Missouri Mechanic’s Lien Law:How to Avoid Being a Monday Morning Quarterback

Presented by: Eugene TuckerGreensfelder, Hemker & Gale P.C.

What Could I Have Done Differently?

Avoid ‘What Could I Have Done?’

• Next time, how can I make sure I’m paid on time?

• Next time, how can I make sure I’m paid in full?

• We want to avoid having to ask about the next time.

Missouri Mechanic’s Lien

• Creature of Statute – Mo. Rev. Stat. §429

• Technical and Detail Oriented.

The Why of Mechanic’s Liens

• Why should I file a Mechanic’s Lien?

• Secure Payment for Work Performed.

The Who of Mechanic’s Liens

Persons Entitled To File A Lien:• General Contractors• Subcontractors• Sub-subcontractors At Any Tier• Supplier• Laborers• Architects And Engineers

The Who of Mechanic’s Liens

• Who am I?

• The Mechanic’s Lien Law differentiates based on your contractual relationship with the Owner.

The What of Mechanic’s Liens

• What type of Project is this?– Commercial?– Residential?– Privately Owned?– Government Owned?– Leased?

The Where of Mechanic’s Liens

• What County is my Project located in?

• The Lien Statement must be filed with clerk of the Circuit Court in the County where the Property is located.

The When of Mechanic’s Liens

• Timing, Timing, Timing.

• Depends on who you are and what type of Project you are working on.

The When of Mechanic’s Liens

• Original Contractor-Privately Owned Project– For a commercial or residential Project, Pre-Lien

Notice MUST be given before you receive payment. It MUST be in 10-point bold type:

FAILURE OF THIS CONTRACTOR TO PAY THOSE PERSONS SUPPLYING MATERIAL ORSERVICES TO COMPLETE THIS CONTRACT CAN RESULT IN THE FILING OF A MECHANIC'SLIEN ON THE PROPERTY WHICH IS THE SUBJECT OF THIS CONTRACT PURSUANT TOCHAPTER 429, RSMO. TO AVOID THIS RESULT YOU MAY ASK THIS CONTRACTOR FOR"LIEN WAIVERS" FROM ALL PERSONS SUPPLYING MATERIAL OR SERVICES FOR THEWORK DESCRIBED IN THIS CONTRACT. FAILURE TO SECURE LIEN WAIVERS MAY RESULTIN YOUR PAYING FOR LABOR AND MATERIAL TWICE.

The When of Mechanic’s Liens

• Subcontractor-Private Commercial Project– Pre-Lien Notice MUST be given to Owner 10

days before you file an actual mechanic’s lien.– Notice MUST include:

• Your Name• Notice that You hold a claim against the buildings or

improvements• Amount Owed• Name of the party from whom the amount is due

The When of Mechanic’s Liens

• Subcontractor-Private Residential Project– A lien cannot be perfected unless the owner has agreed

to be liable by signing a separate written form of consent. The Consent MUST be in ten point bold type:

CONSENT IS HEREBY GIVEN FOR FILING OF MECHANIC'SLIENS BY ANY PERSON WHO SUPPLIES MATERIALS ORSERVICES FOR THE WORK DESCRIBED IN THISCONTRACT ON THE PROPERTY ON WHICH IT ISLOCATED IF HE IS NOT PAID.

The When of Mechanic’s Liens

• Contractor-New Residential Project– Contractor must record a notice of rights in the

office of the recorder of deeds for the county in which the property is located, not less than five calendar days prior to the intended date of closing.

– If Contractor follows all procedures, there is no longer a need to give 10 day notice to an owner before filing a mechanic’s lien.

The When of Mechanic’s Liens

• Time to File Lien:– Six Months from your last day of work.– Not six months from last invoice.– Not six months from when payment is due.

• Time to Enforce Lien:– Six months from the date the lien is filed.

The How of Mechanic’s Liens

• What is lienable:– Generally, anything provided in connection

with the repair or improvements to the property – provided the items were furnished pursuant to a contract.

– Reasonable overhead and profit – if allowed under the contract.

The How of Mechanic’s Liens

• What do I need to file a lien:– Property Description– Lien Statement– Verification– Just and True Account

The How of Mechanic’s Liens

• Just and True Account– Required to attach documents sufficient to

identify the work performed and materials provided for the project and associated costs

– Different requirements for Original Contractors and Subcontractors

The How of Mechanic’s Liens

• Itemized Accounting:– Material Invoices– Labor Records– Small Tools And Consumables– Rental Equipment– Reasonable Overhead And Profit

Practice Pointers: Don’t Wait Until the End!

Practice Pointers: Don’t Wait Until the End!

• Before starting a project, prepare for the worst, so you are not scrambling at the end.

• Know the answers to the questions we asked today: Who am I? Did I provide proper notice? When is the last day I can file a lien?

Practice Pointers:Keep Organized Records

Practice Pointers: Keep Organized Records

• Keep a running log (like an Excel Spreadsheet) and track labor and material costs for each laborer and each material.

• Scan invoices and provide a hyperlink in your Spreadsheet so you can link between an associated costs and a specific document.

Practice Pointers:Be Wary of Leases!

Practice Pointer:Be Wary of Leases!

• Make sure the Owner is aware of the improvements.

• Is the Owner gaining a benefit?

QUESTIONS?