In 1988 – his last year in office – President Ronald Reagan signed the Indian Gaming Regulatory Act (IGRA) which permitted the construction of new casinos on Native American lands. While the federal government retained the power to regulate the gaming, the casinos and the businesses are the property of the Native American tribes themselves. As of 2011, there were 460 gambling operations run by 240 tribes, posting annual revenue of $27 billion!
All of that new construction over the last 30 years on tribal lands got us thinking — “Do mechanics lien rights exist for construction projects that take place on Native American land?” Please read on for the answer.
Lien Rights on Tribal Land? Unlikely.
For a $27 billion industry with 460 separate locations and 240 different “owners” (in this case, tribes) to sprout up in just under 30 years is quite an accomplishment. This business boom almost certainly required non-Native American contractors and suppliers to get involved in the construction in order to keep up with the demand.
These non-Native American companies are faced with some pretty complex legal questions about what rights they have in the event they are unpaid or something goes wrong.
But the short answer to this question of whether they have lien rights is easy: No.
The long answer to this question is very complex, as there are a hundred different issues that can come up in determining what extent of lien rights a contractor or supplier could have on a construction project performed either on tribal land or off tribal land but on behalf of a tribe.
First and foremost, Indian tribes have what’s called “sovereign immunity” from the laws of the United State and the laws of each state. Basically, a claimant cannot sue an Indian tribe in state or federal court because those courts simply cannot exercise jurisdiction over it. The only way to get around this is if the Tribe voluntarily waives its immunity.
Mechanics liens are creatures of statute, which is a fancy way of saying that mechanics liens are created and regulated by state legislatures. In other words, a mechanics lien right is created by a law, or more specifically, a state law.
But state laws don’t apply on Native American reservations. For that matter, federal laws don’t apply either. And this means that mechanics lien protections don’t exist on tribal lands, either.
Is There a Payment Bond?
While not required, it’s possible that a particular Native American tribe may require the prime contractor to supply a payment bond for a construction project that takes place on their land. Payment bonds on private projects aren’t common, but they’re also not unheard of – and tribal lands can be considered similarly. Much like a private project, unless the owner (here, the tribe) requests that a contractor post a bond, or unless they post one themselves, no bond will be present.
If a bond is present on the project, then a company performing work on that project may have recourse for nonpayment. But if no bond is present, then there’s nothing to file a bond claim against – and a claimant may be left high and dry.
We’ve often written about how project type is one of the primary factors that determine what remedies are available (if any) for a non-payment issue on a given project. Given that reality that mechanics lien or bond claim protections probably don’t exist for construction work that takes place on Native American lands, contractors and suppliers should proceed with caution when taking on this kind of work. It doesn’t matter the reason why or who is at fault – if you run into a payment issue, you may end up having trouble resolving it through the tried and true means of mechanics liens or bond claims.