The recent changes to the Mississippi lien law scheme were substantial and transformative. Yesterday’s post announcing that the re-imagining of Mississippi lien law had been signed into law set forth the big changes as to which parties qualify for leon protection. Parties who contract with the property owner are no longer the only ones who qualify for lien protection – that same protection now extends to subcontractors, sub-subcontractors, and materialmen. But, how does a lower-tier party qualify for this protection? In extending protection to previously unprotected parties, Mississippi also set out brand new notice requirements. This post will briefly examine the new notice provisions contained in Mississippi’s revised lien law. More resources and information on Mississippi notices requirements can be found here.
Notice for General Contractors?
There is no traditional preliminary notice, or notice of intent to lien, requirement for parties who contracted directly with the property owner. In most cases, parties in this situation could provide no notice at all, and still be completely protected by the right to file a mechanics lien to secure the amount due to them for the work they performed on the property. However, there are situations in which a type of notice must be provided – and failure to do so could result in the loss of lien rights.
If a property owner makes a written request upon the contractor, the contractor must provide a complete list of all subcontractors and materialmen.New section 85-7-407(1) of the Mississippi Code sets out the situation in which a notice from the prime contractor is necessary. If a property owner makes a written request upon the contractor, the contractor must provide a complete list of all subcontractors and materialmen. This obligation extends down the chain such that, if the original contractor makes a written request to a sub, that sub must provide the original contractor with the same information. The new statute goes on to state that the willful failure (of either the original contractor, or sub) to provide this information within a reasonable time when required to do so results in a forfeiture of that party’s right to file a lien. This is a harsh remedy, so whenever such a written request is received the receiving party should comply as soon as possible.
It is unclear whether actual receipt is necessary (or sufficient if sent in an improper manner) to obligate the contractor or subcontractor to provide the list. The statute requires that the written request for the information to be by “registered or certified mail or statutory overnight delivery”. It seems that, at some point, there may be some litigation to determine what is actually sufficient. It may be that delivering a written request personally will obligate the receiving party to provide the information, but that is not expressly contemplated by the statute. And, neither is a situation where a request has been mailed as required, but never gets delivered. In that case, would a response would be required if the party supposed to receive the request knew that it was supposed to be delivered? As a best practice, it is likely a good idea to respond to any request for this type of information, at least until these little wrinkles get ironed out.
Notice Requirements for Lower Tiers
The new lien law scheme also sets out some notice requirements based on property/project type and the potential lien claimant’s role on the project. One of these new notices created by new section 85-7-407(2). This section holds that:
[A]ny person having a right to a lien pursuant to Section 85-7-403 who does not have privity of contract with the contractor, or, if there is no contractor, with the owner, and is providing labor, services or materials for the improvement of property, within thirty (30) days following the first delivery of labor, services or materials to the property, the person shall give a written notice to the contractor, or, if there is no contractor, to the owner…
This is a fairly standard preliminary notice requirement. Any party who does not either contract with the prime contractor or the property owner (if there is no general contractor) must provide a written preliminary notice containing standard information within 30 days from the date the potential lien claimant first furnished labor and/or materials to the project.
There are two interesting issues raised by this new notice requirement. One has to do with how the notice may be delivered, and the second has to do with the structure of a potential project at issue.
While some states have an electronic repository, or centralized system through which some required notices may be sent/posted, the ability to give notice by e-mail with confirmed receipt is unique and interesting.This notice is allowed to be delivered by multiple methods – registered or certified mail, statutory overnight delivery, or, “e-mail with a confirmed receipt”. This is a unique option. While some states have an electronic repository, or centralized system through which some required notices may be sent/posted, the ability to give notice by e-mail with confirmed receipt is unique and interesting. But, it does raise some questions. One obvious question is what actually constitutes “confirmed receipt”: delivery, delivery not to a spam folder, read-receipt, opening-receipt? This could potentially cause some problems for lien claimants looking to prove they gave a required notice.
Note that this notice is required from a party “who does not have privity of contract with the contractor, or, if there is no contractor, with the owner”. What is a party has a contract with the owner, but there is a general contractor. Say on owner hired a laborer on a project on which there was a general contractor, or hired an architect and then hired a general contractor within 30 days? It is unclear if the laborer or architect in these examples would be required to give notice to the general contractor. It seems unnecessary, but with mechanics liens being creatures of statute that require strict compliance with the requirements set forth, it may be the difference between a valid lien, and an invalid one.
The other type of preliminary notice set out by the newly created statutory scheme only applies to single-family residential projects. Despite being called a “pre-lien written notice” by statute, this notice functions like a required notice of intent to lien. All parties who did not contract directly with the property owner on a single-family residential project must provide this notice to the property owner at least 10 days prior to filing a lien on the property. This notice is strictly required before a valid lien can be filed against the property, but interestingly, very little information is provided by the statute as to how the notice should be given – only that it can be “by any reliable means of delivery”. This is pretty ambiguous for such an important requirement. Again, best practice here would likely be to err on the side of caution and send via a method that provides either a receipt of sending, a proof of receipt, or the ability to track the notice.
When required, the failure to comply with any of these notice requirements can extinguish a potential lien claimant’s right to file a valid lien. More parties in Mississippi now have the ability to protect themselves with the mechanics lien instrument, but in order to do so they may have to comply with new notice requirements.