Lien Laws & Out-of-State Construction Projects (Part V)

Today we conclude my series on differences in lien laws among the states you should consider when working in an unfamiliar state. We begin today with fraudulent liens. Florida has a statute addressing fraudulent liens, defined as liens in which: (1) the lienor has willfully exaggerated the lien amount, (2) the lienor has willfully included a claim for work not performed upon the property; or (3) the lienor has compiled his or her claim with such willful and gross negligence as to amount to a willful exaggeration.   Ramifications of fraudulent liens usually include voiding the lien and may include affirmative claims for damages against the lienor by the property owner. Some states make fraudulent liens a criminal violation, which may be grounds for disciplinary proceedings against the lienor’s construction license. Florida is an example of that.   Given the serious consequences of compiling a lien incorrectly, you should know the standards, ramifications, and defenses for fraudulent...

Lien Laws & Out-of-State Construction Projects (Part III)

In this third installment of my series of pitfalls in embarking on construction jobs in states in which you have not previously worked, we’ll consider differences between various state laws regarding preliminary lien notices and the claim of lien itself. First, the preliminary notices.

As a prerequisite to lien rights, almost every state requires lienors to send some form of preliminary notice to the owner early in the project. The preliminary notice introduces the lienor as a potential claimant from whom the owner must obtain releases of lien. However, the forms and requirements for service of these preliminary notices vary drastically from state to state. For example, in New Jersey, before filing a lien arising under a residential construction contract, a lien claimant must first file a Notice of Unpaid Balance and Right to File Lien within 60 days after the last date that work, services, material or equipment were provided for which payment is claimed.  In Wyoming, a prime contractor must post a notice on the construction site notifying lienors that a notice of the right to claim a lien must be served on the contractor. The lienor will lose its lien rights if it fails to comply.  And sometimes more than one notice is required, depending on the type of work and the classification of the lienor performing the work. Texas requires different preliminary notices, which may be governed by different time frames, depending, for example, on whether or not the lien involves specially fabricated goods. If you work in an unfamiliar state and don’t comply with these unfamiliar preliminary notice requirements, you could inadvertently lose your lien rights, even if you’re not paid at the conclusion of the job.