A little while ago, I posted a short article discussing the requirement of identifying the property on which a mechanic’s lien is claimed.  How detailed that description must be varies from state to state, and runs from a full legal description, to merely a municipal street address – or potentially even less.  Another mechanic’s lien requirement that may have some variation between states is the identification of the parties to be listed on the lien.

The parties that are required to be listed on a mechanic’s lien are not always completely uniform – depending both on the individual state, and various potential requirements related to the priority of the lien claim as to other encumbrances on the property.  Generally speaking, however, there are certain parties required to be listed on every lien claim (although, like everything in mechanic’s lien law, there are some exceptions).  These parties are the property owner, the general contractor, the party who hired the lien claimant, and, naturally, the lien claimant.  Other parties that may or not be required or applicable include a tenant, or a construction lender.

The question, then, is how those parties must be identified.  Oftentimes, a lien claimant has an individual contact who may not be the owner or general in his/her individual capacity.  That is, if the owner is a company, should the lien identify the property owner as “John Smith, President/Owner of X Corp.”, or “X Corp.”  While there may be some leeway in certain states, Washington, for example only requires the “name of the owner or reputed owner of the property, if known“, many states require that the actual property owner be listed on the lien and the failure to do so may result in the lien being invalidated.

It generally does not meet the requirement of listing the property owner on the lien document to list an individual when the actual owner is a company.  While there are always exceptions, and arguments to be made, the safest bet is always to list the property owner as the person or company that actually owns the land, as noted in the land records/assessment records/title documents, etc.

The same analysis can be extended to the general contractor and the party who hired the lien claimant.  Even if you have been working with “Bob Jones” for years, and know his company as “Bob’s Contracting”, if the actual name of his company is “Construction Company, LLC” that is what should appear on the documents.

While it may not always invalidate a lien if a party is not listed exactly correctly, it may.  Best practice is always to find out the correct information, and copy it verbatim for use on the lien claim.

Written by Nate Budde See original article at Identifying Parties In Lien Claims Originally posted on the LIEN

In New York, as is the case in almost every state, the party filing a mechanics lien must do so truthfully. The mechanics lien statement must always be signed, and oftentimes must be notarized and verified, indicating that the facts and figures set forth therein are true and correct.  This extends, of course, to the amount of the lien claimed.

When a mechanics lien is filed for an amount that exceeds the amount due the claim is said to be “exaggerated.”  We have had occasion to discuss exaggerated lien claims on this blog in the past as it relates to a number of states (even Guam!), but most often we’ve discussed it regarding New York laws.

A recent appeals decision makes the New York exaggerated lien laws a bit more convoluted, as we’ll discuss here.  This blog post is separated into two sections.  The first discusses what an Exaggerated Mechanics Lien Claim is and why it’s something you don’t want to file.  The second section discusses the recent New York Appeals decision that frames how courts in that state will address exaggerated mechanics lien claims.

What An Exaggerated Mechanics Lien Claim Is And Why You Don’t Want To File One In New York

Let’s start with the definition of what an exaggerated mechanics lien claim is. This will vary state-by-state and sometimes not be contained within a statute, but in New York the definition is laid out clearly within Lien Law § 39, titled “Lien Willfully Exaggerated is Void:”

In any action or proceeding to enforce a mechanic’s lien upon a private or public improvement or in which the validity of the lien is an issue, if the court shall find that a lienor has willfully exaggerated the amount for which he claims a lien as stated in his notice of lien, his lien shall be declared to be void and no recovery shall be had thereon. No such lienor shall have a right to file any other or further lien for the same claim. A second or subsequent lien filed in contravention of this section may be vacated upon application to the court on two days’ notice.

According to this definition a mechanics lien claim is exaggerated if it “a lienor has willfully exaggerated the amount for which he claims a lien.”  There are two prongs to this short phrase.  First, the amount claimed in the lien must be more than the amount actually due.  Second, the discrepancy must be “willfully” exaggerated.

Circumstances That Cause Exaggerated Lien Claims

There a few circumstances that can lead to your mechanics lien claim being out-of-line with the amount ultimately due. Some of these reasons are more dangerous to the lien claim than others, and include:

• Parties may have a contractual dispute about whether a change order is valid or invalid, thus the lienor’s claim may be higher than what the owner or prime contractor believe;
• Parties may have a dispute about the lienor’s workmanship, such that the owner or prime contractor feel entitled to backcharges or offsets;
• Prime contractor or owner may content that the lienor caused delay to the project and that they are entitled to compensation for that delay;
• The lienor may add attorney fees, costs, expenses, interest or other miscellaneous charges to the lien amount without statutory authority to do so;
• The lienor may just inflate the claim amount to cause anguish to the other parties or in the belief that it will make the lien claim more powerful and garner more attention.

Some of these reasons are better than the others.

The first three jusitifications all relate to legitimate disputes about the amount that is due.  We talked about this situation in the frequently asked questions posts “There Is A Dispute About How Much I’m Owed, Do I Have Lien Rights?” and “Can I File A Mechanics Lien If My Workmanship Is In Dispute?”

In these instances the mechanics lien claim will likely survive even if it is ultimately determined to be more than the amount truly due.  The claim, in other words, would not be “willfully exaggerated” because the amount claimed is subject to a bona fide good faith dispute.

The remaining two justifications are more dangerous.

First, by adding costs, attorney fees and other charges to your lien claim without statutory support or judicial authority, you are inflating the mechanics lien claim unjustly.  This could result in your lien claim being nailed as exaggerated.  We’ve addressed state laws and whether they do or do not allow these types of supplemental charges within a mechanics lien in the tag:  Claim Amount.

The worst offender, of course, is the last justification where the lienor simply increases the mechanics lien claim amount to cause anguish or to get more attention.  This is the purest form of an “exaggerated lien” claim that statutes like New Yorks’ seeks to prevent.

It’s A Bad Idea To File An Exaggerated Lien Claim Because…

New York Lien Law §39 dictates what an exaggerated lien claim is.  Lien Law §39-a indicates the “liabliity of lienor where lien has been declared void on account of willful exaggeration.”  This is where the rubber meets the road in setting forth the consequences of filing an invalid claim of lien.

This statute provides that when a mechanics lien is invalided based on it being exaggerated, the claim is rendered void (both the exaggerated portion and the legitimate portion, if any), and damages may be awarded to the owner or contractor that can include (i) the costs of any bond; (ii) attorney fees; and (iii) “an amount equal to the difference by which the amount claimed to be due or to become due as stated in the notice of lien exceed the amount actually due or to become due thereon.”

The consequences here are obviously severe.

New York Appeals Case Makes It Even More Difficult It Is To Win An Exaggeration Argument

The New York Court of Appeals, First Department, issued an opinion last week that addressed Lien Law §39 and the Exaggerated Lien standards in NDL Associates, Inc., etc. v. Villanova H eights, Inc., et al.  The opinion in this case is very, very short.  In fact, we could almost quote the entire thing right in this blog post.  Importantly, the appeals decision reverses a trial court decision that invalided a mechanics lien as exaggerated.  Here is a quote from the opinion:

[Trial c]ourt improperly held a hearing on the issue of whether the mechanic’s lien was wilfully exaggerated…That issue should be determined at trial or on a motion for summary judgment…[The] hearing effectively resulted in a bench trial on defendants’ counterclaim of wilful exaggeration, prior to the close of discovery and without plaintiff waiving its right to a jury and consenting to a bench trial. Such a procedure is improper.  In any event, defendants failed to demonstrate that plaintiff wilfully exaggerated the lien.  Indeed, even…found that any excessive billing on plaintiff’s part was not malicious or done with fraudulent intent.

That’s pretty much the entire opinion.  While short, it’s packed with implications.

First, the court makes clear that the issue of whether a mechanics lien is wilfully exaggerated in New York must be determined at “trial or on a motion for summary judgment…[after] the close of discovery.” This is not a proceeding, therefore, that can be done quickly or before incurring significant legal expense.  Because of this, it makes the process of challenging an exaggerated mechanics lien claim not worthwhile in many instances.

Second, the court insinuates that to demonstrate a “wilful exaggeration” the parties must find that the inflated lien amount must be done maliciously or “with fraudulent intent.”  This would be a departure from previous cases that did not require this heightened proof.  For those non-lawyers out there, it is very difficult to prove that someone had an intent to defraud or a malicious intent.  It’s a state of mind, and unless the lienor admits to having the state of mind or memorializes it in writing, it’s going to be difficult to prove.

[pullquote style="right" quote="dark"]It is an interesting short decision that could have positive implications for lienors.[/pullquote] To this second point, I’m not sure if the court is creating a requirement that the “wilful” exaggeration need be done with malicious or fraudulent intent and making such a departure from the statutory language and previous case law that simply requires the inflated amount be “wilful.”  Instead, the court may simply be saying that the lower court’s finding that the excessive billing was not made with ill-intent is another supporting reason why it’s previous ruling requiring a trial or MSJ after close of discovery is correct.

Nevertheless, it is an interesting short decision that could have positive implications for lienors.  Lienors can point to this slip opinion and argue: (i) That nothing can be done on an exaggerated lien claim until after close of discovery; and (ii) Exaggerated claims under §39 and §39-a must fail unless there is a showing of malicious or fraudulent intent to inflate the claim.

Written by Scott Wolfe Jr See original article at New York Exaggerated Lien Claims More Difficult To Prove After Recent Appeals Case Originally posted on the LIEN

Who are you?  Seems like a simple enough question.

You’d be surprised how often mechanics lien claimants wrongly identify themselves in a mechanics lien, and you may even be surprised how often this makes a difference. The issue was addressed recently in Connecticut, and a mechanics lien claimant in that state lost its lien claim because it foreclosed its lien under a trade name and not its formal name.

Mechanics Lien Action Dismissed Because Claimant Filed Under Incomplete Name

In Greco Construction v. Edelman, the Connecticut Court of Appeals was confronted with a lawsuit filed by “Greco Construction.”  The problem is that “Greco Construction” isn’t a business entity that had filed business paperwork with the Secretary of State.  Instead, “Greco Construction” was a trade name operated by its owner, a sole-proprietor, Brian Greco.  As the Connecticut Court of Appeals pointed out in the Greco case, the formal, complete and correct name for the company was “Brian Greco d/b/a Greco Construction.”

Is this enough of a problem to dismiss Greco’s lawsuit and consequentialy its mechanics lien claim? Relying on civil procedure law and not referring at all to the mechanics lien statutes, the court explained:

In the present case, it is not disputed that Greco Construction was the trade name or assumed business name of Brian Greco doing business as Greco Construction. Because the plaintiff instituted the action using a trade name or assumed business name of “Greco Construction,” which is not a legal entity and which does not have a separate legal existence, an action brought under that trade name cannot confer jurisdiction.

While the opinion is a civil procedure opinion focusing on the court’s jurisdiction, it is of obvious importance to mechanics lien claimants.

Is This Really Fair?  Would This Happen In Other Jurisdictions?

As far as fairness is concerned, the answer is I don’t know.  I do know about other jurisdictions, however, and it is absolutely possible and likely that the courts in other states (or even other counties within Connecticut) would rule differently here.

The fact is that some courts go out of their way to preserve plaintiff lawsuits, and other courts strictly require that plaintiffs jump through every inconsequential procedural hoop to have a claim. That’s just the way it is.  Some may think it’s unfair, such as foreign courts who mock the United States legal system for its adoration of procedure over fairness. Yet the United States mocks those courts contended that procedure is fairness. I digress.

Other courts may agree with Connecticut in this case, but there are still others who would disagree.  Some already have. Consider, for example, this decision in California we wrote about in California Court Forgives Misidentification of Lien Claimant.

 How To Properly Identify A Company Working Under A Trade Name

Do you still not understand what was wrong with identifying the company as “Greco Construction,” its trade name?  You’re probably not alone.  This presents a legal nuance little-known by non-lawyers.  However, it is something I have already written about because it’s an unfortunate common mistake folks make when filing a mechanics lien.  Consider this comment from my previous article “3 Mistakes Lien Claimants Make When Identifying Itself in A Mechanics Lien:”

If you are a sole proprietor, that means you do not have a company. You are an individual doing business as some type of tradename. Oftentimes, your state requires you to file a record of your trade name with the county recorder or with the secretary of state’s office…

Nevertheless, if your name is John Doe, and your operate “Kitchen Specialists,” and this company is not incorporated or organized as any specific business entity, the formal and legal name of your company would be “John Doe doing business as Kitchen Specialists,” or “John Doe d/b/a Kitchen Specialists.”

It’s also worth checking out this Wikipedia definition of “doing business as:”

The phrase “doing business as” (abbreviated DBA, dba or d/b/a) is a legal term used in the United States, meaning that the trade name, or fictitious business name, under which the business or operation is conducted and presented to the world is not the legal name of the legal person (or persons) who actually own it and are responsible for it…

The distinction between an actual and a “fictitious” name is important because businesses with “fictitious” names give no obvious indication of the entity that is legally responsible for their operation.

Written by Scott Wolfe Jr See original article at More Problems With Misidentification of Lien Claimant in Mechanics Lien Originally posted on the LIEN

No one goes to medical school to learn how to file a mechanic’s lien.  It isn’t brain surgery. Claimants must be careful, however, because mechanic lien laws are hyper-technical and there are many traps for the inexperienced and the do-it-yourselfers.

In fact, as an example of one of these traps, we previously wrote a post warning people about do-it-yourself mechanics lien forms: Why You Shouldn’t Use Do-It-Yourself Mechanic Lien and Notice Forms.

Here are three ways you can get burned if you try to file your own mechanics lien.

Your Lien May Get Invalided Because Of The Property Description

The property description?  Isn’t the municipal address enough?

In some states you can just write down the municipal address and be on your way. This, however, is the exception to the rule.  A vast majority of states require you describe the property being liened with the legal property description.

You can find the legal property description by visiting the property records office in the county where the project is located, and looking up the property’s most recent deed.  Or, you can pay an abstracter to do this, or pay for the legal description through some online service that researches this stuff.

When you file your mechanics lien through Zlien, researching the legal property description is included in our fee.

You’ll Lose Your Right If You Don’t Serve The Lien, And Keep Proof Of Service

Each state has different rules about how and when the mechanics lien must be served, and then, who it must be served upon. Fail to follow these particular steps, and your mechanics lien claim will be invalidated.

In addition to knowing the details about serving your mechanics lien, you must be very careful when serving the document to ensure both that service is successful and you can prove it. Half the battle in getting this service requirement satisfied is proving the document was served properly.

Prepare affidavits of service, know the requirement backwards and forward, and track the service record until you can confirm delivery.

You Have The Wrong Mechanics Lien Form

There are so many mechanics lien forms out there it will make your head spin, and the last thing you want when picking a mechanics lien form is your head spinning.  It’s sad to say, but many of the websites that offer free or paid forms are just taking the same lien form for one state and circumstances and duplicating it over and over again with different state references. Even RocketLawyer does this (and they have millions of dollars to work with!)

You have to be very careful with mechanics lien forms because they not only change state-to-state, but they change situation-to-situation. Most form factories offer the same lien form over and over again, without any concern for your situation.

You don’t want your lien claim to be invalided because it is missing a single piece of information or a single sentence!  But, there are lots of bad forms out there, and this is another way you can and will get burned if you try to file your own mechanics lien.

Written by Scott Wolfe Jr See original article at 3 Ways To Get Burned Filing Your Own Mechanics Lien Originally posted on the LIEN

Mechanics lien statutes are complex and technical, and they get mixed treatment by courts across the country with some courts very strictly construing and others very liberally construing the statutory requirements. It’s because of these varied restrictions that filing a mechanics lien can be a treacherous affair, and folks are at risk to make common mistakes and errors.

Probuild, a material supplier in Connecticut, made such an error when they filed their Connecticut mechanics lien in May 2009. In it, Probuild reported that its materials were furnished between Jan 8 – Feb 24, 2009.  The commencement date of January 8, 2009, however, was not correct as materials were furnished three months earlier in October 2008.  The lien was challenged because the statute requires the claimant to identify the commencement date, and the commencement date was incorrectly identified.  Does that small mistake invalidate the lien?

The Connecticut court of appeals in ProBuild East LLC v. Poffenberge had this to say:

We have long endorsed a policy favoring liberal construction of claimed inadequacies in certificates of mechanics’ liens in order to achieve the remedial purposes of the mechanics’ lien statutes. . . . In accordance with this policy, our courts have been liberal in validating liens despite claimed errors on the face of the lien certificate where the mistake was made in good faith and no resulting prejudice was claimed.

The mechanics lien here was declared valid and enforceable despite the error because there was no showing that the error resulted in prejudice to the defendants or that the error was made in bad faith.

Take-aways from this decision:

1. Don’t commit these minor errors because even though they may seem harmless, if the other party can show “bad faith” or “prejudice” in any way, it may result in the invalidation of your mechanics lien; but
2. If you do make a small mistake, you’re not fighting a completely uphill battle to keep your lien claim

Written by Scott Wolfe Jr See original article at Connecticut Court Forgives Small Error In Mechanics Lien Originally posted on the LIEN

Granted, mechanics lien laws are complex. It’s still surprising to me how many folks out there think they know everything about the lien laws when they in fact know little to nothing at all.

This is a huge problem in the marketplace. Many companies rely on these misconceptions to their detriment, and wind up with defunct lien rights.

I encountered this when speaking with a client just this week. The client was negotiating with their customer to get paid before an upcoming lien deadline, and were being told that their calculation of the deadlines was incorrect. They were in Washington state on a county project, and our client contended the lien deadline as 30 days from project completion, but their customer contended they had 90 days from last furnishing.

[pullquote style="right" quote="dark"]Everyone has something to say about mechanics lien laws. The problem is, they are usually wrong.[/pullquote] Their customer was dead wrong. In Washington state, claimants have 30 days from project completion to file bond and lien claims (see Washington state project bond claim resources on Zlien.com). But the customer was very confident. After all, he had heard the lien laws before, and knew that it was 90 days.

The differences between state and private projects in lien law rules is an example of a very simple mechanics lien law nuance. Private projects have one set of rules, state projects have another. This causes confusion, but it doesn’t hold a candle to all of the nuances in the laws within each category.

At the end of the day, relying on rumors or what people in the industry say can be very dangerous. Rely on smart mechanics lien compliance systems like Zlien and never worry about your mechanics lien rights again.

Written by Scott Wolfe Jr See original article at Mechanics Lien Rumors Are Not Mechanics Lien Laws Originally posted on the LIEN

Little in the law is as misunderstood as the mechanics lien instrument. We’ve dedicated some entire sections of this blog to trying to lift this fog, such sections being devoted to analyzing Common Mistakes and Lien Errors. While each state has its own mechanics lien rules and, therefore, it’s own unique common mistakes, there are some over-arching misunderstandings people have about mechanics lien law and requirements in general.  This post reviews the top 5 misconceptions.

Error 1: A Mechanics Lien Is Forever

This is wrong. While the laws vary depending on your state and project type, there is not a single jurisdiction in the United States where the mechanics lien lasts forever. It’s a mechanics lien law rule, therefore, that these documents do not cloud title forever.  To the contrary, mechanics liens expire.

The most common expiration period is between 8 months and 1 year from the filing of your lien. However, that isn’t to say the lien period cannot be shorter or longer. In California, for example, mechanic liens expire just 90 days after they are filed, and opposite of this, the foreclosure period in Ohio is 6 years! To get your state’s mechanics lien foreclosure period in just a quick glance, check out the infographic we put together.

This doesn’t mean that a mechanics lien is only good temporarily and then of absolutely no effect.  While the mechanics lien will expire by operation of law, you can save its effectiveness by filing a mechanics lien foreclosure action.

Error 2: You Can Always File A Mechanics Lien

This misconception is rampant in the construction industry. So many small contractors, tradesman and supply companies think they can file a mechanics lien whenever they want so long as they’ve gone unpaid. They think the mechanics lien remedy, in other words, is always available to them without much exception, ready to be used at the drop of a hat.

There are three underlying problems with this belief.

First, you may be on a project that doesn’t have mechanics lien rights or even bond claim rights.  While this is rare, there are many circumstances when this is the case. Filing a mechanics lien against a New York condominium, for example, can be very difficult. Also, there may be little security protections for work performed on a private project on public land.

Second, in many states, potential mechanics lien claimants must deliver a preliminary notice to the general contractor and/or property owner at the start of all construction to be later qualified to file a mechanics lien. If you fail to deliver this notice, your mechanics lien rights could be completely destroyed.

Third, you only have so long to file a mechanics lien. You can’t keep giving your client more and more time to pay, thinking you can file the mechanics lien whenever you want. That’s simply not true. All states require mechanics liens to be filed within a certain (short) amount of time after you last furnish work or the completion of the project. A nice average is about 90 days after you last furnish materials or labor.

Error 3: A Mechanics Lien Can Include Every Cost, Penalty And Fee Under The Sun

Mechanics lien laws everywhere are strict, and each state is very specific about what can and cannot be included within the mechanics lien claim amount. You must be careful not to go outside of these boundaries, because the effect could be the absolute nullification of your claim.

There are two articles on this blog which address this issue head-on, and is a good read for anyone tempted to add additional costs, penalties, fees, accrued interest, etc. within their lien claim.  First, we have an article that talks in general about the expenses and costs that can be included in your claim. Second, we have an article about the consequences of filing an “exaggerated” lien claim.

Good rule of thumb:  File your mechanics lien for just the principle amount due, and leave the costs, interests, fees, penalties, etc. out and just part of your negotiations or lawsuit.

Error 4: A Mechanics Lien Is Useless If A Bankruptcy Is Filed

People are way too pessimistic when it comes to filing a mechanics lien.  They come up with a lot of reasons why the mechanics lien will not be effective, and one top reason is the fear that someone on the project will file bankruptcy and avoid the mechanics lien completely.

While bankruptcy is a real fear for any creditor in any situation, the mechanics lien actually matches up quite well against a bankruptcy filing. We ran a blog series here on the relationship between mechanics liens and bankruptcy, and it’s worth reading to see just why a mechanics lien is effective in a bankruptcy proceeding.

Error 5: A Mechanics Lien Isn’t Worth Doing

It’s funny that some folks will be way too pessimistic about a mechanics lien filing and others way too optimistic. The most dangerous misconception about mechanics liens, however, is that they’re just aren’t worth it. Nothing can be further from the truth.

I’ve dedicated my career to understanding the mechanics lien instrument and helping contractors, suppliers and others file these documents and use them to improve their collections process and success. I can tell you without hestitation that filing a mechanics lien is THE most effective way to get paid on a construction project, and that the chances of collecting a debt with a mechanics lien is much, much greater than collecting a debt without a lien.

If you’re unpaid, file a mechanics lien.

Written by Scott Wolfe Jr See original article at 5 Things People Have Wrong About Mechanics Liens Originally posted on the LIEN

Last week I wrote about two court decisions released in April 2012, one out of California (Montgomery Sansome LP v Rezai) and one out of Idaho (Stonebrook Construction v. Chase Home Finance).  These cases presented almost identical circumstances, yet the courts reached opposite results.

Summary of Idaho v. California Cases

The California and Idaho cases are written about more extensively in blog posts from last week, but here is a summary.

Idaho and California are two states which prohibit anyone who is required to have a contractor license from filing a lien unless they possess that license. We’ve written about this rule in the past, see the Contractor License tag. When you get a contractor license in these states (and most states), you must actually do business in that name, and not some other name.

What happens in these two cases is the mechanics lien claimants do have a construction license, but they contract and file a mechanics lien in a slightly different name.

In California, the lien and contract was in “Montgomery Sansome Ltd., LP,” but the license was in “Montgomery Sansome Ltd.”  In Idaho, the lien and contract was as “Stonebrook Construction, LLC” but the license was in “Stonebrook Construction.”

Idaho invalidated the mechanics lien claim completely, but California upheld the lien claim.

Conflicting Mechanics Lien Decisions Are Frustrating

As a lawyer, these types of situations are very frustrating.

When companies come to a lawyer to ask for legal advice, they want an answer and an useful opinion, and lawyers get a bad reputation for compiling opinions full of words and discussion, but void of any solid answer.

The conflicting decisions from Idaho and California is an example of why its so difficult to get a straight answer from a lawyer: because, sometimes, there isn’t a straight answer.[pullquote style="right" quote="dark"]The conflicting decisions from Idaho and California is an example of why its so difficult to get a straight answer from a lawyer: because, sometimes, there isn’t a straight answer.[/pullquote]

Idaho and California have virtually identical contractor registration laws, and the public policy reasons behind these laws are identical. So how is there room for the law to be applied one way in Idaho, and the complete opposite way in California?

A law school professor of mine (who is also a federal judge in Louisiana) used to declare in class that “fairness is something they teach you in Kindergarden.” With a number of years in litigation under my belt, this sentiment is unfortunately very true. The only lesson to really take out of this statement and the conflicting cases in Idaho and California is that your company is best to avoid ambiguities at all costs. Once there is an ambiguity, it’s game on for expensive legal fees and uncertainty.

Filing a mechanics lien can be very complicated.  There are a lot of issues that come up when filing, such as how to identify yourself, how to identify the property being liened, how much to make the dollar value of your claim, what costs can you include in the lien claim, what work actually qualifies for a lien filing, etc. etc.

The best bet is to take the most conservation posture possible on every question, because if you overstep and make a tiny error, you’ll leave your claim in the hands of lawyers and judges…and that’s never predictable, inexpensive, or any good.

Written by Scott Wolfe Jr See original article at Conflicting Court Decisions Highlight Complexity Of Mechanics Lien Law Originally posted on the LIEN

We posted an article yesterday about a California case published last month where a mechanics lien’s validity was in dispute because of the way the lien claimant identified itself on the lien. That case -  Montgomery Sansome LP v. Rezai - was very similar to a California case we wrote about a few months ago – Ball v. Steadfast-BLK.

Those cases presented tiny differences between the identified names of the companies and the companies’ official names.  Tiny differences. Trivial differences, some may say.

You may look at these situations and think it’s a stupid mistake that can’t happen to you, but beware. Typographical errors happen, as do misunderstandings.  Here are some common mistakes companies make when identifying themselves in a mechanics lien claim.

Not Understanding DBAs and Sole Proprietorships

Are you a company or are you a person?  Are you human or are you a dancer?

If you are a sole proprietor, that means you do not have a company.  You are an individual doing business as some type of tradename.  Oftentimes, your state requires you to file a record of your trade name with the county recorder or with the secretary of state’s office. [pullquote style="right" quote="dark"]Most importantly, however, you want to be consistent between filings, as discussed below.[/pullquote]

Nevertheless, if your name is John Doe, and your operate “Kitchen Specialists,” and this company is not incorporated or organized as any specific business entity, the formal and legal name of your company would be “John Doe doing business as Kitchen Specialists,” or “John Doe d/b/a Kitchen Specialists.”

You want to be careful about identifying yourself as simply “John Doe” on legal documents, or as simply “Kitchen Specialists.”  Most importantly, however, you want to be consistent between filings, as discussed below.

Not Putting Your Correct Business Type In Your Name

If you business is an organized entity, and not a sole proprietor, you must know what type of entity you are.

Generally speaking, you are either a Limited Liability Company, a Corporation, a General Partnership, a Limited Partnership, or a Limited Corporation.  The name of your company includes this designation or an abbreviation of the designation.

Apple’s legal name is not “Apple.”  It is “Apple, Inc.”

If you are a business entity, it can be a fatal mistake to not include your business entity’s designation within your business name.

Not Being Consistent

Where most companies get in trouble with company names is being consistent.  Those two California cases analyzed in prior blog posts are a perfect example of this.  In those cases, the contractors had identified themselves one way with the California Board of Contractors, but identified themselves slightly differently in the mechanics lien claims.

You can avoid almost all of the problems with misidentifying your company by identifying your company the same way every time.  So, be consistent, or be in trouble!

Written by Scott Wolfe Jr See original article at 3 Mistakes Mechanics Lien Claimants Make When Identifying Themselves Originally posted on the LIEN

A construction company in Georgia got stiffed $175,000, and filed a Georgia mechanics lien for that amount. Then, they made a mistake that is a pretty difficult mistake to predict.  They hired the wrong attorney.

Xavier Dicks was hired in June 2007 to foreclose upon a $175,000 mechanics lien set to expire on December 15, 2007.  Dicks, however, didn’t file the lawsuit until January 2008.  The lawsuit was eventually dismissed, and Dicks took some sketchy actions to cover his mistake, including having the client sign a document promising to not file a bar complaint or malpractice lawsuit.

This all came to a boil last week when the Supreme Court of Georgia disbarred Mr. Dicks.  Read the full opinion:  In The Matter Of Xavier Cornell Dicks.

While Mr. Dicks disbarment may be a taste of justice, it’s not a very helpful resolution to the poor construction outfit who trusted this attorney with their $175,000 claim. It’s a sad example of why companies must be careful about who they trust to file its mechanic liens, preliminary notices and foreclosure actions.

Zlien is a licensed, bonded and insured legal document preparation company, and has built years of credibility with its clients and the construction community.  Read our pitch for why you should choose Zlien here, and be careful out there!

Written by Scott Wolfe Jr See original article at Be Careful Who You Choose To Enforce Your Mechanics Lien Originally posted on the LIEN