Nate Budde is the CLO and General Counsel at Levelset. He is an expert on construction law and has years of experience advising construction firms on how best to manage legal and financial risk. As head of Levelset‘s legal department, Nate oversees and manages the Lien Genome™ as well as Levelset‘s products and resources. The following interview was conducted on June 21, 2016.
Lien laws have existed in America since the 18th century. Why are they still changing? Shouldn’t we have figured it out by now?
You’d think. However, several factors continue to influence the evolution of lien law, and prevent these laws from ever reaching a point of stasis.
First, there are competing interests. Tension – or rather, perceived tension – between parties on different levels of the contracting chain is a major factor that continues to push lien laws to change. Everyone wants to mitigate risk, or shift it to other parties. Lobbying by groups that feel they are unfairly at risk is one of the main causes of lien law modifications.
Second, streamlining lien law is another reason those laws are modified. A large number of laws governing mechanics lien and bond claim processes are antiquated. Many changes to lien laws are made to make the law more clear (sometimes this is accomplished, sometimes it is not) or to modernize the laws in practice (for example, some states have implemented online construction registries to handle legal documents and laws must be changed to reflect this).
What kind of changes are typical?
There’s no such thing as a “typical” change to lien law, but a typical impetus for change is that people are trying to modernize the law or bring more protection to their constituents. If I had to come up with a “typical” change, despite just saying there was no such thing, I would say that there is more of a trend toward providing notice rather than doing away with those requirements, and it’s not unusual to see states discussing some sort of electronic database.
Do changes generally occur at the state level? Or can some changes in law apply just to a specific county or city?
Actual changes to lien law always occur at the state level. Changes to the Miller Act, however, apply nationwide since the Miller Act covers to projects sponsored by the federal government in any state. Specific document formatting or filing requirements can change at the individual county level, however – stuff like the required margins.
Are there consequences for failing to keep up with changes? What are the risks?
The risk of failing to keep up with changes in lien law is losing your lien rights.
If a new mechanics lien form is required by an update to your state’s lien law, or if a preliminary notice requirement is instituted, or a deadline is modified, any mechanics lien you file may be invalidated, leaving you with limited options in the event of nonpayment.
Is engaging an attorney the best way to keep up with lien law changes?
No. Small companies rarely have the budget to keep an attorney on deck to track and interpret lien law changes. Even for larger companies that do have the resources and the bandwidth, retaining an attorney for this purpose is not the best use of resources.
So what is the best way for construction companies, especially small firms, to keep up with changes to lien law?
The best way to keep up with lien law changes is to follow trusted and reliable sources of information. You can keep track of changes with news alerts from google and other sources, and various legal or construction blogs.
A great way to learn about changes nationwide is to read Levelset’s legal updates. We publish Lien Law Alerts whenever lien laws are altered, or interesting cases are decided. These alerts are written as digestible, easy-to-read articles.
Sign up to get lien law alerts from Levelset.
Where does Levelset get its information on lien law changes?
We get information from a lot of places. We can even be alerted before changes are even made. We get updates when lien law changes are contemplated, when bills are drafted and presented to state legislatures, then we follow them through legislative sites to see whether the changes are (or are not) actually drafted into law. We also consistently and thoroughly comb through cases through various legal research tools.
Then we distill, prioritize, aggregate, and write about these changes in a clear, straightforward manner so it’s easy for you to understand the relevance of changes without needing to sift through complex legal language.
How is Levelset qualified to interpret these laws?
Both myself and Levelset’s CEO, Scott Wolfe, Jr, were practicing construction attorneys before devoting our full time to Levelset. I manage our legal team, and one of our core responsibilities is keeping up with lien law changes to ensure that they are reflected in the Lien Genome™ and also in our free, publicly-available resources.