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Do we have lien rights.

Colorado

We are a supplier of engineered wood products. Most of our projects are direct delivery to a jobsite that has an address that can be used to put a Lien in place if needed. Recently we have started to supply bundles of material to lumberyards in which there would be no direct connection to a specific job address. In these circumstances, do we have any Lien rights? I believe the answer is no since we do not have a direct connection to the material being incorporated into the building, but just want to confirmation that would be correct. Thank you!

8 replies

Sep 28, 2022

 Good question. For equipment and material suppliers there
are certain requirements that must be met before they have lien rights. To have
a lien right, the materials must have been supplied at the instance of the owner
or the owner’s agent. Generally, if a supplier is providing these materials as
an avenue of sales, that supplier cannot establish any lien rights.  

  

As to directly delivering to the jobsite as a means to
secure lien rights, that also still must be done at the instance of the owner
or their agents. Going forward make sure you have the proper evidence of this
being done at the instance of the owner or their agent. Merely having an address
where you drop this off is not enough. You need proper evidence of this being
at the instance of the owner or agent in case things go south. Your construction
attorney can explain the process to protect the company. If you have no
construction attorney, consider having one that you can contact as needed for
things like this.   

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Sep 29, 2022

While I agree as to the agency issue mentioned by my colleague, generally suppliers are going to be able to establish they're agents of an owner, whether for failure of an owner and GC to record a contract, or simply by acting for the GC, who is generally deemed the agent of the owner.

The problem you have, as you note, is not being able to establish your materials went toward the improvement of the property you want to lien. That would cause significant heartburn in attempting to prove you have lien rights as against a specific piece of real estate.

That said, liening may not be your best option anyway. That's highly factually dependent. I can't gather from the question whether your lumberyards are to pay you for supplying packages, or if the contractor whose project they'll ultimately go to is responsible for your payment as some sort of business arrangement. Either way, these payment issues can usually be handled with a contract claim without the risk of improperly liening a property and the associated consequences of doing so. 

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Sep 29, 2022

Hello Robert,

Whenever we provide material to a jobsite it would be done through the direction of the owner or an agent. We almost always have a signed material proposal or order confirmation with that authorization.

Thanks!

 

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Sep 29, 2022

Hello Neil,

In the case, we are supplying directly to a lumber yard not an owner or an agent of the owner. We don' have a direct connection to the final jobsite and the lamber yard is responsible for paying us directly. Could you provide a little detail on what a conttact claim is vs. a lien?

Thank you!

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Sep 29, 2022

Hello James, 

You're welcome. I assumed that the materials were at the instance of the owner but I wanted to note that just so you keep solid records if things did go south. Solid ecords are key in all aspects of construction. As partner and general counsel for a general contractor earlier in my career, I have seen many disputes by and between the parties. 

Reach out if you have questions going forward to robert@pivotallegal.com. 

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Sep 29, 2022
If your materials cannot be traced into improving real estate, you're in precarious waters liening real estate. You have to provide labor and/or materials for the improv't of the subject property, it sounds like you have a simple breach of contract re: pym't. But, you could file a UCC-1 against the receiver of your mat's and collect that way. I've done 450 of these cases.
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Sep 30, 2022

James:

Likely not lien rights, but if the materials are delivered to lumberyards, the manufacturer would have other viable collection options that may be more straightforward. I’d be happy to explore it with you further if you would like.

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Oct 3, 2022

I'm happy to discuss over the phone if you'd like. Feel free to call our office. 7205007855.

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