The mechanics lien process is an invaluable resource for contractors and suppliers to get paid in the construction industry. Because this remedy is so powerful, most states will interpret and enforce lien statutes strictly. A majority of contractors will assume that they have lien rights because they improved some sort of property. But it’s not that simple. A recent case out of Delaware resulted in a mechanics lien being dismissed because the work performed didn’t involve a “structure.”
Delaware mechanics lien rights
The statute governing who is entitled to obtain a Delaware mechanics lien can be found under 25 Del. Code §2702(a):
It shall be lawful for any person having performed or furnished labor or material, or both, to an amount exceeding $25 in or for the erection, alteration, or repair of any structure, in pursuance of any contract, express or implied, with the owners of such structure or with the agent of such owner or with any contractor who has contracted for the erection, alteration, or repair of the same and for the furnishing in whole or any part of the materials therefore including any person who has performed or furnished labor or material, or both, for or at such structure under a contract with or order from any subcontractor to obtain a lien upon such structure and upon the ground upon which the same may be situated or erected.
Furthermore, the term structure is narrowly defined by statute as a “includes a building or house.” That’s not much to go on and, understandably, causes a lot of confusion. For example, a contractor recently asked whether they could file a lien in Delaware for painting a sidewalk.
The Superior Court of the State of Delaware recently rejected a lien claim because the work performed was on open, undeveloped spaces in a residential subdivision, and not on a structure.
Contractor’s lien dismissed: Work performed on “open spaces” not “structure”
The case in question is Erosion Control Specialists, Inc. v. Hyetts
Project Snapshot:
- Owner: Hyetts Corner, LLC (Hyetts)
- Contractor: Erosion Control Specialists, Inc. (ECS)
Hyetts contracted with ECS to perform landscaping services for two separate housing developments. One named Windsor Commons at Hyetts Corner and the other named Windsor South at Hyetts Corner (collectively referred to as the Enclave).
When ECS went unpaid over $100,000, they filed a mechanics lien action (among other claims). In response, Hyetts filed for a motion to dismiss based on the fact that their claim for mechanics lien was improper.
Contractor filed lien for unpaid landscape work on “open spaces”
ECS filed their mechanics lien based on work performed on open spaces in the development, which benefitted the community as a whole. Their argument was that the landscaping work was performed on a common area. Since the common area benefits all the lots, the lien can attach to each lot because they will eventually have a structure (i.e. a house) built upon them.
Hyetts motion to dismiss argued that the work was performed on open spaces that “lacked a nexus with a structure” on any of the lots. Therefore, since no work was performed on the lots and none of the lots had a structure on them.
Court dismissed the mechanics lien
The court was unswayed by ECS’s arguments. The work they performed was an improvement to land, rather than an improvement to a structure. Regardless of “what may occur in the future.” Referring to the fact that houses would eventually be built on the lots. Thus, the court dismissed the claim because:
“ECS fails to show that the labor and materials used on the open spaces were necessary or component parts of any existing structure. ECS admits that the work was performed only on open spaces at the Enclave and that the Lots at issue did not have completed structures (i.e. houses) at the time services were rendered. The mechanics lien statute – which must be construed strictly – cannot be so flexible as to pertain to landscaping services performed on “open spaces” within a residential development and such a decision would stretch the statute “beyond the plain and fair sense of the terms” in the statute. Therefore, the statute cannot apply to landscaping services on open spaces not connected to the Lots, especially when the Lots sit empty and undeveloped.”
Improvements must relate to a structure for Delaware lien rights
This case serves to clarify (or at least attempts to clarify) what type of work gives rise to mechanics lien rights in Delaware. This decision seems to suggest that lien rights can only attach if the work performed “in relation to a structure.” Meaning that the improvements must actually be necessary to or a component part of a house or building. Some cases have allowed for work performed on attached or adjacent property, as long as the work directly benefits the structure. Before filing a mechanics lien, it’s imperative to understand when and if you even have the right to file.