The recent signing into law of SB 2622 has turned Mississippi lien law on its head, and completely changed the rules and requirements of mechanics liens in that state. New notice requirements have been imposed in some situations, new parties are entitled to protection, new deadlines apply, and the lien waiver scheme has been restructured. The whole point of protecting mechanics lien rights and securing the money owed for work on a construction project via the mechanics lien instrument is to get paid. But, the process doesn’t stop once the payment is received. Generally, the now-satisfied lien must be released. This is now especially true in Mississippi.
Release a Satisfied Mississippi Lien, Or Else
If a lien is fully satisfied, and the lien holder is provided a written demand to release the lien, the lien holder must file a cancellation of the lien within 15 days. New Mississippi Code Sec. 85-7-421(2) mandates that, whenever a lien has been fully satisfied, the lien claimant release the lien by filing a cancellation. This is a relatively straightforward provision, and not an unexpected one. After payment has been received the lien has served its purpose and should be removed as an encumbrance on the property. The Mississippi law just sets out a legal requirement (much like many other states) that mirrors the accepted practical practice of the mechanics lien lifecycle.
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This requirement that the lien be released is not the end of the road, however. The provision of Mississippi’s code immediately following the requirement that a satisfied lien must be released contains a penalty to be assessed if the requirement is not met, provided certain steps have been met. If a lien is fully satisfied, and the lien holder is provided a written demand to release the lien, the lien holder must file a cancellation of the lien within 15 days. Failure to do so will result in a penalty of not less than $500 per day in addition to the reasonable attorney’s fees and costs incurred by the party who requested that the lien be released.
This is a harsh penalty, and one that should be avoided.
Despite the small areas of potential confusion, the recent change to the Mississippi lien law provides a strong disincentive for parties who are required to release a lien to fail to do so. It does appear, however, that there may be a typographical error in this particular section of the new statute, and there is a bit of clarification needed, as well. The potential typographical error is found in 85-7-421(3) – and notes that the penalty is prompted when the lien claimant fails, for more than 15 days, to file a cancellation of a fully satisfied mechanics lien “as provided in subsection (1)” after receiving a written request to do so. The confusion is because this appears to name the wrong subsection. Subsection (1), as mentioned relates to the automatic expiration of a mechanics lien after 180 days from the date of its filing, and specifically notes that “No release or voiding of the liens shall be required”. The particular subsection that describes the cancellation of a lien by recording a cancellation in the office of the chancery clerk is subsection (2).
So, will this have any impact? Probably not, but, in all legal matters there is no certainty. It is clear what the legislature intended by these provisions, but the mis-naming of the subsection does throw a little bit of confusion into the mix. It would likely not be what the drafters of Missisippi’s new law intended, but an argument could be made that the statute as written only imposes penalties on a lien claimant after 15 days have passed from the written request to cancel a lien that expired because the 180 day limit. This position would likely be unsuccessful, but it is not absurd.
Finally, this particular section of the new Mississippi law does not specify what party(ies) may make the written request to cancel a lien that triggers the penalty provisions.
The take-away is this. Despite the small areas of potential confusion, the recent change to the Mississippi lien law provides a strong disincentive for parties who are required to release a lien to fail to do so.