5 essential things to know about Missouri mechanics liens
Contractors & suppliers have strong lien rights in Missouri. If a contractor or supplier isn’t paid on an Missouri job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about Missouri’s mechanics lien law.
Most contractors and suppliers can file a Missouri mechanics lien
Prime contractors, subcontractors, laborers, material suppliers, equipment lessors, registered architects, engineers, surveyors and even parties providing landscaping services have lien rights in Missouri. The specific inclusion of landscaping services is unique to Missouri.
Equipment lessors, however, may only file a mechanics lien on commercial properties where the claim is greater than $5000.
Also note that on owner-occupied residential projects of 4 units or less, only parties with a direct contract with the property owner may file a mechanics lien. This restriction may be lifted if the property owner has signed a consent of owner document allowing mechanics liens for unpaid subcontractors and suppliers.
Most Missouri mechanics liens must be filed within 6 months
In Missouri, a mechanics lien must be filed within 6 months after the last day of services or materials were provided. This date is crucial to the rights of the project participant. The lien should be filed with the recorder of deeds in the county where the property is located.
Note again, however, that the rules are different for an equipment lessor. An equipment lessor only has 60 days from the date on which the last piece of equipment was removed from the property to file a mechanics lien.
Generally, a legal description should be included in the lien. However, a partially deficient legal property description has been determined to be sufficient in some Missouri cases. Further, the description of the property “need not be letter perfect” and that “when the rights of third parties are not involved, the description need only be sufficient to enable one familiar with the locality to identify the premises intended to be covered by the lien.” Of course, since generally a legal description is required, it is always best practice to describe the property as thoroughly as possible — with a legal description.
Oh, and don’t forget, all mechanics liens in Missouri must be notarized!
Some projects require preliminary notice
A Notice of Intent to Lien is required for all subcontractors. The NOI must be filed within 10 days prior to filing a mechanics lien. Any other preliminary notice that needs to be filed depends on the type of project and your role on the project. The rules are as follows:
– General Contractor (excluding architects): Must provide notice prior to receiving any payment from the property owner.
– Subcontractors (residential owner-occupied properties): Must obtain consent signed by the property owner from the general contractor. If this consent is not obtained, any subcontractor without direct contact to the property owner will not have lien rights.
– Equipment Lessors (commercial properties): Within 15 days of commencement of the use of the rental equipment or machinery, a notice must be provided to the property owner informing the owner that the rental equipment is being used on the property. Remember the rental must exceed $5000 to file a mechanics lien.
If a property owner has filed notice of intended sale on a residential property, intent to lien must be filed 5 days prior to the date of the proposed transfer.
In the state of Missouri, the failure to provide preliminary notice, intent to lien or notice of lien rights is fatal to the lien in every case.
A Notice of Intent to Lien is required before Filing a Mechanics Lien in Missouri
The lien should not include additional expenses (but expenses are sometimes awarded)
Missouri does not allow mechanics liens to include attorney’s fees, interest, or consequential damages. The amount of the lien is limited to unpaid labor, material, and/or equipment supplied to the project, and customary profit and overhead. A “just and true” account of the alleged money due is required; this can be a lump sum for general contractors, but subcontractors must provide an itemized account of labor and/or materials furnished and unpaid.
Note, however, that attorney’s fees and interest are generally awarded to the lien claimant in successful in a foreclosure action.
Lien priority depends on pre-existing encumbrances
All project participants have equal lien rights but do not have priority over a pre-existing loan or mortgage. Participants do have priority over subsequent encumbrances if there was no previously recorded encumbrance on the property at the start of construction.