July 2018 – Law and Civil Engineering
THE LAW AND CIVIL ENGINEERING – JULY 2018 NEWSLETTER
Mechanic’s Liens and the Notice of Completion
by Eugene Bass
Engineers must be particularly aware of the date of completion of a project to protect their mechanic’s lien rights. There are cut-off dates for recording mechanic’s liens as well as for filing lawsuits to foreclose mechanic’s liens that are tied to the date of completion. Failure to take action within the prescribed time limits can result in complete loss of the valuable mechanic’s lien right.
If you have a direct contractual relationship with the owner, you are an “original contractor” for purposes of the mechanic’s lien laws. Each original contractor, in order to enforce a lien, must record his claim of lien after he completes his contract and before the expiration of 90 days after the completion of the work of improvement if no notice of completion or notice of cessation has been recorded, or 60 days after recordation of a valid notice of completion or notice of cessation.
Each claimant other than an original contractor, in order to enforce a lien, must record his claim of lien after he has ceased furnishing labor, services, equipment, or materials, and before the expiration of 90 days after completion of the work of improvement, if no notice of completion or cessation has been recorded, or 30 days after recordation of a notice of completion or notice of cessation.
The earliest date that a lien can be recorded is after completion, termination or breach of your contract. Be aware that work on the same project may have been performed under more than one contract and that the lien requirements apply to each contract and not the entire project. For example, site improvement work may have been under a separate contract than later works of improvement. The lien timing for the site improvement work will be tied to the site improvement contract. If the continuation of the project is performed under another contract and if the site improvement work is not paid, care must be taken to record the mechanic’s lien within the statutory time periods following completion, termination or breach of the site improvement contract.
The recording of a valid notice of completion will result in shortening the time within which a mechanic’s lien may be recorded. As stated above the time for an engineer who does not have a direct contract with the owner will have the normal 90 day period after completion reduced to 30 days. The 90 days will be reduced to 60 days if your contract is direct with the owner.
The law sets forth the information that must be included in a notice of completion. Failure to include the required information can invalidate the notice. In addition, strict time limits are set for the recording of the notice of completion. A notice of completion must be recorded within 10 days following the date of actual completion of the project. The notice must also recite the date of actual completion in the document. If an incorrect date of completion is stated in the notice of completion, the notice will not be invalid so long as the true date of completion is within 10 days preceding the date of recording of the notice.
Because of the specific statutory requirements for a valid notice of completion and because of the often uncertainty as to the actual date of completion, there is a relatively high possibility that the recorded notice of completion can be found to be invalid and ineffective to reduce the time periods for recording a mechanic’s lien. Legal counsel should be sought immediately to analyze the facts surrounding project completion and the recorded notice of completion.