BY JACOB ZAHNISER
Oregon’s Construction Lien Law has a long history, with over a century of court cases that interpret it. It requires time and attention to prepare the strongest construction lien claim possible. To make your liens better, faster, and stronger, here are three simple steps you can take:
1. Take your time to do the job right.
It takes time to properly perfect a construction lien, including:
(a) time at the start of the project to thoroughly review, understand, and, if needed, update the construction contract and its claim notice provisions;
(b) time during the project to properly and accurately document the justification for payment; and
(c) time at the end of a project, before the lien is filed, to gather project information, prepare the construction lien paper work, and serve and record the lien and lien notices.
Liens must be filed either no later than 75 days after a job is substantially complete, or your last day on the job, whichever is earlier. On the 76th day, the right to lien is lost. The more time invested on the front end documenting the construction claim and making sure it is valid under the contract, the less time scrambling on the back end to gather the necessary information before the deadline, and the quicker your payment.
2. Review the contract to verify what documentation is necessary to support your right to payment.
Payment disputes typically come in two general varieties: (1) for some reason, the owner has no money to pay; or (2) for some reason, the owner or prime contractor refuses to pay. As for the first variety, the only way to avoid this is to research the project and the owner prior to contracting, but even that is no guarantee that the project won’t collapse due to economic forces beyond anyone’s foresight or control. The second variety, however, is controllable. In fact, the second is generally controlled by the contract. Know your contract. Know the timeframe for submitting a notice of claim. Know the documents required to verify and justify payment. Know the documents required in each payment application and supply those documents in each payment application. Having the necessary documents at your fingertips is perhaps the best way to strengthen any lien, because this will typically avoid the need to lien the project in the first place. While the first variety of payment disputes may be unavoidable, the second variety of payment disputes are highly avoidable if you know, understand, and follow the contract requirements.
3. Open a lien file on day one.
Like the emergency “go bag” in the event of a fire or natural disaster, opening a lien file on your computer or in your file cabinet on day one will save you time and therefore money in the long run. The construction lien file should include the following information: (a) the legal and common description of the real estate being improved; (b) the names and addresses of the owners; (c) the names and addresses of any entity with an interest in the property (e.g., a bank); (d) the name and address of any architect and/or project manager; (e) a copy of the written contract and approved change orders; (f) copies of any disputed requests for change orders or other change directives; and (g) a copy of your daily logs or other evidence of the work performed on the job, ideally noting delays or productivity losses due to causes beyond your control. While more information will be necessary to prove your construction lien claim in court or arbitration, having this “go bag” ready certainly strengthens your position when it is time to start the process.
Perfecting the strongest construction lien claim possible takes time, a working knowledge of the contract requirements, and proper documentation. Following the guidelines above will put you in the best possible position to make your next lien the best it can be.