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Mitchell Law Office, LLC |
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Lien and Bond Claims Overview
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Helping you through the complex and confusing steps is what we do.It's the same old story: You did what you said you would do and now you are getting nothing but promises of payment at best. What do you do? If you worked on or provided materials for a construction project, you may have the right to file a construction lien claim (for private projects) or a bond claim (for public works). In Washington, you may also have the right to file something called a retainage lien claim (public projects only). Because these claims can be so powerful, you want to be careful how you make them. Also, there may be steps that, if not timely taken, could prohibit you from even making the claim. Assuming you have the right to make a claim, the next question is what is the deadline for making the claim and exactly how do you do it? Then, if you make the claim, what and when are the steps that need to be taken next and when do you have to take them? Answering these questions and helping clients through the sometimes confusing steps is what we do. It may not always be easy and it can be expensive, but sometimes your only choice is to assert your legal rights. What is a construction lien claim? A construction lien claim is a means of securing your right to claim that you are owed a debt relating to a construction project. Like a mortgage, a lien claim attaches to real property. Construction lien claims are created by state statutes. Thus, in order to assert a lien claim, you need to understand the requirements created by those statutes. Also, courts sometimes interpret the lien law statutes, which can fill in some of the gaps (or make things more confusing). What are the necessary steps in asserting a construction lien claim? The first step is being a party who has the right to file a lien claim. Typically, this means a person or company that provides materials or labor and materials to a construction project. It can also include a licensed architect or engineer. However, if you have not complied with the appropriate regulations, you may not be entitled to a lien claim even though you otherwise have that right. One of the more common examples of this is a company that performs on-site labor but does not have a contractor's license. What are the deadlines? The first deadlines concern pre-claim notices. If you have to give one and fail to do so in a timely manner, then you may lose your lien rights. See the Oregon Lien Claim summary chart or the Washington Lien Claim summary chart . The next deadlines are for recording the claim. These deadlines are calculated based upon your last day of work on the project (or last delivery for a material supplier) and they are very strict. If the deadline falls on a Sunday or a holiday, you are not allowed to record the claim on the next business day. See the Oregon Lien Claim summary chart or the Washington Lien Claim summary chart . Once you record the lien claim, the next deadline is foreclosure of the lien claim. Long before that point, you should have hired an attorney. What must be done to perfect a construction lien claim? In order to perfect a construction lien claim, you need to record a lien claim document in the office of the recorder for the county where the project is located. There is certain information that must be included in those claims. Above that minimal information, there is additional information that we recommend that you include in a lien claim. What is a public works bond claim? A public works project is a project on public property. That includes state, federal, school, city, and county projects. It does not include projects located on Native American trust reservation land. Typical examples include highways, schools, dams, and public buildings. Construction lien claims do not apply to public projects. Given that lack, public bodies typically require their general contractors to provide what is called a "payment bond," which is a type of surety bond. An unpaid subcontractor or supplier then has the right to assert a claim against that bond. For an overview, go to the summary charts for Oregon Public Works or Washington Public Works . What are the necessary steps? Similarly to lien claims, the first step is determining whether you even have the right to file a public works bond claim. For that step, you first need to find out whether there is a "payment bond" associated with the project. Some projects are exempt from providing payment bonds. If there is a payment bond, you should obtain a copy of it. Ideally, you would do this before you even started work on the project. The last thing you want is to get to the end of your work when you are owed a bunch of money and only then learn that the project was exempt from the bonding requirements. If there is a payment bond, then you should consider whether you must comply with a pre-claim notice requirement. For both Oregon and Federal projects, there is no pre-claim notice requirement. Washington, on the other hand, has pre-claim notice requirements for public works projects. What are the deadlines? In terms of the deadlines for pre-claim notices (again, Washington projects only), see the Washington Public Works summary chart. The next deadline is the one for perfecting your public works payment bond claim. As noted in the summary charts, the deadlines are calculated based upon your last day of work on the project (or last delivery for a material supplier). What must be done to perfect a claim? Unlike lien claims, public works bond claims are perfected by sending notice to the applicable parties (the public body, the general contractor, and the surety). Although there may be other methods, most people send their claims via certified mail, return receipt requested. What is a retainage lien claim (Washington only)? Washington law requires that public bodies retain 5% of the contract price until the project is fully complete. Unpaid subcontractors and suppliers can assert claims against that retainage fund. There is no similar claim for Oregon or Federal projects. What are the necessary steps? Since the retainage fund is mandatory, you do not have to worry that it exists. Your primary concern is making sure that you perfect your claim within the necessary deadlines. What are the deadlines? The first deadline is the pre-claim deadline, which is shown on the Washington Public Works summary chart . The second deadline is the one for perfecting your retainage lien claim, which is shown on the Washington Public Works summary chart . What must be done to perfect a retainage lien claim? Like public works bond claims, Washington retainage lien claims are perfected by sending notice to the applicable parties (the public body, the general contractor, and the surety). Although there may be other methods, most people send their claims via certified mail, return receipt requested. Native American trust reservation projects Native American tribes are, of course, sovereign nations. Thus, lien claim rights (which are created by state law) and public works project claim rights (which are created by state or federal law) do not exist on Native American trust reservation lands. Given the frequency of construction projects on these lands (often, casinos), potential claimants should learn what rights they do or do not have. The first issue is determining whether the project in question is actually located on trust reservation land. Sometimes, a tribe will lease private property to build their projects. If so, then the normal state construction lien laws should apply to that project. If the project is located on trust reservation land, then you should contact the prime contractor or the tribe to determine whether a payment bond has been posted. If there is a payment bond, you should obtain a copy of it before starting your work. Because the regular public works claim rules do not apply to these projects, you need to carefully examine the terms of that bond to determine whether you have the right to make a claim, what are the deadlines for making claims, and how do you make claims. |