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See below for details and questions. Thank you!

Thanks for answering my question!!! We live in Arizona. We had flooding at a house we had listed for sale. We called a mitigation company and they had a sister company that did the restoration side of work. We filled out contract papers for the mitigation company, and after their work was done they sent an invoice and we paid it in full (we are working with our insc. company as well). Their sister company began the restoration work on/around 6/28 but once I got the invoice from the claim adjuster, I contacted the restoration company and advised them to stop all work on 7/3. On 7/12 they emailed a 20 day pre-lien notice. We allowed them a chance to re-price the project to keep the job and met on 7/15 to review their adjusted #'s. In the end their numbers were too high and we decided to use a different GC, and advised them of this on 8/5. Within minutes of advising them of this, they replied that there was HVAC work done that they forgot to add on the initial invoice, and as we were now acting as the GC, they aren't waiting for the insc. company to pay out and want their $ asap. The amount of their initial bill (sent after I had them stop all work) was $11,189.65. When they provided us the second quote that showed amount of their current work done and reduced rate for work yet to be done...the total for work completed matched the $11,189.65. On 8/14 they sent the new invoice which was $2433.00 more and said if not paid within 7 days they will file the lien. I looked on the invoice they sent the adjuster and it did included their charges for the duct work which only totaled $247.46. As I couldn't for the life of me figure out where the extra $2433 came from, today 8/15, I asked for a invoice that broke down all charges and am waiting for that to review. I advised I was o.k. with the 7 day period to file a lien if we didn't pay, but stated that I believed the seven day time frame should begin from the date we agree on the total amount due. I have no signed contract or paperwork with this company. (they emailed me a work contract but it has not been signed at this point). I have been trying to familiarize myself with my rights and the legal details around a lien. I also recall reading somewhere that if the amount changes by more than 20% Arizona requires another pre-lien notice be sent (and their price increase is 21.74 %) and they did not send a second pre-lien notice. I feel they suddenly "remembered charges for work done" the minute we decided not to use them to finish the remaining work as up until that point there was never mention of it. Please advise what my protection rights/legal rights are at this point with no signed contract and me disputing the additional new charges? Do I have recourse to prevent the 7 day time frame until they file the lien until we can agree on the amount due? Thanks for any insight and guidance you can provide!

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Aug 19, 2019

It's hard to prevent an Arizona mechanics lien filings in an "official" way before a lien claim is filed, but sending an attorney letter warning that a filed lien would be challenged or bonded off can help to prevent a claim from happening. And, once a lien claim has been filed, there are tools available to fend off the lien claim. Let's first look at some requirements for filing an Arizona mechanics lien potentially relevant to your question above. Then, we'll dive into some defenses against improper lien claims. Arizona mechanics lien requiements Arizona mechanics lien claimants don't need to have a written contract in order to file a mechanics lien. In fact, the statute specifically contemplates the use of an oral contract as the basis for a lien claim at ARS § 33-993(A)(3). Regarding Arizona preliminary notice - Arizona does have a 20% preliminary notice rule, as hinted at above. You can read more about the rule here: Arizona’s 20% Preliminary Notice Rule. But, essentially: any time the price of the work exceeds the amount included as an "estimate" in the originally sent preliminary notice by more than 20%, a lien claimant will have to send an updated preliminary notice in order to fully preserve their lien rights. However, even if a lien claimant fails to update their work when that work exceeds the original estimate by 20%, that claimant would be entitled to file a mechanics lien for amounts that were actually included in the original preliminary notice + 20%. Any amounts exceeding 120% of the estimate, though, would not be lienable. Finally, Arizona mechanics lien claimants are only entitled to file a mechanics lien for the reasonable value of the work performed. So, even when the agreement for work did not specifically set out a price for the work to be done, a lien claimant cannot exaggerate the amount of their lien claim. If they do, they may encounter liability. Though, not all mistaken calculations will give rise to liability. More on that here: Frivolous Mechanics Liens: Intentionally Fraudulent vs. Honest Mistakes. Defending against a lien claim As mentioned above, it's hard to prevent an AZ mechanics lien filing before it actually occurs. However, notifying a lien claimant that their lien would be improper and explaining that damages will be pursued if an improper claim is made can help to give the claimant pause before they pursue their lien. This is especially true when sent by attorney letter. Once a lien is filed, though, an owner will generally be entitled to bond off the lien and/or dispute the validity of the filed lien claim. While bonding off a lien can be expensive and won't make the lien disappear, it can buy some extra time and at least have a lien taken off of the property title. More on bonding off liens here: Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien Finally, regarding the 7-day time frame mentioned above: It sounds like that's an arbitrary time period chosen by the lien claimant. So, there's a chance that the 7-day deadline isn't necessarily a hard deadline, and there's also a chance a lien claimant might be reasoned with and could be convinced to hold off on filing their claim. Lastly, I think these resources might be valuable: (1) "How do I dispute a mechanics lien in Arizona?" (2) Arizona Mechanics Lien Guide and FAQs (3) I Just Received a Notice of Intent to Lien – What Should I Do Now? (4) A Mechanics Lien Was Filed on My Property – What Do I Do Now?

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Aug 20, 2019

Matt Viator- Thanks for your attentive and detailed response. I will read through the links you have provided. Oddly enough, I talked with them last Friday asking for a breakdown of the cost and they said they'd send me the invoice breakdown. When I got that breakdown today, the total due had increased by another 3K. He said he was however willing to settle at the 13k which would cover work done & materials but little profit. Some of the charged items were initially listed as "freebies" on an earlier invoice,and now are charged line items on the newest invoice (he claims he threw those things in for free based on belief of finishing the entire job, but now will bill for them as they aren't finishing the job)however that was never discussed in writing or verbally that we'd have them complete the job or that pricing was dependent on getting to complete the entire job. 1st amount=11K & change 2nd amount=13K & change 3rd amount=16K & change Were we to settle this legally, am I correct that as the amount is for around 3-5K it would be set in small claims court? Thanks again, Leo Reynolds

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Aug 20, 2019

When a dispute is settled through negotiation, typically, that dispute will be made in lieu of pursuing future legal action. So, if a dispute will be settled in the anticipation of filing a claim to claw back some of that settlement, it'd be important to be sure no documentation is signed or no indication is given that the payment will prohibit future legal action on the debt. With that being said, note that a claim won't automatically revert to small claims court just because it's under a certain threshold. Ultimately, what will matter more is where the claim is filed in the first place. In Arizona, it appears that claims of up to $3,500 may be made in small claims court. Otherwise, if suit will be filed, that suit would likely need to be filed in the local district court. More on that here: Guide to Arizona Small Claims Court Also - you're welcome! Happy to help.

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