If you want to use the LAWS that are created to protect your lien rights, you must adhere to some very basic principles. When talking about the laws and wanting to seek protection “Under the Law”, you must first develop a sincere respect for the law. Being naive or cavalier is sure to position you for some very unwanted and disappointing surprises.
Lets start with a very simple attribute of the Lien Laws, more specifically the Mechanics or Construction Lien Laws. They are designed to allow all who participate in the “Improvement to REAL property” to protect their earnings derived from providing materials or services for the “Improvement to REAL property”. Now the operative words are “ REAL PROPERTY” which, for all intensive purposes, means “REAL ESTATE”. Land, Buildings, Houses, Roads, etc. These laws have nothing to do with repairing someone’s automobile or selling flat screen TVs to a hotel chain. Those items fall under the designation of “Personal Property” and while other laws do exist to help you protect your interest in personal property sales or services, The mechanics lien laws are not the correct choice.
Another caution is to be certain that the legal name of your business or the business name you have chosen to use to provide materials or services to an “Improvement to REAL property” meets all the criteria issued by the state where the construction project is located. If the state requires you to be a licensed contractor or grants you privileges to conduct business under a fictitious business name. Then you must be sure to use the name for which you are legally authorized to conduct that business. If that means having a legal dba (doing business as), than be sure that your dba is current and valid. Same holds true for a Contractors License. Do not expect the legal system to work for you if you have chosen to ignore the requirements of the very system under which you seek protection. If your contractors license is suspended, expired, or revoke. Do not try to use the lien laws until these defects have been remedied.
Last, but surely not least. If the law requires that you must first serve a valid preliminary notice before you attempt to claim a lien right, then make sure you have a valid copy of the served preliminary notice and the ability to prove, within the requirements for proof of service, that all entities have in fact been served within the time frame as allowed by the governing statute.
As a side note, the preliminary notice requires a “Description” of the materials or services you are providing to the “Improvement to Real Property”. The best way to determine if your description is adequate for compliance is to ask yourself the following question:
If my preliminary notice is eventually used to support the filing of a mechanics lien and the lien is taken to court as part of a foreclosure lawsuit, will the Judge hearing my case understand what it is that I have supplied or provided to the construction project?
Descriptions like “Materials”, or “Services”, or just about any One Word Description or abbreviated jargon that may satisfy your client could cause the Judge to be more inclined to dismiss your case for failure to satisfy the statute and rule that your preliminary notice is defective. If you are a Plumbing Materials Supplier, a small effort to list materials as “Plumbing Materials” or should you be an Electrical Contractor, changing services to “Install electrical service”, can make a big difference in the evaluation of your supporting preliminary notice.
These issues may appear as moot. But after hearing the horror stories of so many clients who have come to CRM after experiencing the downfall of not respecting these very basic components of conducting business safely under the law. We believe it best to share with you these simple lessons of what to avoid when seeking protection under the mechanics lien laws.
To learn more, or if you have questions regarding your company and the services or materials you provide to Improvements to Real Property. Choose the following like for a free consultation.
