We know many of our Construction clients are well versed in the process necessary to secure lien and bond rights prior to litigation, but from year to year we find ourselves answering the same questions and dealing with the same issues because the lien law is complex and strict and replete with confusing mandatory deadlines. With that in mind, we find it useful to occasionally review the basics of securing liens and bond claims. Litigation may never occur, but if it does, here is a basic refresher of what you need to know to help us take the proverbial wind out of our opponents sails...before our case begins.
Notices to Owner/Notices to Contractor: If your direct contract is with anyone other than the owner of the improvements, this Notice must be served within 45 days of the first day of labor or furnishing of materials to the project. We recommend your NTO be served the minute the contract is signed, even if it is before work starts. If the Notice is too close to the 45 day mark, it can be argued that the Notice is untimely. The expense of attorney's time to argue a futile motion on this point far outweighs the cost of prompt service of the Notice itself.
Liens/Notices of Nonpayment: a Claim of Lien must be recorded, and if it's a bonded job your Notice of Nonpayment must be served, within 90 days of your last day of work or last furnishing of materials to the project. The 90 days is calculated from the last day of substantial work necessary to complete the contract. Punch list work, clean up, or just showing up for an inspection, alone, will not count as the last day. We recommend not waiting beyond the 60 day mark to prepare and record a lien. At that point trouble may already be brewing, and while owners or your customer might not like it, it is your right to protect yourself, and astute business owners should respect that.
Time to file suit: A suit to enforce a lien must be filed within one year of the date of recording of the lien. A suit to enforce a claim against a payment bond also must be filed within one year, however, the year is calculated from the last day of work or furnishing materials, not from the service of the Notice of Nonpayment. And even though your suit is still timely if filed on the next day beyond 365 if the 365th day falls on a weekend or holiday, do not be surprised to get served with a motion to dismiss for untimely filing. Lawyers are paid to defend these suits, and will attack these hard, fast deadlines, if they can.
In short, the cleaner and more secure your rights are before suit is filed, the less ammunition you give opposing counsel, and the less you will ultimately pay lawyers. Give your debtor no arguments, and they will be forced to deal with resolution of the facts, not procedural technicalities that can kill your claim.
