Monthly Lien Law Update: September 2020

adminLien Laws Alert, Mechanics Lien, Notice of Intent

Federal court grants USA Fanter’s More Than $2M on Fraudulent Lien Claims for a Casino built in the Mariana Islands

In September 2020, District Court Judge Ramona V. Mangloña granted an application for more than $2m in mechanic’s liens against owner Imperial Pacific International, LLC (IPI) and in favor of contractor USA Fanter. The project, a Casino built in the Mariana Islands, remained under US jurisdiction due to the islands being part of the Commonwealth of the United States, meaning that US Federal Courts would be used to enforce the mechanic’s lien.

And that is exactly what happened. USA Fanter filed their claim in the District Court on February 6, 2020, and the lien was granted on September 7, 2020. This turnaround time may appear slow to the casual observer, but the federal courts move slowly, and this kind of timeframe should be expected. Judge Mangloña found that USA Fanter had fulfilled their contractual obligations, valued at nearly $2.4m, and had been paid a mere $300,000. As such, the mechanic’s lien issued in this case was just over $2m.

https://www.forconstructionpros.com/business/article/21109968/how-construction-contractors-can-avoid-fraudulent-lien-claims

 

SCHEDULE AN INITIAL CONSULTATION WITH A LIEN SPECIALIST

The California Stop Work Notice Law is a powerful mechanism to exert leverage against the owner.

In situations where there is “no dispute as to the satisfactory performance of the contractor,” Stop Work Notice laws in California allow a contractor to immediately stop work on the project and seek a ruling in court to determine the issue. The procedure is simple. First, the contractor must post a stop work notice at the worksite 5-days before ceasing work. They must also notify all subcontractors. Once those requirements are met, the contractor is not legally liable for the cost of the delay in determining payment. The contractor’s liability to the subcontractors is likewise limited to the amount the subcontractor could otherwise recover under its mechanic’s lien rights.

This procedure has a narrow application because, even if an owner fails to assert a “good faith” dispute to justify the amounts withheld, they may assert an unrelated dispute. This appears to mitigate the importance of Stop Work Notice laws. However, by using the Stop Work Notice law as a sword, an aggressive contractor could challenge the owner by arguing there actually is no dispute over the unpaid work. The contractor would then exercise their statutory rights to shut down the project entirely, pursuing the expedited proceeding remedy in court.

https://www.lexology.com/library/detail.aspx?g=a07f5a72-1dc4-4bb6-85cf-6cbc7ec12a3e

 

Can you file a single mechanic’s lien on multiple buildings in Illinois and Missouri?

We tend to think of liens and mortgages in terms of a single building. But many projects today contemplate multiple buildings, and when this happens, the concept of liens must be considered carefully. In Missouri, to have mechanic’s lien rights on multiple buildings on multiple lots, those buildings must be “united together and situated upon the same lot or contiguous lots, or separate buildings upon contiguous lots” and that they must be built under one general contract. Mo. Ann. Stat. § 429.040. This raises issues when multiple buildings are located on non-contiguous lots. Under Missouri law, for lots to be contiguous they must share at least one “common side.” In other words, lots located kitty-corner from one another do not fit the legal requirements, and if you want to file a lien against multiple buildings, you need to file mechanic’s liens separately.

 Illinois treats this differently. There is no requirement for the lots to be contiguous in Illinois, so the question becomes whether the lien was timely filed. Illinois requires that the mechanic’s lien be filed within four months following of the completion of each building. Here, the date of completion of each building, not the project, controls. Because Illinois and Missouri will likely have overlap in terms of contractors due to proximity, they must be sure to comply with the law that applies to their situation. The stark difference between Illinois and Missouri on this issue alone illustrate this point.

 https://www.greensfelder.com/nuts-bolts-construction-law-blog/can-you-file-a-single-mechanics-lien-multiple-buildings-illinois-missouri

 

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