Tag Archives: St. Louis Mechanic’s Lien attorney

Illinois Mechanic’s Liens FAQs

This article was intended to answer frequently asked questions about Mechanic’s liens in the state of Illinois. The questions contained herein range from the basic essentials of lien filing to a fairly complex discussion of Illinois case law.  In preparing this article, numerous sources have been used, all of which have been cited throughout the text.

In the event a question arises regarding an issue on your construction project, or if you have a question about liens or something related to collecting payment on a project, please contact one of our attorneys for assistance with your case.

General Mechanic’s Lien Questions

The purpose of this section is to inform the reader of the basic principles surrounding Illinois Mechanic’s Liens using statutes and cases to show how Illinois courts have construed the law regarding such subject matter.

The purpose is not only to give a general overview on the basics of mechanic’s liens, but also to provide more in-depth law to educate readers in order to allow companies and individuals in the construction industry to fully exercise their legal rights to collect money that is lawfully due and owing.

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What is a Mechanic’s Lien?

A mechanic’s lien is a tool that contractors and subcontractors can use to create a security interest in property for performing labor or providing materials to improve said property.

While the contractor or individual performing the work can make a claim on the basis of the contract or on the basis of equity, there are certain occasions when the owner is insolvent or unable to pay for the work performed.  In such situations, the contractor’s or individual’s only form of recovery may be through the assertion of a mechanic’s lien.  Ultimately, the recovery potential may be based on priority of the lien if there is limited or no equity in the property.  However, the mechanic’s lien is a mechanism through which the contractor has a direct route to taking the owner’s property and making said property security for the amount owed on the project, which includes the improvements performed thereon.

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What is the Authority for a Mechanic’s Liens in Illinois?

Illinois statutes are the basis for mechanic’s liens.  They do not exist in common law or in equity. Courts are responsible for interpreting the validity of the liens, but the Courts have some flexibility in construing the same.  However, case law dictates that Courts must construe the entire Mechanic’s Lien Act liberally to effectuate its remedial purpose, but before doing so, the lien claimant must have strictly adhered to the statutory requirements to create the lien.  The actual verbiage from Illinois cases is set forth below in this article.

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What Illinois Statute Creates a Mechanic’s Lien?

The statute that creates Illinois mechanic’s liens is 770 ILCS 60/1. However, 770 ILCS 60/7 defines the requirements, statute of limitations, and other relevant details relating to liens. The remainder of the Illinois statutes under chapter 770 set forth the additional rules governing mechanic’s liens.

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What Illinois Law Governs Mechanic’s Liens?

The Illinois Mechanic’s Lien Act falls under 770 ILCS 60/0.01 et seq. and defines a party’s rights with respect to collecting on a construction project by way of a mechanic’s lien. In addition to the Act, there are thousands of cases that interpret the statutes and elaborate on the definitions set forth therein.  The case law cited throughout these frequently asked questions section is aimed at explaining how Illinois courts have construed some of the gray areas in the lien law realm.

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What is the Purpose of a Mechanic’s Lien?

“[The] purpose [of mechanic’s liens] is to protect, through imposition of an enforceable lien, a party who improves the value or condition of property by furnishing labor or materials.” Seasons-4, Inc. v. Hertz Corp., 338 Ill. App. 3d 565, 570, 788 N.E.2d 179, 183 (2003).

To further describe a mechanic’s lien’s purpose, the Illinois Court of Appeals, First District, states: “the underlying theory of the mechanics’ lien laws is that the owner of the fee is benefited by buildings and improvements erected on his premises as they became part of the realty and that he, having received that benefit, should in right and justice pay for such benefit when it was induced or encouraged by his act.” Rasmussen v. Harper, 287 Ill. App. 404, 410, 5 N.E.2d 257, 260 (Ill. App. Ct. 1936).

“[The] purpose of such a statute is to permit a lien upon premises where a benefit has been received by the owner and where the value or condition of the property has been increased or improved by reason of the furnishing of labor and materials.” Colp v. First Baptist Church of Murphysboro, 341 Ill. 73, 76–77, 173 N.E. 67, 68 (1930).

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When Does a Lien Provide a Right to Recovery?

“Mechanics Lien Act provides a method of recovery where a landowner received beneficial improvements to his property or his property value was increased because of a contractor’s labor and materials.” Matanky Realty Grp., Inc. v. Katris, 367 Ill. App. 3d 839, 841, 856 N.E.2d 579, 582 (2006) (citing Gateway Concrete Forming Systems, Inc. v. Dynaprop XVIII: State Street LLC, 356 Ill.App.3d 806, 809, 292 Ill.Dec. 615, 826 N.E.2d 1051 (2005)).

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Who has the Right to file a Mechanic’s Lien?

Any person who has a contract with the owner of property or a person who provides material or labor on a lot or tract of land has the right to file a mechanic’s lien.  These “persons” are described as contractors and subcontractors, the definition of which is set forth in this article. In addition to the foregoing prerequisites, there are numerous statutory conditions that are also discussed in this FAQs article, which must be satisfied to file a valid mechanic’s lien. 770 ILCS 60/1 & 770 ILCS 60/21

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How long does a Contractor have to file a Mechanic’s Lien in Illinois?

4 Months after last work is completed. However, the 4 months’ time period is more than just a statute of limitations, it is the only window in which lien rights may be asserted by the contractor.  “It goes to the existence of the right itself.” N. Side Sash & Door Co. v. Hecht, 295 Ill. 515, 519–20, 129 N.E. 273, 274 (1920).

No contractor shall be allowed to enforce such lien against or to the prejudice of any other creditor or incumbrancer or purchaser, unless within 4 months after completion, or if extra or additional work is done or labor, services, material, fixtures, apparatus or machinery, forms or form work is delivered therefor within 4 months after the completion of such extra or additional work or the final delivery of such extra or additional labor, services, material, fixtures, apparatus or machinery, forms or form work, he or she shall either bring an action to enforce his or her lien therefor or shall file in the office of the recorder of the county in which the building, erection or other improvement to be charged with the lien is situated… (770 ILCS 60/7)

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How long does a Claimant have to foreclose on a Mechanic’s Lien?

A lien claimant must foreclose on a mechanic’s lien “within two years after the completion of the contract, or completion of the extra or additional work, or furnishing of extra or additional material thereunder.” (770 ILCS 60/9)

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What is a Subcontractor Pursuant to the Illinois Mechanic’s Lien Act?

A subcontractor is defined under 770 ILCS 60/21 as “every mechanic, worker or other person who shall furnish any labor, services, material, fixtures, apparatus or machinery, forms or form work for the contractor, or shall furnish any material to be employed in the process of construction as a means for assisting in the erection of the building or improvement in what is commonly termed form or form work where concrete, cement or like material is used in whole or in part…”

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How do Illinois Courts Construe Mechanic’s Liens?

The interpretation of a mechanic’s lien could be referred to as oxymoronic in the sense that the Illinois courts interpret the Act liberally but they construe the satisfaction of the basic lien requirements stringently.

The Courts routinely state that the Mechanic’s Liens Act “is and shall be liberally construed as a remedial act.” (770 ILCS 60/39)

However, to the contrary, “[i]t is well established that the Act must be strictly construed with respect to all the statutory requirements upon which the right to a lien depends.” Cityline Const. Fire & Water Restoration, Inc. v. Roberts, 2014 IL App (1st) 130730, ¶ 10, 7 N.E.3d 235, 237 “The rights created under the Act are statutory and in derogation of the common law, and the technical and procedural requirements necessary for a party to invoke the benefits of the Act must be strictly construed.”

“While our supreme court has declined to establish filing requirements other than those expressly provided in the Act, not wishing to render validly perfected liens technically unenforceable, it remains the settled rule that ‘the lien is valid only if each of the statutory requirements is scrupulously observed.’” Aluma Sys., Inc. v. Frederick Quinn Corp., 206 Ill. App. 3d 828, 839, 564 N.E.2d 1280, 1287 (1990)(quoting First Federal Savings & Loan Association v. Connelly (1983), 97 Ill.2d 242, 246, 73 Ill.Dec. 454, 456, 454 N.E.2d 314, 316.)

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What are the Elements of a Prime Contractor’s Lien in Illinois?

There are a number of necessary elements when filing a mechanic’s lien in Illinois. The following are the general prerequisites:

“(1) a valid contract,

(2) with the owner of the property or his agent or someone who is knowingly permitted by the owner to contract for improvements,

(3) for the furnishing of services or materials, and

(4) performance of the contract or a valid excuse for nonperformance.” Tefco Const. Co. v. Cont’l Cmty. Bank & Trust Co., 357 Ill. App. 3d 714, 718, 829 N.E.2d 860, 863 (2005).

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What are the Requirements if a Lien Claimant wants to enforce the Lien against another Creditor?

If the lien claimant wishes to enforce the lien against a creditor, the claimant must: “(1) file its claim within four months after the completion of the work; (2) verify the lien by affidavit of the claimant or an agent or employee; (3) include a brief statement of the contract; (4) set forth the balance due; and (5) provide a sufficiently correct description of the lot, lots, or tracts of land to identify the same.” Young v. CES, Inc., 2014 IL App (2d) 131090-U, ¶ 79. (citing 770 ILCS 60/7(a) (West 2012); Tefco, 357 Ill.App.3d at 719. See generally First Federal Savings & Loan Ass’n v. Connelly, 97 Ill.2d 242, 249 (1983) (lien claim sufficient even though it pertained to a contract for work on four different buildings likely performed on different dates); Lyons Federal Trust & Savings Bank v. Moline National Bank, 193 Ill.App.3d 108, 112 (1990) (“a statement of mechanics lien does not necessarily require a contract date to be alleged”)).

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Can Attorney’s Fees be collected on a Mechanic’s Lien?

Under certain circumstances attorney’s fees may be collected on a mechanic’s lien. However, prior to the court awarding attorney’s fees, it would have to find that the owner failed to pay “without just cause or right.”

In this context, without just cause or right is defined under 770 ILCS 60/17 as “a defense asserted by the owner who contracted to have the improvements made, which is not well grounded in fact and warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.”

The applicable statute that allows the lien claimant to recover attorney’s fees states the following, in pertinent part:

If the court specifically finds that the owner who contracted to have the improvements made failed to pay any lien claimant the full contract price, including extras, without just cause or right, the court may tax that owner, but not any other party, the reasonable attorney’s fees of the lien claimant who had perfected and proven his or her claim. 770 ILCS 60/17(b)

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What can a Subcontractor file a Mechanic’s Lien for in Illinois?

Any person who shall by any contract or contracts, express or implied, or partly expressed or implied, with the owner of a lot or tract of land…has a lien upon the whole of such lot or tract of land…for the amount due to him or her for the material, fixtures, apparatus, machinery, services or labor, and interest at the rate of 10% per annum from the date the same is due. 770 ILCS 60/1)

“Section 1 of the Mechanic’s Lien Act (Ill.Rev.Stat.1977, ch. 82, par. 1) specifically provides that a contractor shall have a lien for the amount due from the service, material and labor furnished ‘and interest from the date the same is due.’” Plepel v. Nied, 106 Ill. App. 3d 282, 290, 435 N.E.2d 1169, 1175 (1982).

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Can a Contractor file a Lien if the Owner Breaches the Contract?

Yes, but the owner’s breach must be proven.
“Normally under the Act, the contractor must completely perform the contract to enforce its lien for the value of what has been done. E.g., Contract Development Corp., 255 Ill.App.3d at 666, 194 Ill.Dec. 423, 627 N.E.2d 760.” Fieldcrest Builders, Inc. v. Antonucci, 311 Ill. App. 3d 597, 609–10, 724 N.E.2d 49, 59–60 (1999)
“Non performance on the part of the contractor, however, is excused where the owner breaches the contract and, therefore, the contractor would still be entitled to enforce its lien for the value of the services and material provided in performance of the contract.” Wilmette Partners, 230 Ill.App.3d at 261, 171 Ill.Dec. 657, 594 N.E.2d 1177 (and cases cited therein); 770 ILCS 60/4 (West 1994). Fieldcrest Builders, Inc. v. Antonucci, 311 Ill. App. 3d 597, 609–10, 724 N.E.2d 49, 59–60 (1999).

Can a Contractor have a Mechanic’s Lien on an Easement?

Yes. However, a lien will not extend to an easement if the work is solely performed on the easement.

“Although we recognize that a lien may be extended to ‘an estate in fee, or any right of redemption or other interest that the owner may have in the lot or tract of land’ (770 ILCS 60/1 (West 2004)), we determine that ‘other interest’ does not include easement rights when the improvements at issue were solely made on that easement and not in connection with any improvements to the principle property.” Matanky Realty Grp., Inc. v. Katris, 367 Ill. App. 3d 839, 843, 856 N.E.2d 579, 583 (2006).

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Will a Mechanic’s Lien be Invalid if the Amount Due is Incorrectly Stated?

Maybe. This depends, however, on the mental state/intentions of the contractor at the time the lien is prepared and filed.

“No [lien that has an erroneous amount stated] shall be defeated to the proper amount thereof because of an error or overcharging on the part of any person claiming a lien therefor under this Act, unless it shall be shown that such error or overcharge is made with intent to defraud” (770 ILCS 60/7); See http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=077000600K7

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Does a Mechanic’s Lien have to contain different information (apportionment of claim) when covering multiple parcels of land?

No. Apportionment of each claim is not a well-defined rule in Illinois as it pertains to multiple parcels of land. Of course, if the lien claimant is able to break down the claim into each parcel, it may be well-advised to thoroughly describe the work for which the lien claim has been made.

The Illinois Court of Appeals states the following “Schmidt [v. Anderson (1911), 253 Ill. 29, 97 N.E. 291] did not lay down a per se rule that each time multiple properties are involved, allocation is required.” (Barker-Lubin Co. v. Unknown Heirs or Devisees (1982), 106 Ill.App.3d 89, 92, 61 Ill.Dec. 796, 435 N.E.2d 493.)

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What if the Lien Statute Changes over the Course of my Contract, which statute governs? The new or the old statute?

While this is what appears to be one of those gray areas, there is case law that answers this question. The answer is: the lien statute in place at the time when the parties enter into the contract will govern if any disputes arise.

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What is Enhancement in the Context of Mechanic’s Liens?

Section 16 of the MechanicsLien Act provides in relevant part that “upon questions arising between incumbrancers and lien creditors, all previous incumbrances shall be preferred to the extent of the value of the land at the time of making the contract, and the lien creditor shall be preferred to the value of the improvements erected * * *.” 770 ILCS 60/16 (West 1994). Therefore, in order to have priority over a mortgagee, mechanicslien claimants whose contracts with the owner are made after the mortgage is recorded, must prove that they have enhanced the value of the property. If they fail to prove this, then the mortgage will have complete priority over the liens.

Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 744, 665 N.E.2d 326, 329 (1996)(citing Commercial Mortgage & Finance Co. v. Woodcock Construction Co., 51 Ill.App.2d 61, 65, 200 N.E.2d 923, 925 (1964)).

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How does a Lien Claimant prove Enhancement?

“[L]ien claimants must prove the value of their enhancements by applying the market value theory. Generally, under the market value theory, the value of the enhancements equals the market value of the property after the improvements are made minus the value of the property before the improvements are made.” Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 744–45, 665 N.E.2d 326, 329 (1996).

What is the Market Value Theory?

Market value theory is the manner in which a lien claimant proves enhancement of the property.  “Enhancement is the increase in market value of the property by reason of the improvement, and is not affected by the cost of labor or material, the original amount of the claim, or the balance due thereupon.” Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 745, 665 N.E.2d 326, 329 (1996)(citing Moulding-Brownell v. E.C. Delfosse Construction Corp., 304 Ill.App. at 493-94, 26 N.E.2d 709, 712 (1940).

What are other Ways to Prove Enhancement of Property?

Some Illinois appellate courts have determined that “the contract price is the appropriate measure of the lien claimants’ improvements.” Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 745, 665 N.E.2d 326, 330 (1996)(citingNoel State Bank v. Blakely Real Estate Improvement Corp., 321 Ill.App. 594, 53 N.E.2d 621 (1944)). This measure of damages typically only applies in limited circumstances where the improvements are limited though.

When is the Market Value Theory the Appropriate Method of Determining the Enhancements on Property?

The Illinois Court of Appeals held generally that when the improvements were greater than 10% of the structure, then the proper measure of damages is the market value theory.  This reason comes in part from the concept that “the margin of error in utilizing the market value approach is 10%.” Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 746, 665 N.E.2d 326, 330 (1996).

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What are the Elements when the Market Value Theory is Inappropriate?

When the market value approach is not the proper method of determining the enhancement of the property, “the lien claimant must establish the contract price as an accurate measure of the value of the enhancements by showing that the improvements aided the property in achieving its highest and best use.” Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 747, 665 N.E.2d 326, 330 (1996).
The following are the elements to prove enhancement of the property using a contract: “(1) the work in question was properly authorized by the owner of the property, (2) the contract price was reasonable for the work done, (3) the lien claimants complied with the terms of the contract, and (4) the work constitutes a valuable and permanent improvement to the property.” Lyons Sav. v. Gash Assocs., 279 Ill. App. 3d 742, 746–47, 665 N.E.2d 326, 330 (1996).

Notice

What Notice must be given on Owner-Occupied Single-Family Residences?

“A contractor for improvements of an owner-occupied single-family residence must give the owner written notice within 10 days after recording a lien against any property of the owner.” (770 ILCS 60/7)

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How is Service effectuated regarding the Contractor’s Notice Requirement on Owner-Occupied Single Family Residences?

With respect to owner-occupied single-family residences, the service is effective at the time it is “sent or personally delivered.” (770 ILCS 60/7)

In the event that the contractor fails to give timely notice to the owner the lien may be extinguished in part, if the owner has suffered damages before notice is given, but only to the extent of the damages caused by failure to provide notice may the lien be extinguished. (770 ILCS 60/7)

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What Notice does a Subcontractor have to give to the Owner of Residential Property in order to preserve its Mechanic’s Lien Rights?

Pursuant to 770 ILCS 60/21(c), the subcontractor must give 60 days’ notice from the first day labor is performed.

It shall be the duty of each subcontractor who has furnished, or is furnishing, labor, services, material, fixtures, apparatus or machinery, forms or form work for an existing owner-occupied single family residence, in order to preserve his lien, to notify the occupant either personally or by certified mail, return receipt requested, addressed to the occupant or his agent of the residence within 60 days from his first furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work, that he is supplying labor, services, material, fixtures, apparatus or machinery, forms or form work provided…770 ILCS 60/21

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Does a Subcontractor lose its lien rights if it fails to give 60 days’ Notice to a Residential Property Owner?

It depends.  “[A]ny notice given after 60 days by the subcontractor shall preserve his lien, but only to the extent that the owner has not been prejudiced by payments made prior to receipt of the notice.” 770 ILCS 60/21(c)

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What does the Subcontractor’s Notice have to include?

  1. name and address of the subcontractor or material man;
  2. the date the subcontractor began the work or delivered the materials;
  3. a description of the work performed and that will be performed (or a description of the materials that have been delivered and will be delivered,
  4. the general contractor’s name who solicited the work from the subcontractor, and
  5. Certain specific language, written exactly as follows:

“NOTICE TO OWNER

The subcontractor providing this notice has performed work for or delivered material to your home improvement contractor. These services or materials are being used in the improvements to your residence and entitle the subcontractor to file a lien against your residence if the services or materials are not paid for by your home improvement contractor. A lien waiver will be provided to your contractor when the subcontractor is paid, and you are urged to request this waiver from your contractor when paying for your home improvements.”

*The above notice must be in at least 10 point bold face font.

The statute generally states that if the notice is sent via certified mail, then the mailbox rule applies.  The mailbox rule means that the notice would be deemed to be given on the date that the notice was properly addressed and mailed.  770 ILCS 60/21(c)

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Contractors’ Rights

What are the Contractor’s Rights when an Owner Stops Paying on a Project?

If the money is lawfully due and owing to the contractor (always consult with an attorney to know your rights), the contractor can stop performing the work, and the contractor will be immune from any claims due to delay during that time period. 770 ILCS 60/4

Additionally, if payment is not received for a period of at least 10 days, the contractor can abandon the work and pursue a lien on the property. The lien can only be for the amount of work that has already been performed.  Also, the contractor is entitled to keep materials supplied by the contractor if they are not incorporated into the improvement. 770 ILCS 60/4

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Can a Tenant who performs Improvements on a Landlord’s Property Claim a Mechanic’s Lien?

Yes. Even when there was a provision in the contract prohibiting a mechanic’s lien from being filed on the property by the tenant, the Illinois Appellate Court of the First District held that the tenant had lien rights, treating him like any other contractor.

The court stated the following, in relevant part:

under the broad terms of the Act, any person who contracts with a property owner or his agent for the furnishing of services or materials for the benefit of the land may properly claim a lien against the property. (Delaney Electric Co. v. Schiessle (1992), 235 Ill.App.3d 258, 264, 176 Ill.Dec. 280, 601 N.E.2d 978.) This result obtains regardless of whether the lien claimant may have a leasehold interest in the property. It is the lienor’s performance of the contract, and not his status incident to tenancy, which determines his right to a mechanic’s lien.

Leveyfilm, Inc. v. Cosmopolitan Bank & Trust, 274 Ill. App. 3d 348, 353, 653 N.E.2d 875, 878 (1995).

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Bonding over a Mechanic’s Lien

What does it mean to Bond over a Mechanic’s Lien?

When a subcontractor files a mechanic’s lien, sometimes it can cause tension between the general contractor and the owner.  In some situations, it can destroy their relationship. Depending on the extent of the business relationship, this could cost the general contractor thousands to millions of dollars in lost future business opportunities.

What if the claim isn’t even valid?  For example, if the subcontractor files without any just cause? Shouldn’t the contractor be able to get the lien off immediately?

In a number of states, like Missouri for example, the general contractor is stuck litigating the case to vitiate/invalidate the lien or if the general contractor loses, the property is foreclosed upon.

In a lot of these cases, long before the Court or a jury make a decision, the owner puts significant pressure on the contractor to forces them to prematurely settle with the subcontractor.  If the general contractor does not settle these cases immediately, it clouds the owner’s title, which most owners will not tolerate a subcontractor encumbering their property.

Fortunately for general contractors in Illinois, there is the possibility of removing the lien from the property and replacing it with a bond.  This is called bonding over the lien or the substitution of a bond for a lien.

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What Illinois Statute governs Bonding over a Mechanic’s Lien?

In Illinois, section 770 ILCS 60/38.1 governs the substitution of bonds for mechanics’ liens.  As noted above bonding over a mechanic’s lien is one of the most effective ways to relieve the general contractor from getting pressure from the owner.

In Missouri, there is no statute that allows a contractor to bond over a lien.  Instead, the contractor is stuck dealing with a battle from two fronts (from the owner and from the lien claimant).  The only way of getting the lien off is by having a court adjudicate it invalid or by paying it and receiving a lien release from the lien claimant.

In certain situations, where the lien could be ripe for a slander of title claim, the subcontractor may just release the lien and litigate its contractual claim.  This obviously varies greatly depending on the factual circumstances of the case.

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St. Louis Mechanic’s Lien Law Attorney

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St. Louis Lien Attorneys

Depending on the size of your project, a mechanic’s lien can secure hundreds to millions of dollars.

Mechanic’s liens are a critical tool for a construction contractor seeking to collect payment on a construction project.

Why?

Because a lien has the ability to collateralize the property for you.

It makes the real property, upon which you’ve performed the work, collateral, in the event that you do not get paid on the project.

Thus, the real property will be your collateral up to the amount you are owed–that’s what filing a valid mechanic’s lien can do for you.

Essentially the lien clouds the title of the property and causes the lender/financial institution to put pressure on the owner of the property (if there’s a mortgage or deed of trust), or it limits marketability of the property because the encumbrance on the title detracts purchasers.

We are not saying that you cannot collect on a construction project without a lien.  Rather, we are merely pointing out the fact that it is the most powerful collection tool that a contractor can use when seeking payment on a construction project.

In light of the importance of a mechanic’s lien, you want to make sure that you preserve your lien rights and utilize those rights when necessary.

We have attorneys who are experienced with filing and defending mechanic’s liens as we have litigated numerous cases dealing with the foreclosure of mechanic’s liens–both defending and prosecuting the same.

If you need assistance in dealing with your mechanic’s lien filing or claim, our attorneys are experienced with handling the same, and we can help you!

Please contact one of our construction law attorneys today.

5 Thoughts on Mechanic’s Lien Notice Law in Missouri

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St. Louis Attorney Discusses Mechanic’s Lien Notice

Notice is an important part of the lien process.  In fact, it’s an indispensable part.  Without notice, you cannot have a valid mechanic’s lien in Missouri.

This article aims at educating the reader on 5 different thoughts surrounding Missouri mechanic’s liens and a few facts you should probably know if you’re a construction company owner or contractor.

First, let’s look at the notice that general contractors need to provide.

1.   General Contractors Must Provide 429 Lien Notice

A general contractor is required to provide notice for every mechanic’s lien.  The statute, R.S.Mo. section 429.012, even states that provision of the 429 notice is a condition precedent “to the creation, existence or validity of any mechanic’s lien in favor of such original contractor.”

So, what is 429 notice?  It is notice to the owner to alert them that they could pay for materials twice if they do not obtain lien waivers from the general contractor.

The 429 lien notice must state the following in ten-point bold type font:

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.

2.   Subcontractors Must Provide Notice of Intent

In order to have valid lien rights on a Missouri construction project, a subcontractor has to give a notice of intent 10 days prior to filing the mechanic’s lien.

As you may be aware, the lien law in Missouri is six months from the last day worked or materials were supplied.  As such, you must provide notice of intent to lien more than 10 days prior to the mechanic’s lien filing deadline because 10 days must pass before filing a mechanic’s lien.

The mechanic lien notice requirement for a Missouri subcontractor is set forth under 429.100, and states the following, in pertinent part:

Every person except the original contractor, who may wish to avail himself of the benefit of the provisions of sections429.010 to 429.340, shall give ten days’ notice before the filing of the lien, as herein required, to the owner, owners or agent, or either of them, that he holds a claim against such building or improvement, setting forth the amount and from whom the same is due.”

Who can serve the lien notice?

“Such notice may be served by any officer authorized by law to serve process in civil actions, or by any person who would be a competent witness.” R.S.Mo 429.100

3.   Notice will Always Be Required by a Lien Claimant

As discussed above, notice is required by a general contractor and is found under 429.010.

Because a general contractor always has to give notice pursuant to section 429 of the Missouri Revised Statutes, the general contractor should have all contracts and other documentation relating to the project chocked full of 429 notice language.

That way, if there’s a question about notice, and all of your paperwork shows the 429 notice language, then you can easily prove that notice was provided.

Additionally, all subcontractors must provide notice of intent as described above.  That makes up all potential mechanic’s lien claimants on the project.

Thus, notice must be given by any party who wishes to file a mechanic’s lien on the project.

For any subcontractors who need assistance in providing a notice of intent to file a mechanic’s lien statement, please contact one of our construction attorneys.

4.   Lien Notice Compliance is Critical

Mechanic’s liens are creatures of statute as the Missouri courts love to say.  From a practical standpoint this means that because mechanic’s lien rights are created through the statute, the lien claimant typically has to strictly comply with the statutory requirements.

If a contractor does not provide lien notice, it will be fatal to the lien. (Note: there is an exception case in Missouri where the court did not require notice, but it is an extreme rarity)

That’s why contractors should know what type of notice they have to provide (depending on their role on the project).

In addition to knowing what type of notice you need to provide, your documentation, such as contracts and invoices, need to be in compliance with Missouri lien statutes.

In order to properly prepare documentation to preserve your lien rights, you should consult with an attorney in the county in which you need to file the lien.  This is the county where the project is located.

For help with mechanic’s liens in Jefferson County, St. Charles County, or St. Louis County, West County, or Ste. Genevieve County, please contact one of our mechanic’s lien attorneys here.

5. Subcontractors and Suppliers Will Rarely, if Ever, Have Lien Rights on a Residential Property of 4 Units or Less

Because Missouri lien law requires written consent from the owner of a residential property, you will rarely, if ever, have lien rights on such project.  Why?

Because the statute requires the consent of the owner.

R.S.Mo. Section 429.013 prohibits a subcontractor from having a lien on owner-occupied residential property (of 4 units or less):

unless an owner of the building or structure pursuant to a written contract has agreed to be liable for such costs in the event that the costs are not paid. Such consent shall be printed in ten point bold type and signed separately from the notice required by section 429.012 and shall contain the following words:

CONSENT OF OWNER

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.” R.S.Mo. 429.013.2

In order for any subcontractor to have valid lien rights on an owner-occupied residential building of four units or less, the subcontractor must attach “a copy of a consent in the form prescribed in subsection 2 of [R.S.Mo.] section [429], signed by an owner, [] to the recording of a claim of lien.” R.S.Mo. 429.013.3

For that reason, it may be advisable to have a direct contract with the owner of the property when working on such residential units.

A direct contract can have advantages and disadvantages. Accordingly, You should discuss the specifics of your case with a knowledgeable construction law attorney.

As the statute sets forth above, the general contractor on the project would have to obtain consent from the owner.

A general contractor’s main goal is to land the job with the owner of the project, whether that be an owner of commercial property, owner of large residential property (apartment complex/condominiums), or even a homeowner.

Obtaining consent from the owner in order for subcontractors to have the right to file mechanic’s liens will not be a shining badge that will be well-received by the homeowner.  In fact, it could be a deal breaker for the owner.

Accordingly, rarely, if ever, will a general contractor ask the owner of a construction project to sign a consent to lien form.

Mechanic’s Lien Attorney in St. Louis

Filing a mechanic’s lien is a detail-intensive task because you have to strictly comply with the statutes in order to avoid lien vitiation.

On top of that, there are numerous statutes regarding notice, lien requirements, and other caveats depending on the factual circumstances of your case.

You should always consult a construction law attorney if you are seeking to collect on a construction project.

If you need a lawyer to help you file a mechanic’s lien in the St. Louis area, you can contact a lien lawyer here.

St. Louis, MO Mechanic’s Lien Law

Cracked Sidewalk & Bulldozer

Missouri Mechanic’s Lien Law Questions

What is a Mechanic’s Lien?

A mechanic’s lien is a means, created by statute, for suppliers of labor and/or materials to put a security interest onto real property in order to ensure payment of the work performed or materials provided.

A mechanic’s lien is a hammer for general contractors and subcontractors that need to collect payment on a construction project.

In Missouri, a lien is a way for the unpaid contractor or supplier to put an encumbrance on the real property without having to request an order from the court.

The contractor or supplier can simply file a mechanic’s lien statement with the Circuit Court in the county in which the property is located.

The interesting part about a mechanic’s lien is that the owner may have paid the general contractor, but an unpaid subcontractor or supplier can still encumber the property.

This means that the owner may ultimately pay twice for the work performed on the project.

Because there are strict requirements for filing a mechanic’s lien, contractors should contact an experienced construction law lawyer to assist them in preparing the same.

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How does a Mechanic’s Lien Work?

A mechanic’s lien is a statutorily created means for a contractor to take a security interest in property upon which the contractor has performed work.

This is a safeguard chiseled out by the legislature for the benefit of contractors and subcontractors performing on construction projects.

Once a mechanic’s lien is properly filed in the Circuit Court of the county in which the subject property is located, the lien sits idly on the property.

Look under the: “How does filing a mechanic’s lien get me paid” section for an explanation as to how an idle mechanic’s lien may still be working for you (at least from a practical standpoint).

After six months of sitting idly, the mechanic’s lien can be vitiated and cleared from the title.  However, during the six months, a good construction law attorney will fully utilize the power of the lien and foreclose on the same.

The foreclosure of the lien is effectuated by the attorney’s filing of a petition.  This will institute the lawsuit that forecloses on the property (sells the property) in order to pay the lien off as well as any other encumbrances that exist at the time of the sale of the property.

As far as pecking order on the payout after the foreclosure sale, the encumbrances that have priority will be paid first. The remaining funds left over after the most senior encumbrance is paid off would then trickle down to the next party in line.

Because a mechanic’s lien can be rendered invalid if too much time passes, you should immediately consult with a construction lawyer to find out your timeline and how to best proceed in collecting for work performed on the construction project.

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How does filing a Mechanic’s Lien get me Paid?

A mechanic’s lien is a hammer in the construction law realm.  It attaches to an owner’s property, and if properly filed, cannot be vitiated unless 6 months pass without the contractor foreclosing upon the lien.

Often times property is not paid off by the owner and rather there is a mortgage & note on the property which is given by some lender, whether that be a financial institution, bank, or credit union.  The property and structures thereon are typically used as collateral to secure the note.  The mortgage, or in Missouri, more properly termed deed of trust, reflect the fact that the lender has a security interest in the property.

A mechanic’s lien is also a form of security interest in the property.  Thus, when a mechanic’s lien is filed, and a lender has a security interest in the property in question, there may be some issues as to who has priority in the collateral (property/buildings).

Because property is usually not paid off and is subject to the note that was used to purchase the same, the lender includes a provision in the deed of trust (or mortgage), which allows acceleration of the note in the event that there is a competing security interest.  The mechanic’s lien, in this case, would be the competing security interest.

Therefore, from a practical standpoint, the owner faces incredible pressure from a few things: (1) there is an encumbrance on his/her property, (2) the note, which may be an exorbitant amount (and was originally intended to be paid over the course of 30 years or some other term), may be immediately due in full upon the filing of the mechanic’s lien–this is a result of the lender invoking the acceleration clause.

As soon as the lender invokes the acceleration clause, there is extreme pressure on the owner of the property to either get the lien off the property (which usually means payment), or to pay the note in full, which is often impossible or impracticable for the owner. This may force the owner to simply pay off the lien.

For the foregoing reasons, a mechanic’s lien is a very powerful tool for a contractor to force payment on a project where he has not yet received payment.

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What are the costs to file a Mechanic’s Lien in St. Louis?

A mechanic’s lien in St. Louis can be a relatively costly endeavor (depending on the project size).

Any construction lawyer that is diligently performing his/her work will most likely, prior to preparing the lien, run a title report, or what we call an O&E report (Ownership & Encumbrance report), that traces the chain of title.  This is important because it also locates all parties that have an interest in the real property upon which the lien is to be filed.

Because one of the requirements of filing a mechanic’s lien includes notice to all parties with an interest in the property, it is critical to know who has an interest in such property. These title reports range from $100 to $500 or more depending on the complexity of the property, legal description, and depending on the title company that is preparing the O&E report.

In addition to the O&E report, there will be a small cost of filing a mechanic’s lien in the Circuit Court of St. Louis County.

The website of the 21st Judicial Circuit Court of St. Louis County, Missouri has a filing fee listed as $5.00. See https://www.stlouisco.com/Portals/8/docs/document%20library/circuit%20court/circuit%20court%20pages/CirClerkFees2015.pdf for other filing fees at the St. Louis County Circuit Court.

Further, each mechanic’s lien must be served in a specific manner that is in accordance with the statutes of Missouri.  Thus, there will also be service fees depending on whether the sheriff or a special process server is used.

On top of the foregoing costs, a construction lawyer will be preparing the mechanic’s lien and depending on the lien, could spend several hours preparing the same. Accordingly, you will also incur a fair amount of attorney’s fees.

Keep in mind that some construction lawyers are flexible and will agree to a non-hourly fee  arrangement. For example, the lawyer may be willing to take the case on a contingency basis.

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What are the Costs to File a Mechanic’s Lien in St. Charles County Circuit Court?

The filing fees for a mechanic’s lien in St. Charles County Circuit Court, or what is sometimes referred to as the 11th Judicial Circuit Court, are $5. The filing fees for other cases in St. Charles can be found here.

Keep in mind that the total fees will not only be $5.  You will have service fees and attorneys fees as well.

Any time you are filing a mechanic’s liens, you need to be sure to serve the proper parties. This requires a title search to ensure that you are informing all parties with an interest in the property. A title search may be another expense incurred in the mechanic’s lien filing process.

Additionally, if you hire an attorney, you will incur attorney’s fees.

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What are the 4 Mechanic’s Lien Requirements in St. Louis?

In addition to any notice required, the applicable statute, Section 429.080 of the Missouri Revised Statutes, generally sets out four requirements to properly file a mechanic’s lien statement:

(a) a just and true account of the demand;

(b) a true description of the property, or so near as to identify the same;

(c) the name of the owner or contractor, or both if known to the person filing the lien; and

(d) verification by the oath of himself or some credible person for him

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Who Must be Made a Party in the Mechanic’s Lien Lawsuit?

Missouri Revised Statutes section 429.190 states

  • all persons who were parties to the contract must be parties
  • all persons who are “interested in the matter in controversy” or in the property charged with the lien may be parties
    • If the interested persons are not made parties, however, then the Court will not be able to bind them with the rulings in the proceeding

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Do I have to have a written agreement to file a Missouri Mechanic’s Lien?

No. However, there are certain notice requirements that have to be provided to the owner prior to the filing of a lien.  If these notices are not provided, the lien could have deficiencies and ultimately be rendered invalid (vitiated).

The FAQs throughout this website discuss the importance of the various lien notices that need to be given on construction projects.

The notice of intent to file a mechanic’s lien statement as well as the 429 notice that needs to be provided to the owner (warning of the danger of double payment if lien waivers are not secured) are two examples of required notice that subcontractors and contractors have to give, respectively.

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What is a general contractor’s duty when a mechanic’s lien is filed in Missouri?

R.S.Mo. section 429.140 states the following, generally:

If anyone other than the general contractor files a lien, the general contractor has the duty of defending any action brought to foreclose on the lien.  The general contractor shall defend such suit, at his own expense.

The owner has the right to withhold the amount of money that the lien was filed for and in the event that the plaintiff foreclosing on the lien takes judgment, the owner is allowed to deduct the amount of the judgment and costs from any amount owed to the contractor.

The owner then has rights to indemnification from the general contractor for amounts for which the general contractor was originally liable.

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What Statute Creates Missouri Mechanic’s Liens?

Chapter 429 of the Missouri Revised Statutes governs mechanic’s liens.  Specifically, section 429.010 of the Revised Missouri Statutes sets forth the rights of persons providing work, labor or supplies on a building, erection, or improvement, and grants them lien rights.

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How Long Do you Have to File a Mechanic’s Lien in Missouri?

Section 429.080 of the Missouri Revised Statutes governs the amount of time that a claimant has to file a mechanic’s lien.  The specific language of the statute says the mechanic’s lien must be filed “within six months after the indebtedness shall have accrued.” The indebtedness is typically deemed to be accrued on the last day the work is performed.

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I know I have 6 months to file a Mechanic’s Lien, but when does the clock start ticking?

Generally, a contractor has 6 months from the date the work was last performed on the project or from the date that materials were last supplied to the project. The actual language is: the lien must be filed: “[w]ithin six months after the indebtedness shall have accrued …” R.S.Mo. § 429.080.

“The date the ‘indebtedness has accrued’ is the last day work was performed or material incorporated.” Midwest Floor Co. v. Miceli Dev. Co., 304 S.W.3d 247.

This makes the last day work performed or material incorporated an important date for contractors to pay attention to when performing construction work.

This date is strictly measured by work performed pursuant to the contract.

After the owner accepts the work as substantially complete on the project, any further labor provided by the contractor is not lienable. Brown v. Davis, 249 S.W. 696, 698 (Mo.App.St.L.1923).

The foregoing statement, thus, means that a contractor does not have lien rights for work that is performed pursuant to a warranty or for repairs performed as the result of a callback from the owner.

Here’s an excerpt of applicable case law: “A subcontractor cannot, after the termination of an account, extend the mechanic’s lien filing time by rectifying some fault of his in performing the contract.” S & R Builders & Suppliers, Inc. v. Marler, 610 S.W.2d 690, 693 (Mo. Ct. App. 1980).

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Does my work have to improve the property to be able to file a Mechanic’s Lien?

In the case of Brownstein, the Missouri Supreme Court addressed the issue of improvements in the context of an architect’s lien, stating the following: “To hold that § 429.015.1 allows an architectural lien to attach where the services of an architect are not employed in “erection or repair of any building or other improvement” would fly against the plain meaning of the statute’s terms.” Brownstein v. Rhomberg-Haglin and Associates, Inc., 824 S.W.2d 13, 16 (Mo., 1992).

The Court goes further to state: “[t]o qualify, the person seeking the lien must have provided in his professional capacity either labor or materials used for improving the land.” Id. This extended to the work performed by the architect, if the contractor generally used the plans to perform improvements on the construction project.

“The legislature did not intend a mechanic’s lien to attach where none of the labor or materials of the builder were used in the improvement of the property. To qualify (for a lien) the person seeking the lien must have provided in his professional capacity either labor or materials used for improving the land.” Space Plan. Arch. v. Frontier Town-Missouri, 107 S.W.3d 398 (Mo. App., 2003).

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When is Machinery Lienable?

“The intention of [Missouri] law is to give a lien where the machinery furnished is intended by the owner to become a part of the building, manufactory, or plant; and it is immaterial whether this occurs when the building was originally constructed, or when the owner converts an existing building into a manufacturing.” plant.  Bush Machinery v. Kansas City Factory, 81 S.W.3d 121 (Mo. App., 2002) (citing Progress Press-Brick Machine Co. v. Gratiot Brick & Quarry Co., 151 Mo. 501, 52 S.W. 401, 402 (1899)).

“The Supreme Court of Missouri held that the meaning behind the mechanic’s lien statute: indicates that that machinery must be such as is used in the erection of a building, and which will, when placed in the building, erection or improvement on the land, become a fixture, and become a part of the realty, or at least such as is necessary in the erection of the improvement to be made.” Bush Machinery v. Kansas City Factory, 81 S.W.3d 121 (Mo. App., 2002)(citing Springfield Foundry & Machine Co. v. Cole, 130 Mo. 1, 31 S.W. 922, 924 (1895)(quoting Graves v. Pierce, 53 Mo. 423, 428-29 (Mo.1873)).

“Further, because the machinery in that case was not placed in the building, it: became no part of the realty, and no improvement thereon; and inasmuch as the machinery placed in said building was not placed therein in the erection of said building or as an improvement thereto, but was placed there solely for mining…, it formed no part of said building, but remained personalty, and plaintiff was not entitled to a mechanic’s lien.” Bush Machinery v. Kansas City Factory, 81 S.W.3d 121 (Mo. App., 2002).

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Does Every Piece of Material have to go into the Structure to have a Valid Missouri Mechanic’s Lien?

“In order to maintain a lien for materials furnished, it is not necessary in all cases that such materials should actually have gone into the structure and form a part thereof. It is sufficient that their use was necessary, and they were, in fact, used or consumed in the building.” Oliver L. Taetz, Inc. v. Groff, 253 S.W.2d 824, 363 Mo. 825 (Mo., 1953)(citing Rapauno Chem. Co. v. Greenfield & N. Ry. Co., 59 Mo.App. 6.

The Court went on to find that heating oil was lienable. It also stated that other minor items which were necessary for use on the construction project like brushes and steel wool were also found to be lienable items. Oliver L. Taetz, Inc. v. Groff, 253 S.W.2d 824, 363 Mo. 825 (Mo., 1953).

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What happens if My Mechanic’s Lien Accounting is Inaccurate? What is a Just and True Account?

A lien statement may be regarded as just and true if it contains mistakes or errors of omission, as long as those inaccuracies are unintentional and are the result of honest inadvertence, accident, or oversight, and do not result from deliberate intention or design. Dave Kolb Grading, Inc. v. Lieberman Corp., 837 S.W.2d 924 (Mo. App. E.D., 1992)(citing Putnam v. Heathman, 367 S.W.2d 823, 829 (Mo.App.1963)).

Another case states: “`A lien statement may be regarded as just and true, so as not to vitiate the entire lien, if the inclusion of a nonlienable item is the result of honest mistake or inadvertence without intent to defraud and if the nonlienable items can be separated from the lienable items.'” Glenstone Block Co. v. Pebworth, 264 S.W.3d 703 (Mo. App., 2008)(citing Am. Prop. Maint. v. Monia, 59 S.W.3d at 643)(quoting Dave Kolb Grading, Inc. v. Lieberman Corp., 837 S.W.2d 924, 941 (Mo. App. E.D., 1992)).

Although there is no precise definition of “just and true,” whether a lien statement meets those requirements depends upon the facts of each particular case. Dave Kolb Grading, Inc. v. Lieberman Corp., 837 S.W.2d 924 (Mo. App. E.D., 1992)(citing Sears, Roebuck & Co. v. Seven Palms Motor Inn, Inc., 530 S.W.2d 695, 698 (Mo. banc 1975)).

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Can General Contractors Include Work Performed by Subcontractors in their Mechanic’s Liens?

Generally yes.  As long as the general contractors are not attempting to “double dip,” Missouri courts, citing the remedial purpose of the mechanic’s liens statutes, will allow a general contractor to include the work of a subcontractor in its lien:

We are to construe the statute “as favorably to the materialman as its terms permit.” Midwest Floor Co. v. Miceli Dev. Co., 304 S.W.3d 243, 248 (Mo. Ct. App. 2009).
“Therefore, we hold that lien claimants may include the work performed by subcontractors in their mechanics’ lien.” Id. 

Missouri Mechanic’s Lien Notice

What is 429 Notice Pursuant to Missouri Mechanic’s Lien Law?

429 Notice is the typical lingo used by construction law lawyers that refers to the notice that contractors need to provide to preserve the right to file a lien on property. R.S.Mo section 429.012 lays out the requirements for 429 lien notice.

The statutory language needs to be given to the owner to preserve the lien rights and requires that the following language be used:

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.

A good construction law attorney will ensure that this language is contained in your contract, your invoices, and any estimates provided to the owner.

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When does 429 Mechanic’s Lien Notice Need to Be Given by the Contractor?

R.S.Mo Section 429.012 requires that the lien claimant provide notice to the owner or to the person with whom the contractor has a contract, “prior to receiving payment in any form of any kind from such person.”

The applicable statute continues by enumerating several times when the notice should be provided:

(a) at the time of the execution of the contract

(b) when the materials are delivered

(c) when the work is commenced, or

(d) delivered with the first invoice

A good construction law lawyer will insert the above language into most of your documentation, including the construction contract, the invoices, estimates, and any correspondence that you send to the owner.  This will remove all doubt as to whether the proper notice was required.  For that reason, it is important to contact a construction law attorney to make sure that you are in compliance with not only the 429 mechanic’s lien notice, but all statutory requirements.

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Who needs to give 429 Mechanic’s Lien Notice and to whom does it need to be given?

Every original contractor has to give the notice. The notice needs to be given to the person with whom the contract is made, or if there is no contract, then notice needs to be given to the owner.

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What Happens if You Fail to Provide the 429 Mechanic’s Lien Notice?

The lien will be invalid and the owner’s title will be free of any such liens.  The applicable statutory section is R.S.Mo. section 429.012.2, which states “[c]ompliance with [429 mechanic’s lien notice] shall be a condition precedent to the creation, existence or validity of any mechanic’s lien in favor of such original contractor.”

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What Notice Does a Subcontractor Have to Provide Before Filing a Missouri Mechanic’s Lien?

The notice depends on whether the subcontractor is performing work on a residential or commercial project.  It also depends on whether the project is owner-occupied and whether the property contains four units or less. R.S.Mo. § 429.013.1. The definitions of owner-occupied, residential property, and other terms that are relevant to subcontractors’ lien notice requirements are set forth throughout these FAQs.  R.S.Mo. § 429.013.1.

If the subcontractor is filing on residential property of four units or less that is owner-occupied, then the subcontractor must have a consent of owner, which states the following:

CONSENT OF OWNER

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. R.S.Mo. § 429.013.2.

The owner must also sign a document containing the above notice, and such notice and signature must be attached to the lien.  If there are multiple owners, the signature of one of the owners will be satisfactory to represent that of all of the owners. R.S.Mo. § 429.013.3.

If the subcontractor does not have the above-described notice signed by the owner of residential property of four units or less and said residential property is owner-occupied, then the subcontractor does not have lien rights on the property, despite providing notice of intent to lien or any other notice.

In any case, if the subcontractor complies with the rigorous standards of 429.013 or does not fall within the purview of said statute, the subcontractor will still have to provide the Notice of Intent to file a Mechanic’s Lien, regardless of whether the project is residential or commercial.

A fuller description of the notice of intent requirements are set forth below.

What does “Owner” mean under Missouri’s Subcontractor Lien Statutes?

Owner means “the owner of record at the time any contractor, laborer or materialman agrees or is requested to furnish any work, labor, material, fixture, engine, boiler or machinery.” R.S.Mo. § 429.013.1

What does Owner-Occupied Mean in the context of a Subcontractor Lien Filing on Residential Property?

Owner-occupied is the “property which the owner currently occupies, or intends to occupy and does occupy as a residence within a reasonable time after the completion of the repair, remodeling or addition which is the basis for the lien sought, pursuant to this section.” R.S.Mo. § 429.013.1.

What is considered Residential Property in the context of a Subcontractor’s Lien Filing in Missouri?

“[P]roperty consisting of four or less existing units to which repairs, remodeling or additions are undertaken. This section shall not apply to the building, construction or erection of any improvements constituting the initial or original residential unit or units or other improvements or appurtenances forming a part of the original development of the property.” R.S.Mo. § 429.013.1.

What is a Notice of Intent to File a Mechanic’s Lien?

Section 429.100 of the Missouri Revised Statutes states that all persons except the original contractor, who wish to file a mechanic’s lien, must provide 10 days’ written notice before filing the lien.  Lawyers in the construction law industry call this 10 day notice the “notice of intent” to file a mechanic’s lien statement.

If you need help filing a notice of intent to file a mechanic’s lien contact one of our lawyers here.

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What language is required in the Notice of Intent to File a Mechanic’s Lien?

Pursuant to R.S.Mo. section 429.100, the notice of intent to file a mechanic’s lien must include information regarding the subcontractor and must state that said subcontractor holds a claim against the building or improvement (which will be the subject of the lien), and it must set forth the amount and from whom the same is due.

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How is proper service made regarding the Notice of Intent to File a Mechanic’s Lien?

Pursuant to R.S.Mo. section 429.100, the notice of the intent to file a mechanic’s lien should be served by any police officer authorized by Missouri law to serve process in civil actions, or by anyone who would be a competent witness.

In the event the notice of intent to file a mechanic’s lien is served by a police officer, the official return with an endorsement on it will be sufficient proof. However, when the notice of intent is served by any other person, the proof of service must be verified by affidavit of the person serving the same.

These service rules are an important part of properly serving the notice of intent and thus preserving one’s rights to file a subsequent mechanic’s lien.

However, Missouri courts have taken a more lenient approach on the basis of equitable principles, stating “the manner of service is immaterial where it clearly appears that the owner actually received adequate written notice not less than ten days prior to the filing of the lien claim.” Kingston Elec., Inc. v. Wal-Mart Properties, Inc., 901 S.W.2d 260 (Mo. App. E.D., 1995).

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Missouri Mechanic’s Liens Miscellaneous Laws

Who needs to be a party to a Mechanic’s Lien Foreclosure Action?

In all suits to foreclose on a Missouri Mechanic’s lien, the person foreclosing on such lien shall bring all other persons interested in the matter in controversy or in the property charged with the mechanic’s lien. R.S.Mo. 429.190

If the individuals/persons/entities are not made a party to the lien foreclosure action, then the parties will not be bound by such proceedings. R.S.Mo. 429.190

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When do I need to File a Release of a Mechanic’s Lien?

This is a very fact specific question better left for your attorney.  Your attorney knows the specific facts, dealings between the parties, as well as whether payment has been received from the owner or general contractor on the project.

Typically, a lawyer would be well-advised to instruct his client to refrain from filing a release of mechanic’s lien until payment in full has been received and has cleared the bank.  The release of mechanic’s lien is then filed which clears up the title.

It’s similar to what a bank or financial institution would file after a note is paid off.  The mortgage or deed of trust (in Missouri) is then released by filing a release of deed of trust.

Releases of Mechanic’s liens should be treated similarly.  Please note, however, that releasing a mechanic’s lien constitutes a release of an important substantive right to collect on the project.  It is a big decision to release a lien, so you should always consult with an experienced construction lawyer before taking such drastic measures.

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Can I put a lien on City Hall if the Government fails to pay me on a Project?

No. When the government owns property, Missouri law forbids a lien because Missouri has a strong public policy against liens on public property.  Not only would it be embarrassing for the governmental entity, but it would call into question the sovereignty of the state, city, or respective governmental entity.

The example above is City Hall, but this public policy applies to all buildings and/or property owned by governmental entities, whether that entity be a state, city, municipality, or even some quasi-private actor, who has a public purpose or is progressing the government’s objectives by protecting or serving the public interests.

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What Missouri Law Prevents me from Liening a Building Owned by a Public Entity?

Pursuant to Missouri Revised Statutes section 513.455, buildings owned by a governmental entity are protected from the attachment of a lien.

R.S.Mo. 513.455 states the following: “All courthouses, jails, clerks’ offices and other buildings owned by any county or municipality, and the lots on which they stand, and all burial grounds, shall be exempt from attachment and execution.”

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Can I put a Mechanic’s Lien on Property if Title is Held by Husband and Wife?

In Missouri, there is special protection carved out for a husband and wife who jointly own property.  Typically a co-tenancy between a husband and wife would create a joint tenancy in many states, like Kansas for example.

In Missouri, however, a tenancy by the entirety is created when a husband and wife co-own a property. This type of co-ownership (tenancy by the entirety) creates a protection or shield on the property from creditors’ liens, unless both the husband and wife are debtors of the creditor filing the lien.

From a practical standpoint, this means that one of the spouses acting individually cannot subject the property to a mechanic’s lien.  The contractor would have to have a contract with both the husband and wife.

In some Missouri cases, however, one of the spouses may act on behalf of the other (as their agent) and subject their property to a lien.

In such a case, the issue as to whether the non-participating spouse had sufficient participation in the transaction as to make them a responsible party will determine the validity of the lien.

One Missouri Court generally addresses these circumstances:

[I]t is now definitely established that the husband alone has no such interest in an estate by the entirety as can be subjected to a mechanic’s lien…nor will mere knowledge on the part of the wife that a building or other improvement is being erected on her real estate, and passive acquiescence therein on her part, be sufficient in and of itself to show that the husband acted as her agent in making the contract, so as to bind her personally, or warrant the charging of a lien against her property for the cost of materials entering into the construction of the building or improvement. [Citations omitted] Kurtz v. Field et al., 14 S.W.2d 9, 223 Mo.App. 270 (Mo. App., 1929).

In Boeckeler Lumber Co. v. Wahlbrink, the Court held that because the wife signed the deed of trust, note, and other documents to obtain financing, the Court said the wife was charged with acquiescing in the work.  Consequently the property was lienable despite the tenancy by the entirety.  Boeckeler Lumber Co. v. Wahlbrink, 177 S.W. 741, 191 Mo. App. 334 (Mo. App., 1915).

This is one reason why a contractor should always gather the appropriate information before beginning a project.  Specifically, a contractor should at least ask the marital status of the party with whom the contractor is interacting or some other appropriate questions to determine the true legal owner of the property.  In the event that any questions are raised, the contractor should pull the deed from the county’s recorder of deeds office.

Contractors should always consult with a construction lawyer as the lawyer can properly advise the contractor regarding his/her/its legal rights.

Contact one of our construction law attorneys to ensure that your contract is properly structured and the right parties are joined thereto in order to preserve your mechanic’s lien rights.

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What Happens if You Falsify a Mechanic’s Lien?

First off, a lien has to be notarized, which means you’ve publicly filed a false, sworn statement.

This type of conduct could have criminal ramifications, as the prosecution could try to make a perjury argument.

Additionally, you may face civil claims such as slander of title, which is the malicious publication of false words concerning title which result in damages for the plaintiff.

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What is a Slander of Title Claim in Relation to a Mechanic’s Lien?

The filing of a Mechanic’s lien with the wrong intentions, or abusing the process, can give rise to a slander of title claim.

“Slander of title has three essential elements: (1) false words concerning title to property; (2) malice in the publication of such; and (3) injury to the party whose title was slandered.” Arbors At Sugar Creek Homeowners Ass’n, Inc. v. Jefferson Bank & Trust Co. (Mo. App., 2014) (quoting Tongay v. Franklin Cnty. Mercantile Bank, 735 S.W.2d 766, 770 (Mo.App. E.D. 1987)).

Proof of falsity, alone, is not proof of malice. First Nat. Bank of St. Louis v. Ricon, Inc., 311 S.W.3d 857, 867 (Mo. Ct. App. 2010).

“To support an action for slander of title, there must be false words that are maliciously published, causing the plaintiff to suffer a pecuniary loss or injury.” First Nat. Bank of St. Louis v. Ricon, Inc., 311 S.W.3d 857 (Mo. App., 2010) (quoting V.J.M. Assoc., Inc. v. Gilmore,44 S.W.3d 440, 441 (Mo.App. E.D.2001)).

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What are the Damages Permitted in a Missouri Slander of Title Claim?

Compensatory damages, punitive damages, and attorneys fees may be recovered in a slander of title claim.  See First Nat. Bank of St. Louis v. Ricon, Inc., 311 S.W.3d 857, 868 (Mo. Ct. App. 2010).

“[A]ttorney’s fees and other legal expenses incurred in clearing the disparaged title are recoverable as damages in the common law action of slander of title. Lau v. Pugh, 299 S.W.3d 740, 748 (Mo. Ct. App. 2009)(citing Rorvig v. Douglas, 123 Wash.2d 854, 873 P.2d 492 (1994)).

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Can I file a mechanic’s lien if I don’t have a contract with the owner?

Yes. Subcontractors, suppliers, and other persons or entities who provided labor or supplies on a construction project generally have the right to assert mechanic’s liens in Missouri, even if they do not have a direct contract with the owner.

However, the person or entity asserting the lien has to show a contractual chain or basically contractual privity between all the parties leading from the person or entity asserting the lien to the owner. Additionally, the lien claimant must comply with any remaining statutory requirements such as notice to interested parties, notarizing the lien, stating the amounts due and owing, and other applicable provisions discussed herein.

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What does it mean to be tiered out in the construction law context?

In the construction law context, attorneys refer to being “tiered out” as being too many tiers removed on a construction project.  Each contractual relationship between two parties constitutes the creation of a tier.  Some courts refer to a tier as the amount of contractual separation between the entity and the contractor.

So the example would be a second-tier contractor deals with a party that has a contractual relationship with the contractor.

When a party is too far removed, contractually, on certain projects, depending on the state and/or whether federal law is applicable, that party may not have lien rights on the property.

In Kansas, for example, in order to have valid lien rights, the entity must have at least had a contract with a subcontractor.  If an entity has a contract with a subsubcontractor, then that entity will not have valid lien rights as it will be too far removed, or what is typically termed “tiered out” of its lien rights.

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Can I be tiered out of Mechanic’s Lien rights in Missouri?

In Missouri, a claimant is limited to a limited number of contractual tiers in which the contractor can be removed from the owner and still have valid lien rights.

Essentially this means that if a contractor if further removed than the supplier to a subcontractor, then that lien claimant’s right to file a mechanic’s lien no longer exists.  In addition to falling into the limited tier requirement,  the claimant must also prove that there’s a chain of contracts that leads back to the owner, then assuming all other statutory requirements are met, the claimant will have valid lien rights.

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Missouri Mechanic’s Liens Priority

Priority of Mechanic’s Liens in Missouri

The priority of a mechanic’s lien and a deed of trust in the construction law context is governed by when the document is recorded.  However, there are special rules that are particular to construction that affect which encumbrance is senior to the other.

Let’s look at the specific rules.

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Does a Mechanic’s Lien take Priority over a Deed of Trust (Mortgage) in Missouri?

As noted above, this depends on the timing of the filing in either the recorder of deeds office (deed of trust) or with the circuit court (mechanic’s lien).

However, just because a deed of trust is filed before a mechanic’s lien is filed does not mean that the deed of trust has priority over the lien.

One reason the deed of trust may be junior to the mechanic’s lien is due to a doctrine in construction law called the first spade rule.

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What is the First Spade Rule?

“All mechanics’ liens commence at the date of the first stroke of the axe or spade, and continue in the erection of [a structure] without regard to the time of their being filed, or of the doing of the work or furnishing the materials.” Grau Contracting, Inc. v. Captiva Lake Invs., LLC (Mo App. 2014)(quoting Schroeter Bros. Hardware Co. v. Croatian “Sokol” Gymnastic Ass’n, 58 S.W.2d 995, 1003 (Mo. 1932)).

This benefit to contractors comes from the powers granted in section 429.060 of the Missouri Revised Statutes and states the following, in relevant part:

The lien for work and materials as aforesaid shall be preferred to all other encumbrances which may be attached to or upon such buildings, bridges or other improvements, or the ground, or either of them, subsequent to the commencement of such buildings or improvements.

http://www.moga.mo.gov/mostatutes/stathtml/42900000601.html

This statute gives a mechanic’s lien priority over other encumbrances that attach after the work has begun.

However, there is a distinction between whether deeds of trust or mechanics’ liens have priority over the land and/or building. There is another statute that governs deeds on the building, structure, or improvements.

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Is there a difference in priority if the mechanic’s lien attaches to the structure instead of the land?

Yes.  A different statute governs priority with respect to the structure.

Under section 429.050 of the Missouri Revised Statutes, a mechanic’s lien claimant has better protection when the encumbrance relates to the building or structure:

The lien for the things aforesaid, or work, shall attach to the buildings, erections or improvements for which they were furnished or the work was done, in preference to any prior lien or encumbrance or mortgage upon the land upon which said buildings, erections, improvements or machinery have been erected or put; and any person enforcing such lien may have such buildings, erections or improvements sold under execution, and the purchaser may remove the same within a reasonable time thereafter; provided, that nothing contained in this section shall be so construed as to allow any such sidewalk as is mentioned in sections 429.010 to 429.340 to be so sold under execution or so removed.
http://www.moga.mo.gov/mostatutes/stathtml/42900000501.html
This statute basically says that a mechanic’s lien on a building, structure, or improvements takes priority over any other encumbrance.
That’s a big distinction from the priority a mechanic’s lien has on land (which is only on third party encumbrances that were filed after the construction work started).

For purposes of lien priority, does it matter if I have a purchase money mortgage or just an ordinary mortgage?

Generally it does not (there’s an exception discussed below).  When determining priority between liens and mortgages (deeds of trust), whether it be a purchase money mortgage or otherwise, typically all mortgages are treated the same.
Missouri mechanic’s lien statutes (specifically sections 429.050 & .060) govern the priority of a mechanic’s lien while the recording statutes govern the priority of a purchase money mortgage.
However, as noted regarding the building, structure, or improvements, the mechanic’s lien takes priority regardless of the type of mortgage.
Similarly, regardless of the type of mortgage/deed of trust, whether the work begins first or whether the mortgage is filed first determines which encumbrance takes precedence as to the land.
Below is an exception where the purchase money mortgage actually would take precedence on the real estate.

What is the Common Legal Learning Exception with respect to Lien and Mortgage Priority ?

In rare circumstances, a purchase money mortgage may take priority over the mechanic’s lien based on the common legal learning exception.  This is basically a concept set forth in section 7.2(b) of the Restatement (Third) of Property (Mortgages) and states the following:

A purchase money mortgage, whether or not recorded, has priority over any mortgage, lien, or other claim that attaches to the real estate but is created by or arises against the purchaser-mortgagor prior to the purchaser-mortgagor’s acquisition of title to the real estate.

The policy behind this is to protect the purchase-money mortgage from liens or claims that existed on the property prior to the closing and that would attach at the same time as the purchase-money mortgage.

One common situation where this might happen is if the contractor begins work on the property before the closing.

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Other Missouri Liens

What other liens are there besides Mechanic’s Liens?

As you may be aware, contractors, subcontractors, suppliers, and laborers have the ability to file a mechanic’s lien, which is set forth in section 429.010 of the Missouri Revised Statutes.  Chapter 429, however, does not only define mechanic’s liens but includes numerous other types of liens that may be filed by participants on a construction project in Missouri.

There is also something called a design professionals lien, which encompasses liens by architects, engineers, landscape architects, and surveyors.

Persons that perform work on railroads such as contractors, subcontractors, fuel and material suppliers, and/or laborers have lien rights on the property that is owned by the railroad company, but the requirements to perfect these liens are much more stringent than a mechanic’s lien.

One example of the stricter requirements lies in the amount of time the entity has to file the lien. Instead of having 6 months to file the lien (amount of time a contractor, subcontractor, or supplier has to file a mechanic’s lien in Missouri), the contractor, subcontractor, or supplier has 90 days.

In addition, commercial real estate brokers who sell commercial real estate may be able to file a lien on the property that was sold.

There are also certain types of liens called equitable liens, but these types of liens have an element that requires that no other remedy be available for the person or entity asserting the lien.

Because Chapter 429 sets forth numerous types of liens and remedies for contractors, subcontractors, suppliers, and laborers, rarely, will you see an equitable lien in the context of a construction project.

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Can Laborers individually file a lien for unpaid wages?

Yes. Section 429.010 grants lien rights to laborers who have unpaid wages on a construction project.  Pursuant to the statutes, laborers that have direct interaction with the owner are supposed to provide 429 notice that general contractors are required to provide for mechanic’s liens.

However, laborers may receive more lenient treatment when attempting to file liens.  For example, in the BCI Corp. v. Charlebois Constr. Co., the Missouri Supreme Court reviewed the case on appeal and held that the laborer did not have to provide the 429 notice required of general contractors, nor did the laborer have to provide the 10 day notice of intent to file a mechanic’s lien, which is required of subcontractors.  See BCI Corp. v. Charlebois Constr. Co., 673 S.W.2d 774 (Mo. Banc 1984).

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Mechanic’s Lien Law Attorney

If you need further information regarding the filing or defense of mechanic’s liens, please contact one of our mechanic’s lien law attorneys today.