A friend of the blog, Vincent Pallaci, posted an article this week about a New York bill proposing to require proof of licensing before allowing a mechanics lien recording. According to Vincent, it’s a bill that has been proposed to the New York State Assembly every year since 2004 and a bill that should continue to fail. I agree with him.
County clerks and recorders should be completely agnostic as to what is and is not qualified for recording. Unfortunately, it’s sometimes hard for legislatures and recorders to draw (or see) the line. This post is about why recorders should not be authorized to reject any filings, and whether they inappropriately do so currently.
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Why Clerks and Recorders Should Not Decide On What Mechanic Liens Are And Are Not Recordable
At first glance, you may not see the problem in requiring proof of license to record a mechanics lien. After all, if a license is required, shouldn’t the contractor need to prove it?
Ah, but that sentence contains the hiccup, and so does Vincent’s blog post on the subject: when exactly is a license required? Here is Vincent’s terrific explanation:
What if there is a difference of opinion between the contractor and the clerk that is issuing this certification as to whether a license is required? If the clerk refuses to accept the mechanic’s lien for filing, and it is ultimately determined that the lien should have been accepted, the right to file the lien may have expired in the interim. There are a number of nuances in the licensing statutes for each county and those nuances have not yet been completely ironed out by the court systems despite extensive litigation. How is a county employee supposed to make such a determination when the statutes themselves are not clear, especially because determining applicability requires a fact specific analysis? While the problem of unlicensed contractors filings mechanic’s liens is indeed a problem, it is one that the courts can address – they can vacate the mechanic’s lien and if necessary award the home owner damages. The legislature should not put the life or death of a mechanic’s lien in the hands of a county employee that likely would not have the knowledge (either legally or factually) to determine if a license is required for that particular work.
Whether a contractor is licensed or not is just one issue – the county clerks sometimes stick their noses (authorized or not, see below) in a whole host of other legal issues, such as:
- Is the description of the property legally sufficient?
- Is the mechanics lien filed on time?
- Does the claimant have an underlying lien right?
- Does the language within the mechanics lien meet statutory requirements?
The list goes on and on and on. All of these things are legal determinations that may or may not impact the effectiveness of the mechanics lien filing. Can a county employee make these determinations? Should they?
They neither can nor should. But, as I’m about to show you, they constantly and inappropriately do.
Mechanics Lien Claims Are Constantly Rejected By Recorders For Unauthorized Reasons
The unfortunate truth is that county clerks and recorders constantly overstep their authority, and there is very little a claimant can do about it. The clerks are usually immune from suit, and even if they later relent and let you file, their new cooperation may be too late to save your mechanics lien rights. It is precisely why we recommend giving yourself as much time as possible to file a lien, because things out of your control can go wrong when trying to file.
I’ll give you three real-life examples of recorders overstepping their authority in making a decision about what is and what is not lienable. Remember, universally, courts are prohibited from making legal determinations about the validity of a filing. It is their job to stamp documents. That’s it.
Example 1: Possible Arbitrary and Capricious Conduct By The St Tammany Parish, Louisiana, Clerk of Court
A few months ago, levelset had transmitted a mechanics lien cancellation document to the St. Tammany Parish clerk of court in Louisiana. The clerk rejected the cancellation and refused to record it based on her understanding of what the document required. She could not recall or cite the law that supported her decision. After we blogged about the conduct and faxed the post to her, she abruptly changed her mind and recorded the document.
Example 2: California Clerks Are Confused About Requirements Of California Mechanics Lien Extension
Filing a mechanics lien extension in California is quite rare because it requires the property owner’s signature. As a result, the recorders don’t have much experience with the document. They also do not understand the document’s requirements.
We wrote about this after a clerk refused to record a document transmitted by levelset for a client. It was eventually recorded, but the delay was very close to causing a problem.
Example 3: New York County Recorder Refused To File Mechanics Lien Because Work “Not Lienable”
The final example comes from a comment posted here on this blog whereby a company’s lien was rejected by a clerk in New York based on the work not being “lienable.” The filing company’s work was for “testing on a building undergoing renovation.” The clerk rejected the lien stating that “testing” was not included under the lien laws of New York.
Again, here is the clerk making a legal determination which is outside their scope of authority. They may be right…or they may be wrong. But, it’s really not their place to say, especially in this case where the description of work provides only a glimpse at what was done at the property.