Sometimes, it seems like I am constantly discussing deadlines. There’s a good reason for that, though. The importance of monitoring and complying with the statutory deadlines cannot be overstated. It is crucial that the time period in which a lien can be filed is not allowed to slip by unnoticed. If it does, the ability to file a mechanics lien is likely gone, and your security is gone with it. Nevada presents an interesting situation the deadline is marked by 90 days after the the later of two dates: 1) the completion of the work of improvement, or 2) the last furnishing of labor and/or materials by the lien claimant. While this may provide the lien claimant with more time in which to file a lien – yay – it also may make the deadline harder to pinpoint with accuracy – boo.
Nevada’s Mechanics Lien Deadline: How to Determine Completion of the Work Of Improvement
Nevada courts have defined “improvement” to broadly encompass “the entire structure or scheme of improvement as a whole. Since the deadline by which a mechanics lien must be filed in Nevada is dependent upon the completion date of the “work of improvement”, the date a work of improvement is completed is an important determination. But, in order to figure out when a work of improvement is completed, we first need to know what a work of improvement is. Luckily, Nevada statutes give us a definition. Nevada’s construction lien law, specifically N.R.S.T. 9 Sec. 108.22188 states that, subject to certain exceptions:
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“Work of improvement” means the entire structure or scheme of improvement as a whole, including, without limitation, all work, materials and equipment to be used in or for the construction, alteration or repair of the property or any improvement thereon, whether under multiple prime contracts or a single prime contract
This means that a potential lien claimant can claim the benefit, in terms of a later filing date for a mechanics lien, of work performed on the project after that lien claimant’s contract has been performed – provided that the subsequent work by another party was contemplated to be part of the same project or improvement. In fact, Nevada courts have defined “improvement” to broadly encompass “the entire structure or scheme of improvement as a whole.” Peccole v. Luce & Goodfellow, 212 P.2d at 727 (1949). It doesn’t matter if the work is performed under separate contracts; if the work under the separate contracts is continuous, it still comes together under the definition of “work of improvement”.
As long as the work is one project, it doesn’t matter if the work is broken up into parts. Earlier parties on the job can use dates on which work was performed by later parties on the job for the purposes of determining when a mechanics lien may be filed. If the work is separated enough that it becomes a different project, however, it does not count for the purposes of setting the mechanics lien deadline. So, how does this work in action?
Recent Nevada Case Provides Some Insight
The Nevada Supreme Court recently heard an appeal of a case with just this situation. In I. Cox Construction Company v. CH2 Investments the court affirmed a district court’s ruling regarding the expungement of a mechanics lien for being untimely. The facts of the case are as follows.
Cox Construction Company (“Cox”) was hired by Jim Harwin and his company Safe Shot (“Harwin”) to construct a shooting range. The original cost estimate was $37,000 but that proved to be much too low. By September 2009 Cox had billed $48,000, and by October Harwin had paid $46,000 of that amount but refused to pay anything further. Cox worked through October, and then left the project with the project almost entirely finished. In fact, Harwin open the shooting range for business shortly after Cox left the project. After receiving noise complaints in late 2009 and early 2010, Harwin installed soundproofing.
The district court held that the lien was untimely because the subsequent installation of the soundproofing by Harwin was not part of the same “work of improvement. In March 2010, Cox filed a mechanics lien. The March filing was more than 90 days after Cox finished work on the project, but less than 90 days after Harwin installed the soundproofing. The district court held that the lien was untimely because the subsequent installation of the soundproofing by Harwin was not part of the same “work of improvement” such that it would extend the time in which Cox could file a mechanics lien. And, since defining the scope and duration of the work of improvement is a factual determination made by the district court, the Nevada Supreme Court would not overturn that determination unless it was “clearly erroneous”. The supreme court did not find that the determination in this case was “clearly erroneous”, and as such, upheld the district court’s decision.
In making the determination, the district court noted that neither party contemplated soundproofing as part of the project, neither the building or operating permits required soundproofing, and the business was opened prior to the need for soundproofing being noticed. When those factors were weighed, it was determined that the work of improvement was completed when Cox left the project, and that the subsequent installation of soundproofing constituted a separate work of improvement. The work was not continuous, and therefore, two separate projects.
What This Means
That the 90-day period can begin to run from the completion of the project, rather than the potential lien claimant’s last work, can be beneficial. It provides a longer time period in which the lien may be filed. Claimant’s have to exercise caution, however. Just because there is work being performed at the site doesn’t necessarily mean that the lien period can be extended – the work must be part of the same work of improvement. Just as with every other mechanics lien deadline determination, it pays to be vigilant.