The ability for a construction company to file a mechanics lien to secure an amount due for improvement to property on a project or job is a right created and governed by state statute. Accordingly, the rules, requirements, and prerequisites set forth by the statutes giving rise to the right must be strictly complied with in order for any subsequently filed lien to be valid.
One of the specific rules the must be followed is that mechanics liens need to be filed within a certain time-period in order to be valid and enforceable. These deadlines are critical because attempting to a lien after a deadline has passed means that the claimant’s payments are no longer secured and the right to file a valid lien expired with the passing deadline.
Given this crucial importance, it’s no wonder that construction participants routinely have questions related to how the deadlines are calculated. In many states, the time period in which a valid lien may be filed is calculated from the last day the potential claimant furnished labor or materials to the project. So, determining the “last date” of furnishing can have huge consequences to the validity of a lien, and even whether or not the claimant gets paid.
Determining the Last Date of Furnishing
While it may seem like a simple thing to determine – calculating the “last date” of furnishing for the purposes of determining a lien deadline isn’t quite as straightforward as one might think. If you worked on a project for only a particularly defined period of time, left, and never retuned, the last date would be pretty simple to determine: it’s the last date you were on the project working. Things associated with mechanics lien law can be complicated, but it doesn’t pay to make things complicated when they’re not. In the majority of cases, your last date of furnishing is your last date of furnishing.
In some circumstances, though, it’s not quite as simple – and it can be a complicated question. There are often change orders that extend work beyond the date contemplated in the original contract, or punch-list or warranty work that calls a construction participant back to a job that they thought they were done with.
In these situations, the general rule – although, like many things in lien law this is not universal – is that “punch-list” work or remedial/warranty/corrective work does not extend the lien deadline, while work pursuant to a valid change order would.
Free Payment Rights Advisor Tool from Levelset
One of the most important questions about lien rights concerns whether a potential claimant even has the right to file a lien in the first place. What happens if filing a mechanics lien isn’t an option? What are some other actions to take when you’re having a payment issue? We have a free tool that will help you with these questions. It’s called the Payment Rights Advisor. It only takes a couple of minutes — just answer 5 quick questions about your job, and the Payment Rights Advisor will give you all of your best options, including whether or not you qualify for mechanics lien rights.
Insignificant vs. Significant Work
Return work that is insignificant in scope compared to the whole contract, or remedial work is usually irrelevant to the calculation of the lien deadline. In many states (if not most states), labor and/or materials necessary to perform remedial, punch list items, or warranty obligations are generally not considered in establishing the completion date or the last date of providing work. Contractors and suppliers, therefore, can theoretically have the lien period begin days, weeks or months before they are off the job.
This is not the same for when the work is substantial and pursuant to a change order, however. In these situations, it is likely that the work would extend the lien deadline. Additionally, work could be completed on one “work of improvement” and the claimant called back to the job site to perform work on an entirely separate or subsequent “work of improvement.” Here, there would likely be two last furnishing dates to consider, and two separate lien rights.
How to Prove Last Date of Furnishing
Generally, you only need to prove your last date of furnishing if your lien is challenged as untimely. Recorders and clerks do not examine the dates on a lien claim (other than, in certain circumstances, checking if the date of last furnishing provided on the lien makes the lien past due). What you say on the claim is likely going to be accepted unless the lien is challenged, and even then – the date is only going to come into play if the lien is teetering on the edge of being filed untimely. Almost all of the issues surrounding the last date of furnishing can be avoided if you don’t wait until the last minute to file your lien.
However, in the cases where the last date needs to be proved – general evidence can be basically anything that shows you were on the project: last invoices or pay-apps that have a delivery or through date, conditional waivers with a through date, signed delivery slips, payroll or personnel records showing laborers on site, contract documents, change-orders, project notes, and more.
So, what are the best practices? Best practice is to pay careful attention to lien deadlines, and not wait until the very last minute to file, if a lien is necessary, and equally important, keep detailed records of your time on the project.