Filing a mechanics lien is a great credit and collections tool, but there are a lot of compliance requirements tied to the remedy. Sometimes, notices must be sent at the start of construction (preliminary notices).  Sometimes, notices must be sent at the end of construction before a mechanics lien is filed (notice of intent to lien).

These notices go by all sorts of names:  Notice to Owner, Notice of Furnishing, Pre-Lien Notice, Preliminary Notice, NTO, Notice of Intent to Lien, Notice of Intent, etc., etc.  The notices are also tied to all sorts of differing rules.

Getting all of the rules and requirements reduced to a single chart is a difficult task. The above color-coded map tries to do this at a big picture level.  Here is what the colors mean:

RED:  Preliminary notice is required.

GREEN: Notice of Intent to Lien required.

Blue:  Preliminary Notice and Notice of Intent to Lien Required.

GRAY:  No notice requirements.

This relates to private construction projects only.  You can download the full PDF chart here.

Written by Scott Wolfe Jr See original article at Color Coded Map of Nationwide Notice Requirements Originally posted on the LIEN

I came across an exchange in the ContractorsTalk.com forum about whether a subcontractor should sent its Florida NTO and protect its lien rights on a project. The question is one we’ve addressed at length on this blog:  Will a preliminary notice scare a customer?

Here is the forum member’s question exactly:

My question is for those that regularly do larger jobs as a sub contractor. Do you always issue notice to owners on those jobs? Is it a standard practice? I do not want to come off as threatening toward the property or the contractor but I also want to make sure that I am protected.

If you’re a reader of the Lien Blog you know our answer.  The answer is a resounding yes, you should always send preliminary notice on a construction project.  It will not supset your clients, it’s standard operating procedure and it’s critical to your lien rights.  You can see a summary of all of our posts on the Lien Blog on how to Justify Sending Preliminary Notice on Every Project.

It seems that we’re not alone in our position.  Some other contractors who participate in the ContractorTalk forum and act as subs on construction projects in Florida also support sending a Notice to Owner on every project.  My favorite response comes from Ninzam Studio:  ”Standard operating procedure. You are protecting yourself as a subcontractor..”

Ninzam Studio is absolutely right.

Written by Scott Wolfe Jr See original article at Florida Notice to Owner – Will Sending It Upset Your Customer? Originally posted on the LIEN

If you’re the prime contractor and you contracted directly with the property owner, you’ll have a pretty good understand of who owns the property where work was performed. Prime contractors, however, very rarely have preliminary notice requirements.

Instead, its the subcontractors, the sub-subcontractors and material suppliers who usually have preliminary notice requirements to meet, and the exact identity of the property owner is less certain to those parties. This post explains why it’s important to know who the owner is, and how you can figure it out.

You Can’t Notify The Owner If You Don’t Know Who It Is

This post needs to begin with the obvious: knowing a property owner’s identity is important because most states require potential lien claimants to send notices to the property owner to preserve its lien rights. In fact, while this requirement is mostly referred to as a “preliminary notice” requirement, in many states they are simply referred to as “notices to owner” or “NTOs.”

We’ve written ad nauseam in the past about why it’s critical to send preliminary notices. By extension, therefore, it’s critical to know who the property owner is.

Sending notice (or filing a mechanics lien without properly identifying the true owner) can be fatal to your notice or lien claim. While there are limited exceptions, most states are not very forgiving when a notice or lien mistakenly misidentifies the property owner. The entire point of preliminary notice requirements and the filing requirement of a mechanics lien is essentially to put the property owner on notice about your claim, and its impossible to provide this notice without knowing the actual property owner.

State legislatures understand that you may not know who the property owner actually is…but, for this point, they don’t really care.  They had to draw a line, and so they placed the burden on potential lien claimants to figure out who owns the property.

You Must Know The Actual and Exact Owner

Mistaken identity of a property owner is a common mistake, and it’s a critical mistake because preliminary notice and notice to owner requirements mandate that notice be sent to the actual property owner.

There are four common errors companies make regarding property owners, and I’ll discuss each.

1)  Mistaken the tenant for the owner

Everyone theoretically understands the landlord / tenant relationship.  Sometimes, the party occupying a property may not actually be the owner of the property. You can’t forget this in the preliminary notice and mechanics lien context, which essentially means this:  Don’t assume that the property occupant is the property owner.

2) Attributing ownership to a person, when property is actually owned by a company (or vice versa)

Frequently, parties on a construction project are encountering the property owner – and that means they are encountering and working with a real live person.  They come to know this person, and when asked who owns the property, they point to this person. This is a mistake made even by those who contract directly with the property owner on a construction project.

You shouldn’t forget, however, that it is very common for individual property owners to create a limited liability company, corporation or other type of business entity to own the property.  So, while you may think John Doe owns the property, the property may actually be owned by John Doe, LLC.  While you may think this is an unimportant detail, it is not. This mistake could ruin your lien claim.

3) Not knowing about a special property holding company used by the owner

This mistake is similar to the 2nd mistake, but addresses the situation when its known that a property is owned by a corporation or LLC.  I came across this issue the other day.  A client was filing a lien on a large company’s property (we’ll call it ABC Company).  The client knew that the property was owned by ABC Company, but assumed it was that easy. However, it’s very common for companies to create property holding companies to hold its property separate from the rest of its assets.

So, in other words, while ABC Company occupied the property and owned it (in a sense), the actual property owner was “ABC Company Holdings, LLC.”  Not knowing about this tiny differences can create a large lien or notice mistake.

4) Not understanding husband and wife relationship to property, and other co-tenants

The final common mistake relates to the relationships between co-owners of properties.  Properties are not always owned by a single individual or company.  In fact, they are very commonly owned by at least two people or companies, and when working on a residential construction project, the most common co-ownership is husband and wife.

When preparing notices and liens, claimants must be careful to contemplate that role of all owners. While the requirements vary from state to state, it’s frequently required (and a good practice) to list and notify all property owners on preliminary notices and mechanic liens.  This means actually listing and notifying both the husband and the wife.

How To Research And Find The Identity Of A Property Owner

You now understand why it’s important to know the property owner’s identity, and you understand some of the mistakes people make when identifying the property owner on a mechanics lien or preliminary notice…but, you may be justifiably wondering, how do you know who owns a property?

This is the bad news.

Most states do not require that the prime contractor disclose the property owner’s identity, nor is there any requirement that the property owner disclose his identity to potential lien claimants in any way. This means that if you don’t have personal knowledge about the property owner (and confident in it!), you need to do some research.  Unfortunately, this research can be hard or expensive.

To determine who owns a property, you can go to the mortgage or recording office where the property is located and research their records for the current owner. Some of these recording offices have an online presence with access to their records, but really, these are still in the minority.  Another online source for finding property owners is accessor websites, which have online access a bit more frequently than the court and recorder offices.  Try searching for these offices in the applicable county and examine their online offerings. You can even call these offices and ask the employees there whether off-site research of any sort is possible

There are also some online property record services that will allow you to research property records nationwide.  Examples of these services are DocEdge and PropertyShark.

Another thing to consider is using a preliminary notice and mechanics lien service like Zlien. When your company orders a notice to owner from Zlien or files a mechanics lien with Zlien, researching the property owner and legal property description is included in the price.  It’s another reason why it’s Smart to Outsource Your Preliminary Notice (and Lien) Work.

Written by Scott Wolfe Jr See original article at FAQ: How Do I Send Preliminary Notice to the Owner If I Don’t Know Who The Owner Is? Originally posted on the LIEN

Here are a few Florida forms that are helpful to anyone furnishing materials, labor or services to construction projects in those states, as well as a description of each. All forms are provided subject to Zlien’s terms of use.  These forms relate only to private projects in the state of Florida.

Free Florida Mechanics Lien Forms For Download

Notice to Owner / Notice to Contractor

All parties who do not contract directly with the property owner in Florida must deliver a preliminary notice within 45 days of first furnishing materials and/or labor to the project. When there isn’t a payment bond posted to the project, the notice is styled a “Notice to Owner.”  When a bond is posted, however, the notice is styled a “Notice to Contractor.”

The Notice to Contractor is always delivered to the general contractor.  The Notice to Owner, however, must be provided to the property owner and everyone “above the contracting chain” from you.  Since potential lien claimants may not know whether a bond has been placed, or the specifics about who is issuing the bond, Florida law allows you to request identification of the bond from the property owner or prime contractor.

Further, you can send a combined “Notice to Contractor / Notice to Owner” preliminary notice, which will protect both your lien rights and bond claim rights.  The free form provided here is such a combined Notice to Contractor / Notice to Owner.  It also contains a formal written request for identification of the bond.

Claim of Lien

When unpaid on a construction project in Florida, parties may file a mechanics lien against the real property, gaining a real security interest in the property itself equal to the value of the services, labor and/or materials furnished to the project.  Mechanic liens in Florida must be filed within 90 days of last furnishing labor and/or materials to a construction project.  More specific information about Florida’s mechanic lien laws can be found in the post on this blog: 5 Things To Know About Florida’s Mechanics Lien Law.

This particular form should be filled in, signed and notarized, and then filed with the Clerk of Court for the county where the project is located. While usually filing with the Clerk of Court is sufficient, some counties have a separate County Recorder department.  If this is the case, the lien should be filed in with the recorder and not the clerk.

Notice of Non-Payment

When a bond has been issued for the project, lien claimants are entitled to file a claim against the bond, and not the real property itself.  This claim must be delivered to the prime contractor and the surety company by certified mail, with return receipt requested.  It must be delivered within 90 days of last furnishing labor and/or materials to the construction project.  The “Notice of NonPayment,” while creating a formal notice upon the claim under the Florida Construction Lien Law, does not require recording with the clerk or recorder.

Notice of Contest

If your property is liened, and you don’t want to wait for an entire year to see whether the lienor intends to file a lien foreclosure action, in Florida you can serve a “Notice of Contest” upon the lienor.  Service of this notice shortens the lien effective period from one year to just 60 days, meaning the lienor will be required to file the lawsuit to foreclose the lien within the following 60 days or the mechanics lien will be rendered void.

This document must be signed and notarized, and served on the lienor by certified mail with return receipt requested.

Discharge of Lien

After receiving payment on a mechanics lien, or for other reasons, you’ll be required to discharge your mechanics lien from public records.  The lien discharge documentation should be filed in the same recorder or clerks’ office where the mechanics lien itself was recorded.  The document must be signed and notarized, and must actually reference details about the recorded lien within it.

The Value of Zlien’s Services

While forms are important and Zlien prides itself on having the most complete and accurate set forms, there is more to filing a mechanics lien or properly sending a  notice to owner than just filling out the form and sending it on its way.  We provide these forms to our readers free of charge, but that’s because we understand that the true value of Zlien’s service is more than just providing our clients with forms.

First, forms are fluid.  The forms we provide above are simple generic forms for Florida mechanic liens. However, depending on your role in the project and the work you’re performing, these lien forms may exclude certain fields, or may change slightly in one way or another.  Plus, you have to make a decision about which form is the right form for you to use. When you use the Lien Wizard, all of these nuances and variables are taken into consideration.

Second, there are a lot of steps in putting these documents together and getting them filed or delivered.  A service like Zlien that handles all of the logistics has a value that cannot be understated.  Take a look at this blog post for a more detailed explanation: Why You Shouldn’t Use Do-It-Yourself Mechanic Lien and Notice Forms.

Written by Scott Wolfe Jr See original article at Free Florida Mechanic Lien, Bond Claim and Notice To Owner Forms Originally posted on the LIEN

One of the most popular posts on this blog has been an article I wrote in December 2009 titled: 5 Things To Know About The Miller Act. It’s been a long time since we discussed mechanic lien law in Florida, and so I’m inspired to write a top five post about Florida’s mechanic lien laws.

Parties looking to file a mechanics lien in Florida must comply with the statutes housed in Title 40, Chapter 713, Part I of the Florida Statutes, titled the “Construction Lien Law.”  Here are the top five things you should know about these laws to preserve, perfect and enforce your mechanics lien rights.

1) Preliminary Notice is Required

If you don’t deliver a preliminary notice at the start of furnishing labor or materials, you will likely lose your mechanics lien rights in Florida. All parties who did not contract directly with the property owner must serve a Notice to Owner within 45 days of furnishing labor and/or materials to the construction project. There are only two small exceptions to this requirement, as the requirement does not exist for pure individual laborers or for professionals (i.e. architects, engineers, etc.).

The preliminary notice must contain all the information required by the statute (including a statutory WARNING statement), and must be sent to certain parties.  Specifically, make sure you send the preliminary notice to those listed in any filed Notice of Commencement, and:

• If hired by the general contractor, send the notice to the property owner;
• If hired by a subcontractor, send the notice to the property owner and the general contractor; or
• If hired by a sub-subcontractor, send the notice to the property owner, the general contractor and the subcontractor.

2) You Must File A Florida Mechanics Lien Within 90 Days From Last Doing Work (Warranty Work Not Included)

In some states, the lien deadline starts to count from the end of the entire construction project.  Not so in Florida.  Claimants in Florida must record their mechanics lien within 90 days from last furnishing labor, services or materials to a construction project.  The 90 day period starts to count when the substantive portion of your work is completed, and you cannot include the correction of deficiencies in work or warranty work when determining this date.  If you are an equipment rental company, the last date of furnishing is the last date the equipment was actually on site and available to the parties for use.

When recording your mechanics lien, be careful where you are recording.  While most counties maintain county property records with the Clerk of Court for the Florida county, there are some exceptional counties where the property records function is delegated to an designated “County Recorder.”

3)  Know Who Does and Does Not Qualify For Lien Rights

Generally speaking, contractors, subcontractors, material suppliers, equipment rental companies, laborers and professionals have lien rights in Florida.  Florida does not require that you have a written contract to file a mechanics lien, so contracts can be oral, written, express or implied. However, the following do not have any rights to file a Florida mechanics lien:

• Sub-sub-subcontractors (those hired by sub-subs)
• Suppliers to suppliers
• suppliers to sub-sub-subcontractors
• Anyone who is required to be licensed in Florida, but who is not (read more about unlicensed contractor lien rights here)
• Maintenance workers (work / materials provided must permanently improve the property)

4)  Do Not Exaggerate Your Lien Claim

This one really applies nationwide, and not just in Florida.  However, it’s particularly important in Florida, because filing a mechanics lien considered “fraudulent” is a 3rd degree felony.  The tough part is distinguishing between a “mistake” or something subject to a “good faith argument” versus an actual willful or negligent exaggeration.

Florida does not allow lien claimants to include amounts within the mechanics lien for unapproved change orders, claims and lost profits on unperformed work, and other similar legally theoretical claims for damage payments. Similarly, lien claimants should not add costs or lien fees, interest or attorney fees to their Florida mechanics lien.

While all of these amounts may be recoverable in litigation, they cannot be added to lien itself, as the mechanics lien law in Florida only allows lienors to encumber the property for the value of its actual permanent improvement to the property.  This is a typical rule all across the country, as we discussed previously in this post:  What Costs Can I Include In A Mechanics Lien?

5) Know The Foreclosure Deadline…And All Exceptions

In Florida, as elsewhere, mechanic liens are only effective for a defined period of time.  Once that time period is up, the lien expires as a matter of law unless you file a lawsuit to foreclose upon the property and the lien.  The general rule in Florida is that the lien foreclosure action is due within 1 year from the lien’s recording.

However, the 1 year foreclosure period can be shortened to as little as 60 or 20 days. It’s important to know these two exceptions:

• Foreclosure period is reduce to 60 days if the property owner serves a Notice of Contest of Lien (F.S. 713.22(2)).
• Foreclosure period reduced to 20 days if the owner or interested party files a lawsuit complaint and summons with a rule to show cause on the mechanics lien (F.S. 713.21(4)).

Written by Scott Wolfe Jr See original article at Five Things To Know About Florida’s Mechanic Lien Laws Originally posted on the LIEN

Many states mandate lien claimants complete at least two steps to successfully claim a lien: (1) File the lien; (2) Send notice of the lien to the property owner and other interested parties. In California, for example, the law was just changed to require more  post-lien notices to be sent to the property owner.

Thanks to Laurie & Brennan, LLP for calling our attention to a recent Illinois Appeals Court decision that re-iterates this important post-filing step. The case — Parkway Bank and Trust Co. v. Meseljevic (click to read full text) — holds that a mechanic lien is invalid as to a construction lender because the lender was not provided with notice of the lien within 90 days after the claimant’s completion of the work.

Written by Scott Wolfe Jr See original article at In Illinois Filing A Mechanic Lien Is Only The First Step: Notice Required Too Originally posted on the LIEN

A county in Ohio – Lorain County – is home to a recorder with a really novel ideal.  With the intent to prevent real estate fraud, Recorder Judy Nedwick has launched a notification system to alert property owners whenever a document is filed against their property. The alerts will be sent by email or text message.

The Recorder is using a system created by a third party, but remarked in a news article about the program that the system was attractive to her because her office had just experienced a “fraudulent mechanics lien.” A lien was placed on a home in Elyria, Ohio, by someone who was in prison! The homeowners didn’t find out about the lien until later.

If the notification system were in place, the homeowners would have gotten the notice immediately.

While the notification system doesn’t directly relate to contractors, subcontractors, design professionals or materialmen who file construction liens…it does have an indirect relation. The way I see it, such a notification system could have two primary effects: (1) It could eliminate the need for lien claimant’s to send post-lien notices to property owners; and (2) It would get the owner involved with the dispute more quickly.

This is one small county trying out this service, and notifications are only being sent to those who sign up for the service. As a result, it’s a very, very limited group of people affected by the system. It is, however, an interesting use of technology, and may one day have an impact on those folks filing lien claims.

Written by Scott Wolfe Jr See original article at County Recorder in Ohio Will Notify Property Owner of Liens By Text Message Originally posted on the LIEN

Back in November 2009, we reported that the California legislature had passed an act to amend California Code § 3084 and 3146, relating to construction liens, and the new regulatory scheme was set to take effect on January 1, 2011.   The effective date of the amendments is now upon California contractors and subcontractors.

You can read the Act amending the mechanics lien laws by clicking here.

Here are some key changes to the California lien laws:

Service of the Lien Upon Owner

Previously, there were no specific provisions requiring service of a recorded lien upon the property owner.   As Porter Law Group reported on a website bulletin, “[p]roperty owners have long complained that until they receive the foreclosure lawsuit they are often entirely unaware that a mechanics lien had even been recorded on their property.”

To address the concern, California Civil Code § 3084 will be amended to provide a specific statement titled “NOTICE OF MECHANICS LIEN.”  This identical statement must be printed in at-least 10-point boldface type on the lien itself….and it must be served upon the property owner contemporaneously with the filing of the lien.

Along with the printing of this text onto the lien, § 3084 (a)(6) also states that a “proof of service affidavit” must be completed and signed, and included with the lien, by the person serving the Notice of Mechanics Lien to the owner.

If the lien is not served, § 3084(d) provides that the “mechanic’s lien [shall be] unenforceable as a matter of law.”

Additional Changes

§3146 adds the requirement of recording a “notice of pendency of proceedings” within 20 days after the filing of the mechanic’s lien foreclosure action.  §3084 also adds that reference to the user of the term “mechanics lien,” when it previously only referred to a “claim of lien.”

Zlien is Prepared

Zlien is prepared for the upcoming changes to California’s lien laws.  Our Claim of Lien documents are updated to include the new Notice of Mechanics Lien language, and service of the property owner will be made as required by the statute.

Zlien can help your company manage the sending of these notices, record delivery and sending notifications, and record affidavits of service.  Let us help you Lien Smarter.

Written by Scott Wolfe Jr See original article at California Lien Law Changes Effective January 1, 2011 – Are You Ready? Originally posted on the LIEN

In many states, if the property owner doesn’t know your company is working on a project, you may not have the right to lien.   And since it’s impossible for the law to know when a property owner does or does know a fact, laws around the country require contractors of various tiers to “notify” the property owner in writing that they have begun work.

This is called a preliminary notice or notice to owner (NTO).    Simply put, it is a written document usually sent certified mail return receipt requested that formally notifies the property owner and any higher tiered contractors that your company is on the project and that you expect to get paid.

In the event you’re unpaid, and you gave the required notice, the property owner and/or upper tiered contractors may be liable to pay you directly (after you file a lien).

If you don’t deliver the required notice, you’re largely out of luck, and you can only pursue payment from the person you directly contracted with.

That’s a very, very general overview of how preliminary notices work across the country.   It gets sticky when you look into the details of each state, however, as every state has different notice requirements and deadlines.

Zlien has great free resources for contractors, subcontractors, equipment lessors and suppliers looking for some clarity on whether notices are required and when they must be delivered.    Check out their free “Lien Law Punchlists,” organized by states.   They also have a “National State-By-State Lien Law and Deadline” publication.

Written by Scott Wolfe Jr See original article at Give Notice That You’re Working! Originally posted on the LIEN

The California legislature just passed an act to amend California Code § 3084 and 3146, relating to construction liens, and the new regulatory scheme is set to take effect on January 1, 2011.   While the effective date is still more than a year away, it’s important for potential claimants to understand and prepare for the changes.

You can read the Act amending the mechanics lien laws by clicking here.

Here are some key changes to the California lien laws:

Service of the Lien Upon Owner

Previously, there were no specific provisions requiring service of a recorded lien upon the property owner.   As Porter Law Group reported on a website bulletin, “[p]roperty owners have long complained that until they receive the foreclosure lawsuit they are often entirely unaware that a mechanics lien had even been recorded on their property.”

To address the concern, California Civil Code § 3084 will be amended to provide a specific statement titled “NOTICE OF MECHANICS LIEN.”  This identical statement must be printed in at-least 10-point boldface type on the lien itself….and it must be served upon the property owner contemporaneously with the filing of the lien.

Along with the printing of this text onto the lien, § 3084 (a)(6) also states that a “proof of service affidavit” must be completed and signed, and included with the lien, by the person serving the Notice of Mechanics Lien to the owner.

If the lien is not served, § 3084(d) provides that the “mechanic’s lien [shall be] unenforceable as a matter of law.”

Additional Changes

§3146 adds the requirement of recording a “notice of pendency of proceedings” within 20 days after the filing of the mechanic’s lien foreclosure action.  §3084 also adds that reference to the user of the term “mechanics lien,” when it previously only referred to a “claim of lien.”

Zlien is Prepared

Zlien is prepared for the upcoming changes to California’s lien laws.  Starting January 1, 2009, the Claim of Lien document will be updated to include the new Notice of Mechanics Lien language, and service of the property owner will be made as required by the statute.

Zlien can help your company manage the sending of these notices, record delivery and sending notifications, and record affidavits of service.

Subscribe to our blog to stay tuned to lien law changes across the country.  An alert will be posted to our blog before the change takes effect in 2011.

Written by Scott Wolfe Jr See original article at California Lien Law Forms, Procedures and Laws Changing on January 1, 2011 Originally posted on the LIEN