Ways to Lose Your Mechanics and Materialmen Lien Rights in Alabama
For contractors, subcontractors, materials suppliers, and others who provide labor, services, or goods for the improvement of real property, a mechanic’s lien can be an extremely powerful tool for securing unpaid balances on construction projects.
By properly recording and enforcing a mechanics lien or materialmen lien, these parties can force the sale of the property to obtain payment for their unpaid contributions even if the property owner defaults. However, there are also a number of ways lien claimants can inadvertently lose their lien rights in Alabama if key procedural requirements are not strictly followed.
Understanding Alabama’s Mechanics Lien and Materialmen Lien Landscape
In the realm of construction, liens act as a safety net ensuring those who labor or provide materials are rightfully compensated. But nuances matter, especially when differentiating between types of liens.
Definition of a Mechanics and Materialmen Lien
A statutory lien on real property for a laborer or material supplier who has furnished labor or goods for construction or improvements on the real property.
Unpaid Balance Lien and Full Price Lien
- Unpaid Balance Lien: This type is rooted in the idea that a lien claimant can only claim the unpaid balance owed by the owner or proprietor, regardless of the initial agreed amount or any overages.
- Full Price Lien: This variant, often more encompassing, allows the lien claimant to have a lien for the full price of the materials furnished. Understanding the distinction can significantly influence the amount recoverable.
The amount recoverable depends on the work performed, your relation to the owner or proprietor, the terms of your contract, and the steps you take to preserve your lien rights.
Parties Involved
- Lien Claimant: Whether you’re a general contractor, an individual craftsman, or a large supplier, if you’re asserting your right to payment through a Mechanics or Materialmen lien, you’re a lien claimant.
- Property Owner or Proprietor: At the other end of the lien spectrum, the property owner’s rights and responsibilities are also defined by the lien process.
- Contractor or Subcontractor: These entities play a significant role, as they are often the ones directly involved with the project. Their actions, or lack thereof, can directly impact the validity of a claimant’s lien.
- Construction Lender: The financial institutions or individuals that fund construction projects also have a stake in the mechanic’s lien process. Their rights and secured interests may impact a lien claimant’s prospects for recovery on their lien.
Main Legal Provisions
As a derogation of common law, lien claimants must strictly comply with the statutory provisions to protect their lien rights. To truly grasp the mechanics of mechanics and materialmen liens in Alabama, one needs to dive into legal sections like Ala Code § 35-11-210 or Ala Code § 35-11-218 and case law interpreting all mechanics and materialmen lien code sections. These provisions outline the requirements and procedures and case law provides further clarification on how the provisions are applied.
The Importance of Proper Notices when Filing the Lien
Ensuring your notices are in order is more than just “paperwork”, it is a pivotal step that must be taken in order to assert your legal rights later on.
Preliminary Notice
In order for some lien claimants to make use of the mechanics and materialmen lien process, they may be required to provide a preliminary notice to the owner or proprietor. It informs the property owner or proprietor about your involvement in the project and seeks to secure your right to file a lien if unpaid. This notice must be filed within 30 days of commencing work.
It’s essential to understand the difference between the “preliminary notice” and “notice to owner” requirements. While the former often serves as a generic introduction, the latter might have specific details or be mandated at different project stages.
Notice of Intent
Before you file a lien, it’s courteous, and often required, to let the property owner know of your intentions. It’s a final call for a resolution before filing and recording a lien on the real property and may be a prerequisite to a lien claimant exercising their lien rights.
Deadlines: A Lien’s Best Friend or Worst Enemy
It is crucial that a claimant pay very close attention to the applicable lien deadlines. The deadlines depend on the nature of a lien claimant’s services, the type of contract that the lien claimant has, and who the claimant’s contract is with.
Filing Deadlines
Just completing your work doesn’t secure your rights. Liens must be filed within a certain amount of time of the last day of work or delivery of materials. Returning to a project to perform warranty work usually will not extend the applicable deadline. Where you file also matters. The office of the judge of probate in the county where the property is located is the designated location.
Additionally, having a direct contract with the owner can influence these timelines. A direct contract often comes with its own set of deadlines and requirements.
Further, even after a mechanics and materialmen lien is filed, it may be necessary to file suit to enforce that lien in order to preserve it. This suit usually needs to be filed within six months after the maturity of the indebtedness secured by the lien.
Proper Documentation of the Mechanic’s Lien
While serving notices on time is crucial, ensuring they are accurate is also important. Misstatements or inaccuracies in a lien statement, discussed below, could result in claims against the lien claimant.
Statement of Lien
Lien claimants have a duty to file in the probate office a written, verified statement containing the amount of the demand secured by the lien with all applicable credits applied. It articulates the amount owed and must be both accurate and comprehensive. An integral part of this statement is the description of the property, ensuring there’s no ambiguity regarding the property in question. Unless a proper lien statement is filed, a lien may be lost.
Lien Waivers
At times, in the spirit of moving things along or under pressure, individuals sign lien waivers, essentially relinquishing their rights to future liens. Such waivers may impact your rights to pursue repayment through the mechanics and materialmen lien process so it is important to understand what you’re signing and the implications thereof.
Statutory Form
Each state, including Alabama, has its own specified format or form for liens. Adhering to this not only ensures your lien’s validity but also expedites the process.
Common Misconceptions and Mistakes with Alabama Mechanic’s Liens
The realm of mechanic’s liens is riddled with myths and misconceptions.
Dealing with General Contractors
A common fallacy is that subcontractors believe the general contractor’s notice encompasses them. This is not true. To preserve your rights, always serve a separate notice that is tailored to your status under the lien law.
Sale of the Property
Another misconception revolves around property sales. Some believe selling a property negates any liens on it. However, properly filed liens often “stick” with the property, potentially affecting its sale or the terms thereof.
Tips for Safeguarding Your Lien Rights
Keeping an eye on the applicable deadlines and, if necessary, taking steps to preserve your lien rights prior to non-payment are vital to ensuring payment. In this ever-evolving landscape, staying updated is essential.
Regularly Reviewing Alabama Lien Law
As with most laws, changes and amendments are frequent. Staying updated ensures you’re always in compliance, and your actions are in line with the latest requirements. Moreover, court decisions and interpretations can shift the understanding of existing laws. It’s always a good idea to monitor recent develops in the area of mechanics and materialman liens.
Collaboration with Professionals
Navigating the complexities of Alabama’s lien laws can be daunting. Engaging with professionals, especially construction law attorneys, can provide much-needed guidance. From ensuring adherence to Alabama lien law requirements to providing insights based on experience, their expertise can be invaluable.
Contact Our Seasoned Alabama Mechanics Lien Attorneys
The complexities and intricacies of mechanic’s liens in Alabama can be overwhelming. But, with careful navigation, adherence to guidelines, and some professional guidance, you can ensure your rights are preserved. Given the requirements imposed on lien claimants, it is important to consider how to preserve your lien rights before issues arise on a project.
The attorneys at Stone Crosby, P.C. are real estate and construction law attorneys with deep knowledge of Alabama’s lien laws and procedures. We will advise on safeguarding your lien rights and can provide comprehensive legal representation if a dispute arises over payment or enforcing a lien. Contact our office today to set up a personalized consultation with a member of our legal team.
