We just finished exhibiting at the CFMA 2012 Annual Conference in Orlando, FL, and we had a really terrific time talking with controllers, CFOs and other folks who care about the bottom line. We encountered a lot of large companies who simply do not have a mechanics lien policy or a very efficient way of managing and sending preliminary notices, which is to say that they send notices themselves and only intermittently.
I love talking to these folks about about the benefits of Zlien’s services, and one of the biggest selling features is that Zlien does research on every project to verify the title property owner. This is an often overlooked component of mechanics lien and bond claim compliance.
Accordingly, it was nice to wake up this morning and come across an article in the NC Construction Law, Policy and News blog about a June 2012 case underscoring the importance of property owner verification.
The North Carolina Court of Appeals case, Young & McQueen Grading Company, Inc. v. Mar-Comm & Assocs., Inc. et al., featured a general contractor mechanics lien claimant. The general contractor signed a contract with “Mar-Comm & Associates of North Carolina, LLC,” and the contract listed that company as the property owner. The catch is this, the property was actually owned by an affiliated organization, Mar-Comm & Associates, Inc..
This happens all the time!
Subcontractors, suppliers, general contractors, etc. – they always send us projects listing a certain party as the property owner when its not actually the case. Instead, the property owner is an affiliated person or company. Sometimes instead of “John Doe” the property is owned by John and Jane Doe,” or is in an entity like “John Doe Properties, LLC.” Or, as is the situation in the North Carolina case, the property is owned by an affiliated business entity.
Think this is semantics and doesn’t make a difference? Think again. Lawyers live and die by semantics.
In the North Carolina case, the general contractor just squeeked by and got to keep its mechanics lien claim. That decision came only after spending thousands upon thousands of dollars fighting in court, and could have very easily gone the other way in a stricter jurisdiction.
Getting the property owner is critical when filing a mechanics lien, but lien claims are not the only game in town. To preserve your lien rights, you may be required to deliver a preliminary notice to the property owner — and guess what? If you don’t get the notice in the exact right owner’s hands, you’ll be without lien rights.