In many cases, Arizona’s mechanics lien law is very similar to California’s mechanics lien law. However, the two statutory schemes are substantially different when it comes to the timeframe for serving a mechanics lien.
Serving owners with an Arizona mechanics lien
Recent changes to California’s mechanics lien laws mandated that lien claimants serve the property owner with a copy of the mechanics lien simultaneously with the filing, actually requiring an affidavit of service to be included with the lien filing. There is no similar requirement in Arizona. Instead, the Arizona statute simply requires that a copy of the mechanics lien be served upon a property owner within a “reasonable time” after filing.
How long is a reasonable time?
That’s a question recently considered by the Arizona Court of Appeals in the case Wang Elec Inc v. Smoke Tree Resort LLC.
In Wang Electric, the mechanics lien was served upon the property owner three months after the original filing, and it was only served by attaching it and serving it with the complaint for foreclosure. The property owners argued that service of the lien 3 months after filing and service along with the foreclosure complaint was not “reasonably” soon as a matter of law.
The property owners relied on a previous case in Arizona where a mechanics lien was first served on a property owner the day before the foreclosure deadline and was served along with the foreclosure complaint. In that case – Old Adobe Office Properties Ltd v. Gin – the court reasoned:
A.R.S. § 33-998 provides that a lien recorded under the provisions of Article 6 “shall not continue for a longer period than six months after it is recorded, unless action is brought within such period to enforce the lien.” Since the purpose of the notice requirement is to allow an owner an opportunity to protect himself and to investigate the claim, absent unusual circumstances, the notice requirement of § 33-993(A) will not be met merely by appending a copy of the notice and claim of lien to the complaint filed in an action to foreclose that very lien.
That situation was distinguished by the court in this Wang Electric case, saying there is clearly a difference between 3 months after filing and waiting until the very last day of the foreclosure period. Whether this particular notice of the lien was or was not reasonable requires a factual finding by the court, as “reasonable” may be different on a case-by-case basis:
We cannot say as a matter of law that Wang’s service of the notice and claim of lien approximately three months after recordation was not within a reasonable time. The record before us does not set forth any facts bearing on Smoke Tree’s ability to investigate the claim or protect itself after service of the lien. Moreover, Smoke Tree does not offer any argument why service of the lien approximately three months after recordation was not reasonable. In light of the record developed thus far, summary judgment on this issue is not appropriate.
It’s a good idea to serve your mechanics lien soon after filing and avoid these issues. Nevertheless, there is some gray area here still in Arizona law. Perhaps we’re in for a statutory change soon…