A massive problem with mechanics lien laws in every state is that to comply with them, a claimant must know information that is not public knowledge and that is sometimes hard to acquire. If you get the information wrong, you could lose your lien rights.
Examples of Information You Can Get Wrong That Matters To Mechanics Liens
Sending a preliminary notice requires you send a document to a particular party, but who? Filing a mechanics lien requires you identify the property owner, but who is it? You’d be surprised about how much information you may need to comply with lien laws. Here are some examples:
Lenders: On construction projects in states like California, Oregon and Arizona, preliminary notices must be sent to the construction lender. Failing to deliver the preliminary notice to these parties may seriously impair your mechanics lien rights. Unfortunately, there aren’t any databases in these states that disclose the lenders on projects.
Owners: Finding a property owner is sometimes like digging in a rabbit hole. Rumors on the project may have the property owner being one person or entity, but it winds up being another person or entity. It is very common for properties to be in trusts, business entities, investment organizations, or more, and for these entities to not be very well known. You may think John Doe owns the property, but are you sure it isn’t “John and Jane Doe,” or how about “John Doe Investments I, LLC.” These nuances are common, but rarely known.
Prime Contractors: You probably think you know who the general contractor is. Most people do. You’d be surprised, however, at how often general contractors are actually subcontractors to another large general who completely out-sourced the project. Alternatively, a general contractor may be doing business under a joint venture or a “minority-owned” version of their company.
How To Get The Information You Need To Comply with Notice & Mechanics Lien Laws
So, how do you get the information you need to comply with the notice and mechanics lien laws? The answer is, unfortunately, that this can be tough.
Folks in California should be happy to know that the recent revisions to California’s mechanics lien laws really took this issue into consideration. Now, the prime contractors on a project are burdened with the obligation to identify the property owner and lender whenever requested. This makes it a lot easier for California subcontractors and suppliers to find lenders on those projects.
In other states, however, good old research is required. Going to the property records office and looking up the last finance document or the last deed record to get the property owner and lender. Making formal requests (which are allowed in some states) to the prime contractor or owner for identification of the other parties.