When do mechanic's lien rights expire?
Mechanic's lien rights exist in all 50 states. They are an American institution as old as the Bill of Rights, but as creatures of statute, they vary from state to state.
To enforce lien rights, claimants must strictly follow statutory requirements. A typical statutory scheme says that a contractor's mechanic's lien must be filed within a certain number of days or months after the subcontractor performs its last work on the project. There are vast differences in how courts interpret what was the last day worked on a project for purposes of starting the clock ticking for lien purposes.
Lien statutes place time limits on the right to file liens in order to relieve owners of the burden of having unlimited exposure to the risk of double payment for lien liability. Placing reasonable time limits on the right to file liens is fair for owners and the contracting community.
Since the deadline for filing liens is for the protection of the owner, it is only reasonable to examine the owner's involvement in the timing of the contractor's last day worked. For example, if a contractor whose lien rights have expired returns to the job on its own volition to perform work of a dubious nature, it is easy to conclude that this voluntary work will not extend the contractor's lien right.
If, on the other hand, a contractor returns to the jobsite at the request of the owner to perform work that was part of the contractor's original scope of work, it should be reasonable to conclude that the lien time has been extended. After all, there is no showing that the contractor's entry onto the jobsite to perform work was motivated for the sole purpose of extending its lien time.
Let's look at how two states, Kansas and Connecticut, differ on the issue of when lien rights expire.
The Kansas Rule
In Kansas, a subcontractor must file its mechanic's lien within three months of the last date it furnished labor, materials, or equipment for the project. In Crème de la Crème (Kansas) v. R&R International, 85 P.3d 205, the court determined that the electrical subcontractor's lien was not filed in a timely fashion.
In this case, the electrical subcontractor returned to the project after submitting its final billing, which stated that its work was 100% complete. Later, the subcontractor's electricians, acting solely on an oral request from representatives of the owner, spent 12½ hours at the jobsite over the course of two days. The work performed had not been included in the subcontractor's original scope of work.
Because the last work performed was not part of the subcontractor's scope of work and there was no change order adding this work, the court found it to be gratuitous and did not extend the subcontractor's time for filing its mechanic's lien. The court did not consider the owner's duty to issue a change order because of its expansion of the subcontractor's scope of work.
The Connecticut Rule
Connecticut statute requires a mechanic's lien to be filed within 90 days of the contractor's cessation of work. In F.D. Mattson Company, Inc. v. Tarte, 719 A.2d 1158 (1998), the issue was whether the contractor ceased work as of the date of substantial completion, or whether cessation did not occur until after the contractor completed some trivial work at the request of the owner.
By the time the job was substantially completed, the owner had fallen behind in payments. The contractor stopped work on the project, but left scaffolding and roofing brackets in place. Subsequently, a new owner asked the contractor to remove the scaffolding and roofing brackets.
In this case, the Connecticut Supreme Court ruled that in order for the lien time to begin to run as of the date of substantial completion instead of the date the contractor completed the call-back work requested by the building owner, two conditions had to be satisfied: first, the contractor must have unreasonably delayed final completion of the project, and, second, services rendered by the contractor after the date of substantial completion must have been furnished at the contractor's initiative, rather than at the owner's request.
Owner's request is key
Even though the removal of the scaffolding and brackets was part of the contractor's scope of work, it is my professional opinion that the reasoning of the Connecticut court is more sound than that of the Kansas court because of the weight given by the Connecticut court to the owner's request for the contractor to return to the jobsite to finish the job.
Statutory lien deadlines are written into law for the protection and benefit of the owner, but if the owner is the cause of the contractor returning to the jobsite to finish the job, it is only reasonable that the lien time be extended.