically translate across a multitude of jurisdictions. There are a number of requirements in order to file and enforce a mechanic's lien, and the specifics differ among jurisdictions. You are entitled to file a mechanic's lien if you provided labor or material for, or performed labor on any structure on a given parcel.
In Iowa, a builder-owner or general contractor must post notice of commencement of work within 10 days of beginning work in order to properly file and enforce a mechanic's lien. The notice is only effective as to work and material provided after it is posted. If you are a subcontractor and the owner or general contractor failed to post such notice, you can cure the defect by posting it in conjunction with the preliminary notice that is required to be posted of all subcontractors.
If you have successfully navigated the preliminary requirements and are able to file a mechanic's lien, the person against whom you filed the lien can provide written demand for you to bring suit to foreclose the lien within 30 days. If you do not bring suit to foreclose the lien within 30 days, then the lien is forfeited.
If written demand to foreclose the lien is not provided, you do not have unlimited time to enforce it. You have two years plus ninety days from the last date on which labor or material was provided to foreclose the lien. Additionally, you will need to "perfect" the lien before you can foreclose.
If collateral is provided as security before work is complete, you cannot file a mechanic's lien. If security is provided after work is complete, you can still file a mechanic's lien. As you can see, there are nuances in the law of mechanic's liens, and these examples are illustrative, not exhaustive. If you do not do it right, you may end up forfeiting your right to file and foreclose the lien.
In Iowa, a builder-owner or general contractor must post notice of commencement of work within 10 days of beginning work in order to properly file and enforce a mechanic's lien. The notice is only effective as to work and material provided after it is posted. If you are a subcontractor and the owner or general contractor failed to post such notice, you can cure the defect by posting it in conjunction with the preliminary notice that is required to be posted of all subcontractors.
If you have successfully navigated the preliminary requirements and are able to file a mechanic's lien, the person against whom you filed the lien can provide written demand for you to bring suit to foreclose the lien within 30 days. If you do not bring suit to foreclose the lien within 30 days, then the lien is forfeited.
If written demand to foreclose the lien is not provided, you do not have unlimited time to enforce it. You have two years plus ninety days from the last date on which labor or material was provided to foreclose the lien. Additionally, you will need to "perfect" the lien before you can foreclose.
If collateral is provided as security before work is complete, you cannot file a mechanic's lien. If security is provided after work is complete, you can still file a mechanic's lien. As you can see, there are nuances in the law of mechanic's liens, and these examples are illustrative, not exhaustive. If you do not do it right, you may end up forfeiting your right to file and foreclose the lien.
Saturday, March 16, 2013
How to register for the Mechanics' Notice and Lien Registry.
Over the last several days, I discussed mechanic's liens, and how Iowa lien law changed in 2013. I discussed the importance of registering for the Mechanics' Notice and Lien Registry (MNLR), and posting Notices of Commencement of Work for residential construction projects. The 2013 Iowa Code provides that a person or company cannot enforce a mechanic's lien if proper notice is not provided in residential or commercial constructions projects.
Courts have not decided whether a person or company can enforce a mechanic's lien under the new Iowa law if proper notice was not provided at the beginning of a project. The law is too new for courts to have decided the issue. Not many contractors know about the new law, so it is a near certainty that courts will hear the issue in the next year or two. The way it is written, you cannot enforce a mechanic's lien if you do not provide proper notice. It does not matter if you were not aware of the new law.
In order to register for the MNLR, you need to fill out this form. Then, you need to post commencement of work notices within 10 days of beginning work for residential construction, and provide written notice within 30 days of beginning work for commercial projects. Once you get a handle on the new requirements, I am confident that they will be easy practices to implement. None of the requirements are too burdensome or onerous, but you do need to follow them in order to enforce a mechanic's lien.
Courts have not decided whether a person or company can enforce a mechanic's lien under the new Iowa law if proper notice was not provided at the beginning of a project. The law is too new for courts to have decided the issue. Not many contractors know about the new law, so it is a near certainty that courts will hear the issue in the next year or two. The way it is written, you cannot enforce a mechanic's lien if you do not provide proper notice. It does not matter if you were not aware of the new law.
In order to register for the MNLR, you need to fill out this form. Then, you need to post commencement of work notices within 10 days of beginning work for residential construction, and provide written notice within 30 days of beginning work for commercial projects. Once you get a handle on the new requirements, I am confident that they will be easy practices to implement. None of the requirements are too burdensome or onerous, but you do need to follow them in order to enforce a mechanic's lien.
Thursday, March 14, 2013
Navigating the new mechanic's lien requirements in Iowa.
As discussed in other posts, the State of Iowa imposed new requirements for obtaining and enforcing a mechanic's lien in 2013. These new requirements went into effect at the beginning of 2013. There are different requirements for residential and commercial construction. For residential construction, you have to post notice of commencement of work within 10 days to the secretary of state's website. You also have to furnish the homeowner with the following notice in 10-point font or larger:
Additionally, the contractor must provide the website address for the Mechanic's Notice and Lien Registry (MNLR), so the owner can see who has lien rights on their property in connection with a particular project. Then, if the homeowner does not pay, they know who can file a lien against them. The notice must also provide the toll-free number for the MNLR: 888-767-8683.
Here is the fee schedule for filing to the MNLR in Iowa. The process is slightly different for commercial work. The general contractor must provide to the owner (or the subcontractor to the general contractor) in writing a notice within 30 days of first beginning work with the general contractor's contact information. When you provide this notice, you should make a copy of it just before sending, because it will help support your lien claim in the event you end up in litigation.
For reference, here is the new mechanic's lien form for residential construction. Here is the new mechanic's lien form for commercial construction.
"Persons or companies furnishing labor or materials for the improvement of real property may enforce a lien upon the improved property if they are not paid for their contributions, even if the parties have no direct contractual relationship with the owner. The mechanics’ notice and lien registry provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property."
Additionally, the contractor must provide the website address for the Mechanic's Notice and Lien Registry (MNLR), so the owner can see who has lien rights on their property in connection with a particular project. Then, if the homeowner does not pay, they know who can file a lien against them. The notice must also provide the toll-free number for the MNLR: 888-767-8683.
Here is the fee schedule for filing to the MNLR in Iowa. The process is slightly different for commercial work. The general contractor must provide to the owner (or the subcontractor to the general contractor) in writing a notice within 30 days of first beginning work with the general contractor's contact information. When you provide this notice, you should make a copy of it just before sending, because it will help support your lien claim in the event you end up in litigation.
For reference, here is the new mechanic's lien form for residential construction. Here is the new mechanic's lien form for commercial construction.
Wednesday, March 13, 2013
Substantial confusion over new mechanic's lien procedures in Iowa.
As discussed in other posts, mechanic's lien law has many requirements. In Iowa, some of these requirements changed in 2013. For one, mechanic's liens are no longer filed with the district court in which the work occurred. It has come to my realization there is substantial confusion among contractors over the new procedures. There is more opportunity to get things wrong with the new procedures. There are procedures that must be followed before a dispute ever arises to properly obtain and enforce a mechanic's lien. If you do not get it right, you could be out of luck. If you are in a business that regularly or occasionally deals with mechanic's liens, it behooves you to understand the new procedures.
Monday, March 4, 2013
Improving your chance of success in foreclosing a mechanic's lien.
The lien foreclosure process begins before a dispute arises. If you begin protecting your rights before a dispute arises, it can go a long way toward improving your chances of successfully foreclosing a lien. If you are engaged in structural, mechanical, electrical or plumbing construction or improvements, you probably have either filed or thought about filing a mechanic's lien. There are a number of requirements for filing and enforcing a mechanic's lien. But there are things you can do before a dispute arises to make the process easier.
First, when you begin a project, provide the proper notice of commencement of work with the Secretary of State. Second, if possible, take pictures of exactly what is covered in your scope of work, before you begin working. When the project is complete, take pictures of what you did. Now, if you did it wrong or poorly this can come back to bite you. But if you adhered to industry best practices and the contract's scope of work, it will go a long way toward proving that you are owed the amount you are claiming in the lien. A mechanic's lien is not like a contract. You do not need to prove a contractual breach. You only need to prove that you did work and did not get paid.
Third, keep a journal of the days you worked on the project, the time you spent each day, and what you did each day. This will provide more credibility when you are testifying in a lien foreclosure proceeding about what you provided.
First, when you begin a project, provide the proper notice of commencement of work with the Secretary of State. Second, if possible, take pictures of exactly what is covered in your scope of work, before you begin working. When the project is complete, take pictures of what you did. Now, if you did it wrong or poorly this can come back to bite you. But if you adhered to industry best practices and the contract's scope of work, it will go a long way toward proving that you are owed the amount you are claiming in the lien. A mechanic's lien is not like a contract. You do not need to prove a contractual breach. You only need to prove that you did work and did not get paid.
Third, keep a journal of the days you worked on the project, the time you spent each day, and what you did each day. This will provide more credibility when you are testifying in a lien foreclosure proceeding about what you provided.
Sunday, February 24, 2013
Liens versus breach of contract.
The last few days I wrote about about liens. If you hold a mechanic's lien, agricultural lien or harvester's lien, there are likely other methods of obtaining payment from someone who is wrongfully withholding it. You may be able to file a claim for breach of contract or quantum meruit. To file a breach of contract claim, there must be an express or implied contract. In cases where you perform work that entitles you file a lien, you may also be able to file a claim for breach of contract. If you do not have a written contract, it would be more difficult to prove the existence of an implied contract and its breach, as opposed to the value of the services you provided.
Quantum meruit is a legal term simply meaning that if you do not have a contract but provided a benefit to another, you can recover the reasonable value of the services provided. You are able to recover the same amount as with a lien -- the reasonable value of the services provided -- but the recovery does not attach to property like a lien.
These rights are not mutually exclusive. It may be prudent to file a lien, breach of contract claim, and for quantum meruit. Generally, the legal procedure of bringing all three claims can be a bit complicated. First, you have to file the lien, perfect it, and file a petition to foreclose it. Depending on the jurisdiction in which you live, you may not be able to bring any claims along with the petition to foreclose the lien. Second, you would file a petition for breach of contract and quantum meruit. Third, you would file a motion to consolidate the cases, which would likely be granted. If your jurisdiction allows you to include other claims in a petition to foreclose a lien, then you could include all three claims in one petition.
Sometimes it may not be prudent to assert all three rights of action. If you have a contract worth $50K but reasonably performed only $20K worth of work, you could stand to make more money by claiming breach of contract. If you have a contract worth $50K, but the reasonable value of the services you provided was $75K, you could make more money by filing a lien.
If you clearly have a contract, you would not likely have a strong case for quantum meruit. That remedy is available when there is no contract. In the last example, the opposing party would likely assert a counterclaim for breach of contract, so the opposing party would attempt to limit your recovery to $50K. It would be a fairly difficult case requiring a lot of evidence and testimony regarding the amount you should recover: $50K, $75K, or nothing. But those are just some considerations you should make if you performed work but did not get paid.
Quantum meruit is a legal term simply meaning that if you do not have a contract but provided a benefit to another, you can recover the reasonable value of the services provided. You are able to recover the same amount as with a lien -- the reasonable value of the services provided -- but the recovery does not attach to property like a lien.
These rights are not mutually exclusive. It may be prudent to file a lien, breach of contract claim, and for quantum meruit. Generally, the legal procedure of bringing all three claims can be a bit complicated. First, you have to file the lien, perfect it, and file a petition to foreclose it. Depending on the jurisdiction in which you live, you may not be able to bring any claims along with the petition to foreclose the lien. Second, you would file a petition for breach of contract and quantum meruit. Third, you would file a motion to consolidate the cases, which would likely be granted. If your jurisdiction allows you to include other claims in a petition to foreclose a lien, then you could include all three claims in one petition.
Sometimes it may not be prudent to assert all three rights of action. If you have a contract worth $50K but reasonably performed only $20K worth of work, you could stand to make more money by claiming breach of contract. If you have a contract worth $50K, but the reasonable value of the services you provided was $75K, you could make more money by filing a lien.
If you clearly have a contract, you would not likely have a strong case for quantum meruit. That remedy is available when there is no contract. In the last example, the opposing party would likely assert a counterclaim for breach of contract, so the opposing party would attempt to limit your recovery to $50K. It would be a fairly difficult case requiring a lot of evidence and testimony regarding the amount you should recover: $50K, $75K, or nothing. But those are just some considerations you should make if you performed work but did not get paid.
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