The most powerful legal tool a construction party has is a mechanics lien. Filing a mechanics lien gives you a legal interest in the property you have contributed work to, which allows you to foreclose on the property. Because you have a property interest, you are afforded due process protection. This protection includes receiving certain personal notices about the property, like a tax sale occurrence. This fact could make all the difference in certain cases like the one heard by a Missouri court recently.
Sunnypointe, LLC used to own a piece of property in which Beemer Construction Company and Seal-O-Matic Paving Company both contributed work to. Beemer commenced work on the project on April 2006. Seal-O-Matic started working on the property in January 2007. Neither party was ever paid. Subsequently, both Beemer and Seal-O-Matic filed mechanics liens against the property in December 2007. The claims were for $164,879.76 and $187,494.80, respectively. Both mechanics liens were filed properly according to Missouri state law.
Unfortunately, Sunnypointe didn’t pay its taxes on the property either. On May 24, 2010, the Director of Collections for Jackson County, Missouri petitioned for foreclosure and public sale of the property. The petition was granted, and the tax sale was set for August 22, 2011. Sunnypointe was notified personally by certified mail, and the collector also sent out a public notification (i.e. a newspaper posting). Realty Acquisition, LLC purchased the property for $51,000. At no point was either Beemer or Seal-O-Matic notified of such sale. Upon learning of the sale, both parties moved to oppose to confirmation of the sale. They argued that their due process rights were violated by not being notified of the sale despite having property interests in the Sunnypointe property. The trial court sided with Beemer and Seal-O-Matic. Realty appealed.
The Appellate Court
In Collector of Revenue’s v. Parcels of Land, 453 S.W.3d 746, Realty’s argument was solely based on section 141.540 of Missouri law. This section defines that when a tax sale is announced, only the owner of the property must be personally notified. Every other party’s rights are satisfied by public notification. The section reads
[T]he persons named in the petition as being the last known persons in whose names tax bills affecting the respective parcels of real estate described in said petition were last billed or charged on the books of the collector, or the last known owner of record, if different, and to the addresses of said persons upon said records of the collector.
The section further states that the owner may serve personal notice to a mortgagee or security holder if they wish. In response to this, the court points out that a provision of a state statute not requiring notice does not constitutionally satisfy the rights of due process. The court reasoned further to say that a mechanics lien specifically creates a property right that affords a claimant due process protection. Therefore, a personal notice was required to be sent to both Beemer and Seal-O-Matic in order for the tax sale to be valid.
The Power of a Mechanics Lien
This case is another perfect example of how powerful a legal tool construction parties are afforded. Essentially, a mechanics lien gives you the same legal rights as a property owner. It only makes sense though. What would be the point of filing a mechanics lien if a tax collector could sell the property without you even knowing? That would be a major chink in the armor that is mechanics lien claims. Thankfully, that flaw does not exist, as evidence by this Missouri court’s decision.