Comments for Â鶹tv´óƬ / Fri, 19 May 2023 15:23:01 +0000 hourly 1 https://wordpress.org/?v=6.4.3 Comment on We completed a change order. To submit it with our month requisition for payment, I see it can be on it’s own separate continuation sheet instead of changing the SOV for every CO. Is that correct and Is it subject to retainage as well? by Matt Viator /payment-help/question/we-completed-a-change-order-to-submit-it-with-our-month-requisition-for-payment-i-see-it-can-be-on-its-own-separate-continuation-sheet-instead-of-changing-the-sov-for-every-co-is-that-correct-and/#comment-3105 Thu, 08 Aug 2019 16:52:05 +0000 /payment-help/question/we-completed-a-change-order-to-submit-it-with-our-month-requisition-for-payment-i-see-it-can-be-on-its-own-separate-continuation-sheet-instead-of-changing-the-sov-for-every-co-is-that-correct-and/#comment-3105 That’s a great question. Regarding updating the schedule of values with change orders – if the specifics on billing change orders aren’t set out in the contract, it might be helpful to ask the customer how they should be billed. While the customer’s word might not be gospel, if they have a preferred method that makes logical sense and doesn’t negatively impact your rights, that might be the best way to determine how to proceed considering that one of the common reasons for a payment application being rejected is the organization of the application, itself.

Generally, though – change orders are reflected both by updating the schedule of values and the continuation sheet. And, amounts owed for change orders will generally be treated like other billable amounts, and as a result, retainage will typically apply.

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Comment on Does a Lien Waver constitute final payment? by Nate Budde /payment-help/question/does-a-lien-waver-constitute-final-payment/#comment-3104 Thu, 08 Aug 2019 16:34:00 +0000 /payment-help/question/does-a-lien-waver-constitute-final-payment/#comment-3104 This is great question. Lien waivers can be confusing, especially since most states (like New York) do not have required or standardized lien waiver forms, so waivers can say whatever the parties agree to include.

Because New York does not have statutory forms, parties need to be careful with respect to what they are signing. However, just because there are not specifically required forms, it doesn’t mean that there is no regulation of lien waivers in New York.

In fact, New York specifically does not allow lien rights to be waived prior to payment. According to New York law, “any contract, agreement or understanding whereby the right to file or enforce any lien created under article two is waived, shall be void as against public policy and wholly unenforceable” unless the waiver is required only simultaneously with or after payment has been received.

That being said, however, it is still a good idea to carefully examine “lien waiver” documents to make sure that they only apply to waiving lien rights, and do not overreach in other ways.

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Comment on I’ve sent out preliminary notices to my customer and homeowner for a completed job. I never received the payment, I then sent out an intent to lien notice. Now I have the homeowners lender information. Can I send the lender the stop notice? by Matt Viator /payment-help/question/ive-sent-out-preliminary-notices-to-my-customer-and-homeowner-for-a-completed-job-i-never-received-the-payment-i-then-sent-out-an-intent-to-lien-notice-now-i-have-the-homeowners-lender-informatio/#comment-3103 Thu, 08 Aug 2019 16:24:48 +0000 /payment-help/question/ive-sent-out-preliminary-notices-to-my-customer-and-homeowner-for-a-completed-job-i-never-received-the-payment-i-then-sent-out-an-intent-to-lien-notice-now-i-have-the-homeowners-lender-informatio/#comment-3103 I’m sorry to hear about that – nonpayment is frustrating, but it’s that much worse when you’ve taken all the right steps but not been paid. Before diving in – it’s worth noting that sending a copy of a Notice of Intent to Lien to a project’s lender can be an effective tool, too. While an owner and a contractor will typically take the threat of a lien claim very seriously, a construction lender will typically be very wary of threats to their investment – like a mechanics lien – and they can help put additional pressure on the parties who have failed to resolve the issue and make payment.

Preliminary notice
Further, before talking stop notice, let’s also look at the effectiveness of preliminary notices sent but not received since a stop notice can’t be sent unless preliminary notice was given. In California, under § 8116 of the California Civil Code, preliminary notice is effective upon mailing if it’s properly sent to the required recipients. Further, notice is effectively sent if it’s sent to the recipients’ residence or place of business under § 8108. Additionally, preliminary notice that’s sent to the owner’s address as shown on the direct contract, the building permit, or a construction trust deed will be effective, and notice sent to the contractor at the contractor’s address as shown on the building permit, on the contractor’s contract, or on the records of the Contractors’ State License Board under § 8108(a) and (d).

Re-sending Notices of Intent to Lien
Note that, even if preliminary notice is effective, it might be a good idea to resend Notices of Intent to Lien so that the contractor and owner actually receive them. Because it’s not a required notice, the real power in a California Notice of Intent to Lien is the effect it has on recipients. When they receive a Notice of Intent to Lien, they know that the claimant means business and isn’t afraid to take whatever steps are necessary to get paid. So, if there are other addresses where a contractor and owner can be found, it might be wise to send them a Notice of Intent to Lien at an address where they’ll receive it.

Stop notice
Under § 8530 of the California Civil Code, a claimant who would be entitled to file a mechanics lien is also entitled to send a stop payment notice to the project’s construction lender. This notice, when sent, calls for the lender to stop releasing payments until the dispute is resolved. A stop notice can be “bonded” (meaning, paired with a surety bond that equals 125% of the amount of the claim) or “unbonded” (sent without also securing a surety bond). Note, though, that under § 8536(b), a lender can decide not to withhold funds if (1) the stop payment notice is unbonded, or (2) if the claimant is someone other than a direct contractor and if the project has a payment bond on record. Otherwise, the lender must withhold payment.

When necessary, mechanics liens typically lead to payment
Nobody likes mechanics liens. But, sometimes they’re necessary. If preliminary notices, Notices of Intent to Lien, and even stop notices aren’t effective, pursuing a lien claim just might be. After all, mechanics liens are the strongest payment recovery tool in the construction industry. It’s unfortunate when a lien must be filed, but when push comes to shove, filing a lien will often get the job done. More on that here: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid.

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Comment on How should I proceed with a project in which our prelim was filed late and the mail returned? by Matt Viator /payment-help/question/how-should-i-proceed-with-a-project-in-which-our-prelim-was-filed-late-and-the-mail-returned/#comment-3102 Thu, 08 Aug 2019 15:27:15 +0000 /payment-help/question/how-should-i-proceed-with-a-project-in-which-our-prelim-was-filed-late-and-the-mail-returned/#comment-3102 I’m sorry to hear about that missed deadline. Before diving in – I should note that I’m not able to advise you on how you should proceed in your particular situation. However, I am able to provide some information that I think will be helpful for you to determine what options might make the most sense under your circumstances.

First, as you may know, late preliminary notice will still be partially effective in California. When notice is sent late, it will be effective to preserve the right to lien for the 20 days before the notice was sent, as well as the work performed afterward.

Second, notice is generally effective as long as it was sent, as required, to the appropriate parties. The actual receipt of the notice is typically less important as long as the notice was sent in the manner required to the correct recipients at the correct address. Specifically, under § 8116 of the California Civil Code, when notice is given by mail, it’s considered “given” when it’s deposited in the mail. Of course, to be effective, it must be mailed to the appropriate address. Under § 8108 of the California Civil Code, the proper address for a contractor will be at the contractor’s residence, place of business, or at “the contractor’s address shown on the building permit, on the contractor’s contract, or on the records of the Contractors’ State License Board.” So, if the notice was properly mailed to one of those addresses, generally, that notice will still (at least partially) preserve the right to lien.

Regarding a preliminary notice that could not be delivered – it would likely be wise to obtain a notice which was sent but not delivered. That should help to provide some clarity as to why the notice could not be delivered, and that should help a claimant decide whether or not they should proceed with their claim. If there’s no issue with the mail piece and if it was sent to a correct address, that would seem to confirm the ability to file a lien (to the extent that one is available). More importantly, that documentation would be valuable in a dispute over a filed mechanics lien.

Lastly, keep in mind that many potential lien claimants find that merely threatening or warning that a lien will be filed can be enough to compel payment without the cost or headache of an actual lien filing. By sending a document like a Notice of Intent to Lien to both the owner and the prime contractor (and/or their customer), a would-be claimant can make sure their issue is known. Plus, when the owner is involved, that can help put additional pressure on the contractor and/or customer to resolve the dispute before the property title is encumbered by a lien claim. More on that idea, here: What Is a Notice of Intent to Lien and Should You Send One?

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Comment on Contractor Termination and Homeowner paid him by Matt Viator /payment-help/question/contractor-termination-and-homeowner-paid-him/#comment-3101 Thu, 08 Aug 2019 14:57:42 +0000 /payment-help/question/contractor-termination-and-homeowner-paid-him/#comment-3101 Good question. Alabama is typically considered an “unpaid balance” state (rather than a “full price” state). Meaning, sub-tier lien claimants will usually only be entitled to file a mechanics lien to the extent that the project’s prime contract was owed payment but not paid. i.e. If the prime contractor is paid in full, generally, their subs and suppliers won’t be entitled to lien claims – they’d have to go after that contractor if they’d already been paid for the work. So, to some degree, fears about liens from subs and suppliers might be quelled a bit.

However, note that if subs and suppliers properly sent a Notice to Owner, they’ll be entitled to file a mechanics lien for the full value of what they’re owed but unpaid unless the owner disclaimed responsibility upon receiving that Notice to Owner. Â鶹tv´óƬ discusses Alabama preliminary notices and the potential for “full price” liens, here: Alabama Does Require Preliminary Notices — And Strict Compliance Required.

In any event: regardless of whether a lien claimant is actually entitled to a valid and enforceable mechanics lien, that claimant can typically actually have their lien filed. Recorders offices generally have neither the authority nor the bandwidth to investigate each claim made. Granted, if a filed lien is improper, it should be relatively easy to challenge the filed lien, and the claimant might even have to pay for the owner’s attorney fees and maybe even damages if they’ve filed an improper lien.

With all of the above in mind, note that Alabama owners will typically have a bit of leverage over their contractors in making sure that no subs or suppliers file lien claims. Under § 35-11-227(b) of the Alabama mechanics lien statute, a contractor will have to defend any legal action – like an action to enforce a filed lien – on behalf of the owner. So, if a lien is filed and a legal action erupts from that filing, the contractor will be on the hook for the owner’s defense. Reminding a contractor of this fact can help convince that contractor to try and smooth things over with their sub.

I hope this information has been helpful. I think these resources should be valuable, too:
(1) I Just Received a Notice of Intent to Lien – What Should I Do Now?
A Mechanics Lien Was Filed on My Property – What Do I Do Now?

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Comment on can i file Lien? I did not send preliminary notice in march on a verbal contract by Matt Viator /payment-help/question/can-i-file-lien-i-did-not-send-preliminary-notice-in-march-on-a-verbal-contract/#comment-3100 Thu, 08 Aug 2019 14:02:07 +0000 /payment-help/question/can-i-file-lien-i-did-not-send-preliminary-notice-in-march-on-a-verbal-contract/#comment-3100 That’s a good question, and it’s one we get often here at the Expert Center.

In California, most construction businesses must send a preliminary notice in order to later file a mechanics lien. Specifically: any party (other than a laborer) who was hired by someone other than the property owner must send a notice to both the owner and the prime contractor. When hired directly by the property owner, a contractor will only need to send a preliminary notice to the lender, if one is present on the job. In both cases, a preliminary notice must be sent within 20 days of first performing work. Sending notice late will still be partially effective, though. Late notice will preserve the right to lien for any work done within the 20 days before sending the notice, as well as any work done after. If a claimant is required to send a preliminary notice but fails to do so, that claimant will not be able to file a valid and enforceable lien claim later on in the project.

Another consideration to keep in mind is the deadline to file a California mechanics lien. In California, the lien deadline will depend on whether the lien claimant was hired directly by the property owner or hired by someone else – like a contractor.

-For direct contractors: the deadline will be either: (1) 90 days from the completion of the project; or (2) 60 days from when an owner files a Notice of Completion or Cessation (if one is filed).

-For everyone else (subs, suppliers, vendors, laborers, etc.): the deadline to file a lien will be either: (1) 90 days from completion of the work of improvement; or (2) 30 days from when a Notice of Completion or Cessation was filed. Whatever deadline applies – if that deadline comes and goes before a mechanics lien is filed, the right to file a valid and enforceable mechanics lien will no longer exist. More on Notice of Completions here: How Do You Know If a Notice of Completion Was Filed on a Project?

Finally, note that California mechanics lien claimants are entitled to file a mechanics lien, regardless of whether their contract was in writing. However, the above requirements still apply.

Keep in mind – even when mechanics lien rights might not be available, there are always other options available for recovery.

Lastly, here are some resources I think might be helpful moving forward:
(1) California Preliminary Notice Guide and FAQs
(2) California Mechanics Lien Guide and FAQs
(3) How to File A California Mechanics Lien – Step By Step Guide To Get You Paid

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Comment on why does your website say you’re 90-day deadline to file a lien for the state of Idaho is from when work is substantially done? by Nate Budde /payment-help/question/why-does-your-website-say-youre-90-day-deadline-to-file-a-lien-for-the-state-of-idaho-is-from-when-work-is-substantially-done/#comment-3099 Thu, 08 Aug 2019 13:35:22 +0000 /payment-help/question/why-does-your-website-say-youre-90-day-deadline-to-file-a-lien-for-the-state-of-idaho-is-from-when-work-is-substantially-done/#comment-3099 Thanks for reaching out. I’d be happy to provide some more information regarding the deadline by which a lien is required to be filed in Idaho, and where such information comes from.

As stated in the Idaho mechanics lien resources section to which you refer, the deadline to file a mechanics lien in Idaho is 90 days from the claimant’s “completion of the labor or services, or furnishing of materials” for which the lien is claimed. This provision is set forth by .

Like you mention, the statute itself doesn’t specify exactly what is meant by “completion.” In order to understand how “completion” is determined and defined a party must look to court decisions. Courts are tasked with interpreting statutes, and the court’s decisions set out the “case law” regarding how the statutory law is applied.

In Idaho, case law provides additional helpful information related to mechanics lien deadlines. In the Idaho Supreme Court held that: “It is established that ‘trivial’ work done or materials furnished after the contract has been substantially completed will not extend the time in which a lien claim may be filed.” This is because, as stated again by the Idaho Supreme Court, in Gem State Lumber Co. v. Witty, 217 P. 1027 (1923) “if trivial work could extend the time for filing a lien, ‘in every case in which a right to lien has ever existed, the title to the property may, for an indefinite period, remain in an unsettled and not ascertainable condition.”

While the court in Mitchell noted that the “period for the filing of liens cannot be extended or revived by the furnishing of trivial labor or materials” the period may be extended by the furnishing of labor or materials that “were reasonably necessary to complete construction according to the terms of the contract.”

Accordingly, it appears that the deadline is as set forth by the resources. In Idaho a claimant has 90 days from the substantial completion of his furnishing of labor or materials to the project in which a valid and enforceable lien may be filed. And, while this deadline may not be extended by trivial work, but it may be extended by returning to complete work that is necessary to complete the job.

You can read more about Idaho mechanics lien deadlines in this blog post. As with all of the information presented on the site, the deadline information is not advice tailored specifically to your situation – it is general information that you can use to be better informed. In all cases in which you have a need for specific legal advice you should ask a local attorney for assistance.

I hope you are able to get paid and to resolve your dispute with the homeowner.

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Comment on Contractor Affadavit by Matt Viator /payment-help/question/contractor-affadavit/#comment-3098 Thu, 08 Aug 2019 13:27:01 +0000 /payment-help/question/contractor-affadavit/#comment-3098 Good question. Illinois prime contractors don’t really have a traditional preliminary notice requirement, like subcontractors do in the state. However, if an owner requests that the contractor provide an affidavit under § 60/5 of the Illinois lien statute (more on that affidavit below), then a contractor must provide one in order to later preserve the right to lien.

Before receiving payment, § 60/5(a) of the Illinois mechanics lien statute states that, if it’s requested by the owner, a contractor must provide a list of “the names and addresses of all parties furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work, and the amounts that are due or to become due to each.” Essentially, this is to put the owner on notice of all potential claims for payment by subcontractors, suppliers, laborers, etc. But, as mentioned above, it’s only required if the owner has first requested it. The first sentence of § 60/5(a) states that it’s the duty of the owner to request it.

In addition to the requirements above, under § 60/5(b), a prime contractor providing work on an owner-occupied single-family residence must also include a disclaimer within their contract with the owner alerting the owner of their right to request that list.

I hope this information was helpful! Keep in mind, an owner’s first instinct once a mechanics lien will often be to challenge the filed lien – but that doesn’t necessarily mean there’s any issue with the claim. Â鶹tv´óƬ explores that idea here: My Lien Was Challenged — What Do I Do?

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Comment on What Are The Different Types of Construction? by Construction Is Work What - Jumboloansadvisor /blog/types-of-construction-projects/#comment-3097 Thu, 08 Aug 2019 05:40:58 +0000 /blog/articles/?p=15693#comment-3097 […] Types of Construction Projects: What Are They and Why You. –  · Whenever construction work is being performed to a single-family residence or a residential facility with (usually) less than 3 or 4 units. If you are working on an apartment complex this would more likely be considered a commercial project instead of a residential project. […]

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Comment on My question relates to the impact of TX Constitution Art 16, Sect. 50(a)(5)(C)’s impact on filing a mechanics lien in TX by Matt Viator /payment-help/question/my-question-relates-to-the-impact-of-tx-constitution-art-16-sect-50a5cs-impact-on-filing-a-mechanics-lien-in-tx/#comment-3096 Wed, 07 Aug 2019 20:59:28 +0000 /payment-help/question/my-question-relates-to-the-impact-of-tx-constitution-art-16-sect-50a5cs-impact-on-filing-a-mechanics-lien-in-tx/#comment-3096 That’s an excellent question. Many businesses fail to consider homestead requirements when deciding on whether or not to proceed with filing a mechanics lien claim on residential property. Those requirements are reflected at § 53.254 of the Texas Property Code, which Â鶹tv´óƬ discusses here. However, I believe the section you’re referring to does not affect mechanics liens that involuntarily arise as a result of construction work performed but unpaid.

The section of the Texas Constitution cited above appears to relate to voluntary liens granted in exchange for the improvement of property. As in, when a contractor would accept an interest in the property, voluntarily, in exchange for the promise of payment. While, on its face, the section doesn’t limit itself exclusively on voluntary construction liens – most of the content available online relating to Art. 16, Sect. 10(a)(6) refers to things like voluntary loans and refinancing – including from Fannie Mae. Plus, I’m a bit wary of its applicability considering that, under section(D), to give rise to a homestead lien, the contract could be executed “only at the office of a third-party lender making an extension of credit for the work and material, an attorney at law, or a title company.”

So, it appears that in order to enter into a contract that grants a lien on the homestead project property in exchange for work performed, the requirements under Art. 16, Sect. 10(a)(6) must be met. But, the requirements for filing an involuntary mechanics lien against a homestead are contained at § 53.254 of the Texas Property Code.

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