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Will my lien be valid?

My customer (sub-contractor) orderd material for a project - (we did send out preliminary notice) - the material is still in the posession of my customer - so it was never shipped to their customer - the company that ordered it doesn't want it...so can I still file a lien and will it be valid?

1 reply

May 2, 2018

That's a tough situation, and the question of whether a lien could be filed for materials that are ordered and delivered (but never make it to the jobsite) isn't particularly cut and dry. First, it's worth noting that lien claims - even flawed ones - can actually be filed in most cases. However, whether a lien would be valid in the face of a challenge or enforcement action is another question. Generally, most states will require some actual improvement of property - or at least the delivery of materials to a job site, before a valid mechanics lien may be filed. There may be room to argue that Nevada's mechanics lien statute provides some grey area, though. Specifically, under NRS § 108.2214, a "lien claimant" is defined as "any person who provides work, material or equipment with a value of $500 or more to be used in or for the construction, alteration or repair of any improvement, property or work of improvement." Thus, it seems like the statute may contemplate that materials are not actually utilized - and it's silent as to whether materials must be delivered. Before getting too far, let's also take a look at the definition for "material" under NRS § 108.22144 - "appliances, equipment, machinery and substances affixed, used or to be used, consumed or incorporated in the improvement of property or the construction, alteration or repair of any improvement, property or work of improvement." Here, too, it appears that material might not necessarily need to make it into the improvement - and potentially not even to the job site. Finally, looking at NRS § 108.222, a lien claimant has a lien on property/ improvement "for which the work, materials and equipment were furnished or to be furnished" for: "material and equipment furnished or to be furnished by or through the lien claimant, the unpaid balance of the price agreed upon for such work, material or equipment, as the case may be, whether performed, furnished or to be performed or furnished at the instance of the owner or the owner’s agent..." While this language may all seem to be favorable re: materials delivered to a subcontractor but not the actual job site - keep in mind that on the whole, mechanics lien rights are intended to secure payment for the improvement of property. Thus, there's certainly a chance that the argument (supporting the right to lien for materials that don't actually make it to a job site) could fall on deaf ears. However, by the letter of the lien statute, such a lien might be valid. It's worth noting, though, that unless a lien is filed in bad faith or exaggerated, the penalties associated with a fraudulent or improper lien filing typically won't come into play. Plus, since lien claims rarely make into a courtroom (either via a challenge of the lien claim or an eventual lien enforcement action). They're often paid or settled before that. This means that, ultimately, the ability to actually enforce/foreclose a lien claim might be a secondary concern - plus, if there's serious question as to whether the lien claim would hold up against scrutiny, a claimant will often be able to release their lien without facing the penalties of a fraudulent/improper filing. You can learn more about the line between fraudulent filings and honest mistakes here: Intentionally Fraudulent vs. Honest Mistakes.

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