Mechanical Liens

A recent “friends of the court” brief on the part of the American Subcontractors Association and its Minnesota affiliate/chapter is seeking to overturn an appeals court decision that could leave subcontractors in a precarious spot.

A recent appeals court decision in Engineering & Construction Innovations, INC. v. L.H. Bolduc Co. Inc has overturned a previous district court and jury decision that barred a general contractor from shifting liability for damage caused during a project. The subcontractor in question alleges it had no part in the damage. ASA noted that a jury found the general contractor at fault for the damage, to a pipeline.

ASA is now urging the Supreme Court of Minnesota to uphold its interpretation of the state’s anti-indemnity law in order to protect subcontractors from such liability.

"Engineering & Construction Innovations, Inc., v. L.H. Bolduc Co., Inc. is one of those unfortunate cases where there’s damage during construction, everyone runs from liability, there’s litigation, and there’s no real clear cut answer as to who should or who is going to pay for the repairs,” said Greg Powelson, director of NACM’s Mechanic’s Lien and Bond Service (MLBS). “It doesn’t surprise me that the prime tried to push down liability, but I think the case [appeals court ruling] will be overturned. I don’t think it would be a surprise to anyone if, in the end, the subcontractor is not held liable for damages it didn’t’ cause. I believe, at the end of the day, logic and cooler heads will once again ultimately prevail, and the prime will have to pay for the damage.”

Brian Shappell, NACM staff writer

Bucking recent trends both nationally and within the state, Oklahoma has simplified its Mechanic’s Lien statute. One expert says its a case of common-sense prevailing and hoped it is a harbinger of similar changes to come in other states in upcoming months and years.

Senate Bill 277,  signed into law by Governor Mary Fallin on April 6, 2011, became effective Tuesday and changed the threshold for a notice to a value of $10,000. It also repeals the pre-notice requirement for notice on residential property -- the 75-day from last furnishing is now effective for both residential and commercial. Greg Powelson, Director of NACM’s Mechanic’s Lien and Bond Services, hailed the move as "a real victory for suppliers and sub contractors.

"The Oklahoma statue has been difficult to manage for years," he said. "For the first time, suppliers and subcontractors know their deadlines and have consistency.”

(Note: More on this story in Thursday's NACM eNews).

Source: NACM staff

During its 2011 session, the Virginia General Assembly passed two important changes to bond and claim requirements on Virginia Public Construction Projects, according to Greg Powelson, president of NACM’s Mechanic’s Lien & Bond Services (MLBS). House Bill 1951, effective July 1, raised the minimum amount required for bid, performance and payment bonds; the new minimum contract amount increased from $100,000 to $500,000 for non-transportation construction projects. “If the bond requirement is waived on projects between $100,000 and $500,000, the prospective contractors must be prequalified,” said Powelson.  “This means that subcontractors and vendors on non-transportation construction projects under $500,000 should not assume that a bond is in place and should investigate that issue before agreeing to payment and credit terms.”

Senate Bill 1424, also effective July 1, reduced the time within which lower tier subcontractors and vendors must provide notice to the contractor, from 180 days to 90 days. Therefore, any claimant that has a contract relationship with a subcontractor or vendor, but no contract relationship with the contractor may only pursue a payment bond claim if it first gives written notice to the contractor within 90 days from the day on which the claimant performed the last of the labor or furnished the last of the materials for which it claims payment.

To learn more about this change, and to stay up to date on any future changes to state construction and lien laws, visit MLBS here.

According to Greg Powelson, president of NACM’s Mechanic’s Lien & Bond Services, the New York State Legislature is considering a bill that would allow suppliers and contractors to file a mechanic's lien for retainage within 90 days after the date that the retainage was due to be released. The bill passed the assembly on May 3, 2011 and has been delivered to the Senate for consideration.

“This is an amendment that will be a welcome addition if passed,” said Powelson. “Currently, suppliers and contractors must file their lien on the project regardless of whether the retainage is all that is left within the current strict statutory time frames (4 months for single family dwellings and 8 months for all other private projects). The lien can often create problems for the supplier or contractor that is still on the job because the owner will demand removal of the lien even though the lienor had no choice but to lien or waive its lien rights. This new statute could allow the unpaid supplier or contractor to continue to wait for retainage without risking waiving his right to lien.”

To get news like this and even more up-to-the-minute updates on construction and lien law, check out MLBS here.