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Mechanics Liens in Missouri

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MISSOURI MECHANIC’S LIENS

             Mechanic’s liens, regrettably, are necessary to protect contractors, materialmen and subcontractors from non-payment. However, in certain circumstances a mechanic’s lien can be a severe penalty to property owners, when they can be forced to pay for labor and materials twice. The mechanic’s lien statutes are necessitated by general contractors and property owner’s failure to

pay for services and materials. The mechanic’s lien statute provides some security to materialmen, laborers and subcontractors to protect them against non-payment.

             A general contractor’s initial contract with the owner should contain the following:

NOTICE TO OWNER

 

FAILURE OF THIS CONTRACTOR TO PAY THOSE PERSONS   SUPPLYING MATERIAL OR SERVICES TO COMPLETE THIS CONTRACT CAN RESULT IN THE   FILING OF A MECHANIC’S LIEN ON THE PROPERTY WHICH IS THE SUBJECT OF THIS   CONTRACT PURSUANT TO CHAPTER 429 R.S. MO. TO AVOID THIS RESULT YOU MAY ASK   THIS CONTRACTOR FOR “LIEN WAIVERS” FROM ALL PERSONS SUPPLYING MATERIAL OR   SERVICES FOR THE WORK DESCRIBED IN THIS CONTRACT. FAILURE TO SECURE LIEN WAIVERS MAY RESULT   IN YOUR PAYING FOR LABOR AND THE MATERIAL TWICE.

If the general contractor fails to include this language in a notice to the owner prior to receiving payment, either at the time of the contract, when the materials are delivered, when the work is commenced or with the first invoice, the general contractor will be denied any mechanic’s lien. Many contractors place this language in both their contract and on their invoice, as a precautionary measure.

            Any original contractor (general contractor) who fails to provide the written notice with intent to defraud is guilty of a Class B misdemeanor. Any contractor who knowingly issues a fraudulent lien waiver or a false affidavit is guilty of a Class C felony See Section 429.012 R.S. Mo.

           No subcontractor or material supplier will have a lien for work performed on owner occupied property for the repair or remodeling of or addition to residential property of four units or less, unless the contractor obtains the following signed, written consent:

CONSENT OF OWNER

CONSENT IS HEREBY GIVEN FOR FILING OF MECHANIC’S LIEN BY ANY PERSON WHO SUPPLIES MATERIALS OR SERVICES FOR THE WORK DESCRIBED IN THIS CONTRACT ON THE PROPERTY ON WHICH IT IS LOCATED IF HE HAS NOT PAID.

 

The aforesaid consent must be in ten point bold type and signed. Although one’s immediate impression may be that the owner would never agree to this, many material suppliers and some subcontractors will refuse to deliver or work until the consent is signed. This may take rigorous enforcement of the contractor’s policies, but the only other guaranty of payment for the materialmen and subcontractors is payment on delivery.

           In order for a contractor to avail himself of the benefits of the mechanic’s lien statute, it is essential for that contractor to maintain adequate records to support the mechanic’s lien. First, they should maintain written contracts with the owner or general contractor, which include provisions for invoicing on time, materials and profit for extras requested above and beyond the scope of the original contract. If there is a change in the original contract, the contractor should get a written specific change order. Secondly, upon filing a lien, a sub-contractor will have to provide a just and true account of the work, labor and materials used on the project. See Section 429.080 R.S. Mo. A general contractor may be able to avoid the just and true account, if they are relying upon a lump sum contract signed by the owner of the property. There are numerous Missouri cases defining the term “just and true account.” The definition of “just and true account” is beyond the scope of this article. That aside, the just and true account must be sufficient to notify the owner of the work and materials provided by the contractor and give the owner sufficient information to determine whether or not the labor and materials were incorporated in the improvements. Wadsworth Homes, Inc. v. Woodridge Corporation, 358 SW2d 288 (Mo.App.1972). Obviously, the better the contractor’s recordkeeping is, the more detailed just and true account they will be able to provide in the event they have to file a lien. Some lien statements include an itemized statement of hours worked by employees, what work was done and what materials were installed. Others are less detailed. Needless to say, the greater detail the contractor is able to provide, the greater chance that the contractor will survive the Court’s scrutiny of the “just and true account.”

           The lien must be filed with the Circuit Clerk within six months of the last day of work or delivery of materials to the project. Subcontractors must provide notice of intent to file their lien to the owner at least ten days before filing a lien with the Circuit Clerk. The last day of work for purposes of determining when to file the lien can be the subject of dispute. “Work” may be sufficient to constitute the last day of work, when the work performed is related to the original contract, and is requested by the parties, i.e. the owner or the general contractor, even if the amount of work is small according to the Missouri Court of Appeals, Eastern District. United Petroleum Service Inc. v. Piatchek, 282 S.W.3d 477 (Mo.App.E.D. 2007); A.E. Birk & Son Plumbing & Heating vs. Malan Construction Company, 548 S.W.2d 611 (Mo. App.E.D. 1977); and S & R Builders and Suppliers Inc. vs. Marler, 610 S.W.2d 690 (Mo.App.E.D. 1980).      

           A suit seeking to enforce the lien must be filed within six months of the date the lien was filed, otherwise no suit to enforce the lien can ever be filed and, as a result, the lien is rendered invalid. Despite this, contractors can still file suit against the person they contracted with, but will not be able to get the benefit of the mechanic’s lien, if they file out of time. In most cases, a contractor should retain an attorney well before the ten day “Notice to Owner” is due, so that they can adequately prepare the lien.

           Frequently, the causes of disputes among owners, general contractors and sub- contractors arise from disagreements over what items were contained in the original contract, or what items were “extras” or “change orders”, and what is the amount to be paid for “extras”. Contractors should have a form for contracting “Change Orders”, including a notice to the owner. Any time the owner or a general contractor asks for additional work above and beyond the scope of the original contract, the contractor should write the changes out on a change order, and either quote a price or specify that the extra will be performed on a time and materials basis, and have it signed by both parties.

         Lien litigation can become very expensive for all parties. If a lien claimant prevails, they gain powerful leverage against the owner to get paid, and may recover attorney fees. The key to a contractor prevailing lies in having the proper documentation, and having served the proper notices in a timely manner.

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Guest Tuesday, 24 October 2017