Missouri contractors and subcontractors have received a bit of extra protection courtesy of the Missouri legislature, with property owners and others receiving benefits as well. Recently enacted provisions amend the Missouri Mechanic’s Lien Law to provide protection for new home sellers, buyers and title companies, as discussed below. The Mechanic’s Lien Law amendments also provide a number of other procedures and protections that have even greater application, as those provisions are not limited to just new residential construction, but include remodeling, additions and repairs. However, these amendments do not apply to owner-occupied residential real property of four (4) units or less.
Prior Mechanic’s Lien Law Requirements
Just the same as prior to the recent amendments, in order to impress a lien for payment secured against residential real property improved by such labor or material, an “original” (general) contractor must provide the property owner with a “Notice to Owner” in the specified statutory format. (See “Notice to Owner” at end of this article.) This Notice to Owner must be given prior to the original contract or receiving any payment either (a) at the time of executing the contract, (b) when the materials are delivered, (c) when the work has commenced, or (d) delivered with the first invoice. This Notice to Owner alerts the property owner that a subcontractor or a materialman may seek payment directly from the property owner unless lien waivers are obtained from subcontractors and materialmen.
In addition, professional registered architects, engineers, landscape architects and land surveyors may also impress a lien against real property for payment.
However, to have the benefit of the foregoing provision, the property owner must also execute a “Consent of Owner,” which consent is to be “printed in 10-point bold type and signed separately” from the Notice to Owner. (See form of “Consent of Owner” at end of this article.) The signature of any one property owner binds all owners under the statute.
Thus, not only is the property owner given notice that they may be liable to subcontractors if the general contractor does not pay them, the property owner actually is to sign a separate consent acknowledging the rights of subcontractors to payment.
Besides the “Notice to Owner” and “Consent of Owner” procedure, other contractor notices are required as well. Please see our previous e-LawLines article, New 2005 Missouri Legislation; Home Construction Defects, for further information.
Amendments Effective November 2010
Owner’s “Notice of Intended Sale”
Amendments effective November 2010 change the requirements for lien claimants (subcontractors and materialmen, as well as architects, engineers, landscape architects and land surveyors) to protect their lien rights. Under the new statutory provision, an owner of “new” residential property, being 4 or less units, as well as residential condominiums, townhouses and cooperatives regardless of the number of units, must record a “Notice of Intended Sale” not less than 45 days prior to the earliest intended closing date on the sale. In addition, the owner or its designated agent is to post a copy of the owner’s Notice of Intended Sale at the subject property, the worksite or other alternate locations.
Claimant’s “Notice of Rights”
In order to maintain its lien rights, a claimant must record a “Notice of Rights” in the county wherein the subject real property is located not less than five (5) calendar days prior to the intended date of closing set forth in the Notice of Intended Sale.
Be Wary of a Gap in Procedure
A difficulty arises on the part of a contractor or subcontractor trying to protect its rights. Under the Mechanic’s Lien Law amendments, while the owner or its designated agent with regard to new residential construction must provide any claimant with a copy of the Notice of Intended Sale within five (5) calendar days after a claimant’s request for notice of same, if the owner does not have to provide actual notice to a contractor or subcontractor in the first instance, how is the potential claimant to know that it has to act to protect it’s lien rights?
The statute is silent regarding the actual Notice of Intended Sale being provided to known contractors and subcontractors. Thus, claimants must remain vigilant in taking action to protect themselves.
Claimant’s Recourse if Owner Fails to Respond
If the owner fails to provide the Notice of Intended Sale in response to a request for such, the only recourse for a violation of this section of the Missouri Mechanic’s Lien Law is the claimant’s actual and reasonable costs, excluding attorneys’ fees, to obtain a legal description of the subject property. Thus, an owner who intentionally disregards a request under the statute may be able to thwart the ability of contractors and subcontractors to impress their liens. Accordingly, lien claimants will have to be vigilant in requesting notices or taking unilateral action to protect their rights.
Lien Claim Information
Although indicated as of general applicability to residential real property, the Mechanic’s Lien Law amendments, while purporting to clarify what information and documents are required to file a mechanic’s lien claim with the circuit court clerk, seem to suggest the requirements apply to only liens associated with new residential real property liens. The required information and documentation is listed below.
Substitute Collateral to Satisfy Lien
There is now a provided procedure whereby liens may be “bonded over,” by the owner depositing cash, an irrevocable letter of credit or a surety bond deposited with the clerk of the circuit court.
A claimant may waive its right to assert a lien by executing a partial or full lien waiver, whether conditional upon receipt of payment or unconditional. However, the statute provides that a waiver of mechanic’s lien rights shall not be deemed to waive or release mechanic’s lien rights in exchange for a payment of less than the amount claimed due at the time unless such waiver is an unconditional, final mechanic’s lien waiver in compliance with that statutory provision. The required information for an unconditional final lien waiver for residential property is provided in the statutory amendments. An unconditional final lien waiver, however, does not release or waive any other claim, remedy or cause of action. In other words, a claimant may still seek payment through a breach of contract or other theory of recovery against proper parties.
Release of Lien
A claimant who has recorded a Notice of Rights and who has been paid in full for work performed on the subject real property is required to execute and deliver in a timely manner, but not less than five (5) calendar days after written request for same, an unconditional final lien waiver. If a claimant fails or refuses to execute such a lien waiver under such conditions, the claimant is then presumed liable for slander of title and for any damages sustained as a result thereof, plus a statutory penalty of $500.00.
The Lien Law amendments also include a deceptively-looking, simple provision that reads as follows:
“Notwithstanding any other provision of this section, a notice of rights recorded after the owner’s conveyance of the property to a bona fide purchaser for value shall not be effective to preserve the claimant’s mechanic’s lien rights to the property.”
Although dealing with only new residential property of four units or less and residential condominiums, townhouses and cooperatives, the applicability of such a provision will almost certain be the subject of litigation in the instance where a sale occurs prior to the initial 40 days after the owner’s Notice of Intended Sale is recorded.
Missouri’s Mechanic’s Lien Law amendments primarily impact the new residential construction industry, including residential condominiums, townhomes and cooperatives. They also apply to non-owner occupied residential real property. However, because of the legislature’s grouping so many provisions concerning a wide array of details arguably applicable to all real property lien matters, it is uncertain how the courts may construe some of these provisions, as they apply to remodeling, additions and repairs to non-owner occupied residential real property as well.
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, RSMO. 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 MATERIAL TWICE.
CONSENT IS HEREBY GIVEN FOR FILING OF MECHANIC’S LIENS 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 IS NOT PAID.
Date: The date of the document.
Owner: Identify Property Owner, as “Grantor” by correct name.
Claimant: Identify Claimant, as “Grantee” by correct name, current address, contact persons and current telephone number.
Property: The legal description of the property.
Person Contracting with Claimant for Work: Identify person or entity contracting with Claimant by correct name, current address and current telephone number.
Persons performing work for or supplying materials to Claimant: Claimant may, but is not obligated to, identify any persons or entities which have or will be performing work or supplying materials on behalf of Claimant for the Property. Said persons or entities must be identified by correct legal name, address and current telephone number.
A recorded notice correctly identifies a person or entity so long as the identifying information in the notice is neither deceptively similar to another person or entity reasonably likely to provide labor, materials, supplies or equipment for the improvement of property nor so deficient in information as to make it unreasonably difficult to identify such person or entity. The form shall be signed by a person authorized to execute the form on behalf of the Claimant, and such signature shall be notarized. The name of the person signing the form shall be printed legibly or typed immediately below the signature.
(1) A photocopy of the file-stamped notice of rights and any renewals of notice of rights recorded by or identifying claimant;
(2) The name and address of the person or entity which claimant contracted with to perform work on the property;
(3) A copy of any contract or contracts, purchase order or orders, or proposal or proposals, hereinafter collectively referred to as agreements, and any agreed change orders or modifications to such agreement or agreements under which claimant performed its work on the property;
(4) In the absence of any written agreement or agreements, a general description of the scope of work agreed to be performed by claimant on the property and the basis for payment for such work as agreed to by claimant and the contracting party;
(5) All invoices submitted by claimant for its work on the property;
(6) An accurate statement of account which shows all payments or credits against amounts otherwise due to claimant for the work performed on the property and the calculation or basis for the amount claimed by claimant in its mechanic’s lien statement; and
(7) The last date that claimant performed any work or labor upon, or provided any materials or equipment to, the property;
(8) The claimant shall attach a file-stamped copy of his or her notice of rights to claimant’s mechanic’s lien statement if and when filed with the circuit clerk under section 429.080.