MAINE MECHANIC S LIEN LAW

Transcription

1 MAINE MECHANIC S LIEN LAW Go to: Maine Mechanic s Lien Forms More Info: Section Contents Pre-lien Notice(s) Name of Notice Who Must Use This Notice When How to Serve Verified or notarized? Section Contents Maine Mechanic s Lien Who is Entitled to a Lien? When to File/Record Where to File/Record How to Serve Amount of Lien Property Subject to the Lien Furnishing Information Verified or Notarized Priorities Lien Release Bond Miscellaneous Issues Section Contents Lawsuit to Foreclose Lien Page 1 of 10

2 Introduction When Where to File Arbitration Need a Lawyer? General Notes Be Careful: The courts consider a Maine mechanic s lien to be a privilege and not a right. You receive its benefits only if you strictly adhere to the state law requirements. Bottom line: miss a deadline by one day and you have lost it. Unlike other areas of the law where you can argue equities, find technical exceptions, and lawful excuses, there is no forgiveness here. In this case, knowledge is not only power, it=s a necessity. In this State you will be writing down dates for at least three documents: a) Notice to Owner; b) Maine Mechanic s Lien; and c) lawsuit to foreclose the mechanic=s lien. Write down all the deadlines in your calendar. Use a highlighter or red pen. If you have a staff, use a fail safe system by doubling up and putting it in their calendar also. This reminds you twice. The first calendar entry should be two weeks before the due date as a preliminary reminder. On the second calendar entry, do a white lie to yourself. Put the due date as one week before it is actually due as insurance in case you get busy or need legal advice. Time is money. You will waste a lot of valuable time running around and doing it at the last moment, as opposed to doing it early. PRELIEN NOTICE If you are a contractor (general or sub) or material/equipment supplier and do not have a direct contract with a residential owner, you may, but are not required to, serve a prelien notice. This procedure is totally optionally and there is no mandatory requirements. Subject to the qualification described below, you can still file a Maine mechanic s lien later, even if you do not serve this prelien notice. This having been said, it is highly recommended that you nevertheless serve the prelien notice. Page 2 of 10

3 This prelien notice may be served only on residential projects or projects involving commercial, business, or industrial purposes where the owner resides on the premises. If this is not the case, there is simply no need to serve a prelien notice. So, why is it a good idea to serve such a notice? Unless the notice is given to the owner, that owner is liable to the subs and suppliers only if there is still money due under the contract with the general contractor. This means that if the owner still owes the general contractor some money at the time you serve the prelien notice, the owner will be liable to you and will have to pay under your later-filed mechanic s lien. It is therefore important to serve these notices as early as possible. If the owner has already paid the general everything under the contract, there is nothing left for you to receive, and you will get nothing in the later filing of your Maine mechanic s lien. This is meant to protect the owner from paying twice. Name of Notice: Notice to Owner. Who Must Use this Notice: When: How to Serve: All contractors, subcontractors, laborers, and material/equipment suppliers who do not have a direct contract with the owner or the owner s agent. For example, a general contractor with a direct verbal or written contract with the owner who acts as the prime is not required to give the Notice. See Time Deadlines table. Maine law does not require the filing or recording of the prelien notice. It only requires that a copy be Agiven@ or Aprovided@ to the owner or that person s agent. The manner of service is not specified. In line with other states, it is therefore recommended that it be served on the owner by certified mail, return receipt requested. Verified or Notarized?: A verified notice simply means you sign it and are representing the contents are true and accurate. A notarized notice is signed in front of a Notary Public or other official. A verified notice is all that is required in this state. The prelien notice does not have to be notarized or verified. MAINE MECHANIC S LIENS Page 3 of 10

4 Name of Lien: Notice of Lien Who Must File the Lien?: A Maine mechanic s lien is not required to be filed or recorded by a general contractor or any subcontractor, material supplier or equipment supplier who has a direct contract with the owner. This means that typically, only subcontractors and suppliers are required to file the lien. Those persons must therefore go through two steps: (1) filing the mechanic s lien; and (2) filing a lawsuit to foreclose the mechanic s lien. General contractors, or other persons who have a direct contract with the owner, only have one procedural step: directly filing a complaint for their unpaid labor and materials. Who is Entitled to a Lien: When to File/ Record: Where to File/Record: Maine has a broad statutory scheme to protect almost anyone who has conferred labor, materials, and equipment to the job site. Some states distinguish between the various layers or tiers of contractors, subcontractors, or suppliers. For example, some states prevent a lien by a sub-sub-subcontractor or material supplier who has a contract with a sub-sub-contractor. Those states consider these persons to be too remote. Maine has no such limitation. The lien laws also protect surveyors, architects, engineers, real estate licensees, as well as equipment renters and providers of equipment repair parts. A lien is also allowed for repair services (as opposed to building permanent improvements) as well as house movers. See Time Deadlines table. The Notice of Lien is filed in the Registry of Deeds in the county in which the project is located. How to Serve: The Maine mechanic s lien statutes were amended in 2005 to make clear how the lien is to be served. You can do so by regular first class mail (no need for certified) sent to the owner(s). Simply go to a post office and mail it after getting from the clerk at the counter a certificate of Mailing (much cheaper than certified mail). Keep that certificate in your files. It is conclusively presumed that the owner has received it when you get such a certificate. Page 4 of 10

5 Amount of Lien: Primarily for unpaid labor, material, and equipment supplied. Also includes court costs, although the Maine statute is very specific as to what is and is not included. Attorney=s fees are not recoverable in an action to foreclose the mechanic=s lien. A general contractor s lien will usually be limited to the amount of the contract. A subcontractor s lien will also typically be based on the price in the contract between the subcontractor and general. However, if the market value of labor and materials is less than the contract amount, the lien will accordingly be reduced for a subcontractor as to that value. On the other hand, typical items such as profit and overhead, taxes, and insurance are considered part of that Areasonable price@. Although an exact prediction is not always possible, it is presumed that in most cases the contract price will prevail, especially if it was fully negotiated. A lien cannot include indirect or consequential damages, including lost profits on other jobs, delay damages, impact damages, and other consequential damages. Property Subject to the Lien: Most states provide that mechanic s liens apply only on private project and that there are no liens allowed on public projects, whether state, federal, or local. Maine is an exception. Although there are no mechanic s liens against state or federal construction projects, mechanic s liens are allowed on local construction projects (cities, towns, counties, school districts, and other municipal corporations under Section 3251). Obviously, liens are also allowed on private projects. For tenant improvement work, a lien can go against the tenant s interest in the lease as well as the tenant s property. The lien will not go against the owner s or landlord s interest, unless that person has knowledge of and consented to the construction work. Furnishing Information: Upon request, the general should furnish others with information about the owner so the required notices and lien can be filled out properly. Page 5 of 10

6 Verified or Notarized?: Priorities: A verified notice simply means you sign it and are representing the contents are true and accurate. A notarized notice is signed in front of a Notary Public or other official. A verified notice is all that is required in this state. The lien must be both notarized and verified. It does not make any difference who files a lien or lawsuit first. All lien claimants, whether generals, subs, or suppliers, share equally in the proceeds of the foreclosed property on a Apro rata@ basis. In other words, it is based not upon who files first, but upon the overall percentage of the lien in relationship to the total amount claimed by all the claimants. Lien Release Bond: Maine does allow the release of a mechanic=s lien by the filing of a surety bond. You should consult competent legal advice in this regard or a surety bond company for further details. Miscellaneous Issues: Definition of Completion : Since subcontractors and suppliers only have 90 days from the completion of the project to file their liens, the definition of completion becomes crucial. Warranty or Acall-back@ work will not extend the lien period. In other words, going back and fixing what you have already performed will not extend the period. To be safe, always assume an earlier completion date so your lien will be preserved. Owners Defenses: An owner can prevent a Maine mechanic s lien by serving a written notice to subcontractors and suppliers that the owner will not be responsible for unpaid labor and materials or future liens. However, this notice has to be given before the labor and materials are first furnished. The owner, obviously, cannot serve this notice as to contractors or suppliers that it has a contract with. This is under Section If you are a subcontractor, you might wonder why in the world you would ever perform work in Maine. The answer is simple. Page 6 of 10

7 Such notice must be given before you start your work which would give you the opportunity of declining the work. For the notice to be effective, it would also require the general contractor to give the owner a list of subcontractors and suppliers. This does not often occur. And, it may have repercussions on the general contractor. That person may not want to perform work as well because of the absence of subcontractors who have opted out. But be careful. If the owner gives notice of non-responsibility for mechanic s liens and later changes his or her mind, make sure that is clearly expressed in writing. Home Improvement Contracts: Pay particular attention to requirement in Maine as to home improvement contracts. For residential construction of more than $3,000, there must be a written and signed home improvement contract between the general contractor and owner. It must contain the following provisions: The name, address and phone number of the contractor and the owner(s); The location of the residence or property; The estimated start date and estimated date of substantial completion; The contract price; The method of payment; A general description of the work and materials to be used; A warranty statement (providing that the work will be free from faulty materials, done to code, and performed in a skillful manner); A dispute resolution provision (selecting arbitration or mediation); A change order provision (requiring all contract changes to be in writing an signed by the parties); Certain disclosures regarding insulation and energy efficiency standards (if applicable); Consumer protection information (i.e., a copy of the Attorney General s consumer protection information on home construction and repair, which includes information on contractors successfully sued by the State); and Attorney General s website, address and phone number. As to change orders, they must be in writing, signed by the parties, state the previous contract price and revised price, and describe the purview of the change. Page 7 of 10

8 A down payment of more than one-third of the total contract price is forbidden. Remedies for failure to comply can be onerous. The failure to so comply may be considered a prima facie case of unfair trade practices under Maine law, which may subject the contractor to damages, as well as a fine of up to $1,000 per violation. LAWSUIT TO FORECLOSE MAINE LIEN Introduction: As described above, although a general contractor or other person who has a direct contract with the owner is not required to file a mechanic s lien, that person is required to bring a foreclosure action. When: Within 120 days of the date on which the last labor, services, or materials were provided to the project. Thus, subcontractors and suppliers have 90 days after completion of the project to file their lien and then an additional 30 days to bring their complaint in court to foreclose. Note also there is a special rule for subs and suppliers. They must wait for at least 30 days after filing their lawsuit to enforce the lien to serve the owner (no such rule for a general). This apparently gives extra time to negotiate a settlement before lawyers get involved. Where to File: Arbitration: In either the superior or district court in the county in which the project is located. Many construction contracts state that all disputes will be decided by binding arbitration, as opposed to a court proceeding by judge or jury. In fact, it has long been a tradition to do so in the construction industry. Arbitration is usually quicker and less costly, especially because it cuts down on expensive discovery. The decision is final and binding, with no right to appeal. You lose your right for a jury trial, but few contractors want that in the first place. You usually pick an experienced construction attorney or retired judge to hear the case in their conference room. It is just like a court proceeding with the same general rules of evidence, but more informal. Page 8 of 10

9 On the other hand, you can only foreclose your lien through a court proceeding, not arbitration. So, how do you keep your arbitration rights and at the same time preserve your lien rights? Simple. You bring a lawsuit to protect the lien and then immediately request the court to stay the court proceedings. When arbitration is done, you go back to court and turn the arbitration award into a judgment. Need a Lawyer? In this country, every individual has the statutory right to represent themselves. This means they can prepare all necessary papers, appear at hearings, and actually try the case. In so doing, the court considers you to be acting either in pro se or pro per. Before making this decision, consider the following factors: 1. You are a professional and thoroughly know the ins and outs of not only the construction industry but of the project itself. The best lawyer on his or her best day will probably not know more than 50% of what you know. 2. How is your public speaking abilities? If you are uncomfortable speaking to a group, you will even more uncomfortable in court or arbitration. You could be the sharpest wit in town but may not be able to present your arguments. Remember, appearing uncomfortable is perceived as having deficiencies in your case. People usually think that if you are not comfortable about your own facts, then they must not be that strong. 3. If the other side has a lawyer, you might want to think twice about representing yourself. You will certainly know the facts quite well, but you may be blindsided by legal technicalities. 4. You may also want to think twice if this is a really nasty and emotional case. In other words, if the other side is going for blood. Having a lawyer can shelter you from this emotional trauma. No matter how strong you are, lawsuits are taxing not only on your time, but on your physical and emotional energies. 5. If you have a good case in which you have complied with technicalities and performed good work, you are essentially engaging in a collection action. These actions are Page 9 of 10

10 typically very simple because there are few defenses or defects alleged by the other side. It makes it easier for you to represent yourself because it is more a question of when and how much they will pay as opposed to whether you will win at all. 6. If you have a binding arbitration provision, you may consider representing yourself. These proceedings are much more informal and the arbitrator tends to give you more leeway. There are also fewer rules and not they are usually not quite as strict. 7. You could consider representing yourself but get advice along the way from a lawyer. It is much cheaper that way. On the other hand, the lawyer cannot watch over every move and you might slip up. Many times lawyers can also help you with preparing the forms, simply putting your name on the pleading. You can also bring in your lawyer at the end to actually try the case. 8. Judges and courts do not give legal advice. They only help you with what forms to use. However, clerks can be invaluable in steering you in the right direction as far as where to file, time limitations, the nature of the form or pleading, etc. But, remember when it comes right down to the ultimate advice, they cannot help you. 9. Judges usually treat you the same as an attorney which means they expect strict compliance with the rules. Although some judges give you more slack, don t count on it. 10. The biggest dilemma is whether you should hire an attorney for a smaller case, typically in the $5,000 to $10,000 range. You have to watch this because you may eat up that amount in attorney s fees. You never make money on lawsuits, only lawyers do. Try to settle for the best price you can get and move on. Prepared by: Thank you for your business. Page 10 of 10