Source: http://www.constructionlawtoolbox.com/2014/03/articles/legal-1/new-mississippi-lien-law-sb-2622a-summary-of-the-vast-changes/
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New Mississippi Lien Law, SB 2622-A Summary of the Vast Changes : Construction Law Toolbox
Home > Legal > New Mississippi Lien Law, SB 2622-A Summary of the Vast Changes
Posted on March 31, 2014 by Christopher Solop
The Legislature has completely rewritten the Mississippi lien law for commercial and residential projects. Senate Bill 2622 has now been sent to the Governor for his signature and provides lien rights to prime contractors, subcontractor and material suppliers. [Link to SB 2622] The new lien law will require those seeking to file a lien to comply carefully with strict notice and filing requirements. An error in complying with these requirements could lead to a “claim of lien” being ineffective or unenforceable.
Some of the key points in the new lien law are:
There are no lien rights if a contractor has provided a payment bond. (Miss. Code Ann. §85-7-431)
To have lien rights the party filing a "claim of lien" must be properly licensed by the Mississippi State Board of Contractors. However, it should be noted that there are counties and municipalities that also have licensing requirements. (Miss. Code Ann. §85-7-403)
There are numerous ways that a contractor and/or subcontractor or materialman can lose its "claim of lien", including:
If the contractor fails to provide a list of subcontractors to the owner within a reasonable period of time after requested or if the subcontractor fails to furnish a list of its subcontractors to the contractor within a reasonable period of time after requested (Miss. Code Ann. §85-7-407).
If lien claimant fails to file its "claim of lien" within ninety (90) days following the last labor, services or materials provided (Miss. Code. Ann. §85-7-405(1)(b)).
If a subcontractor not in privity with the contractor fails to send written notice to the contractor, or, if there is no contractor, to the owner, within thirty (30) days after the first delivery of labor, services or materials to the property. (Miss. Code. Ann. §85-7-407(2))
If the owner has made payment to the contractor in reliance upon a lien waiver issued by the lien claimant (Miss. Code Ann. §85-7-413(1)(a)).
If a "payment action" is not commenced within one hundred eighty (180) days after the "claim of lien" is filed, the "claim of lien" is unenforceable (Miss. Code Ann. §85-7-421(1)).
The basic requirements for filing a "claim of lien" are set forth in Miss. Code Ann. §85-7-405. If a party fails to comply with any of the requirements the "claim of lien" shall not be effective or enforceable. The filing of a "claim of lien" is not intended to prejudice a party’s right to arbitration.
The right to claim a lien cannot be waived in advance of furnishing labor, service or materials (Miss. Code Ann. §85-7-419).
The "special lien" granted by the statue to contractors, subcontractors and materialmen is limited to the amount due and owning under the terms of the express or oral contract, subcontract or purchase order (Miss. Code Ann. §85-7-403(3)). The "special lien" also includes interest (Miss. Code Ann. §85-7-403(4)).
A judgment secured in a "payment action" to enforce a "claim of lien" is limited to a judgment in rem against the property and does not impose any personal liability upon the owner (Miss. Code Ann. §85-7-405(1)(d)(ii)).
If payment is made by the owner in reliance of a lien waiver or statements of the contractor, the aggregate lien amount of the subcontractors and materialmen not in privity with the contractor shall not exceed the unpaid balance of the contract price between the owner and the contractor at the time the first notice of lien is filed (Miss. Code Ann.§85-7-405(5)(a)).
Party seeking to assert a "claim of lien" must be in "substantial compliance" with the contract, subcontract or purchase order (Miss. Code Ann. §85-7-405(1)(a)).
"Claim of lien" must be filed in the chancery court of the county by a contractor, subcontractor or materialman where the property is located and within ninety (90) days of the last labor, services or materials provided. It must also contain certain language notifying the owner of its right to contest the lien and be sent to the owner and contractor within two (2) days after it is filed (Miss. Code Ann. §85-7-405(1)(b)).
A subcontractor or material supplier not in privity with the contractor, or, if there is no contractor, with the owner, must provide notice within (30) days following the first delivery of labor, services, or materials as a condition precedent to filing a "claim of lien" (Miss. Code Ann. §85-7-407(2)).
The "claim of lien" can be amended at any time provided there is compliance with certain procedures (Miss. Code Ann. §85-7-405(1)(e)).
All liens under Miss. Code Ann. §85-7-403 have equal priority. If the proceeds are insufficient to satisfy all liens, distribution is on a pro-rata basis (Miss. Code Ann. §85-7-403(3)(d)).
A "payment action" (lawsuit) to enforce the "claim of lien" must be commenced within one hundred eighty (180) days from the date of the filing of the "claim of lien" (Miss. Code Ann. §85-7-405(1)(c)). This period can be shortened by the owner or contractor filing a "Notice of Contest of the Lien". (See, Miss. Code Ann. §85-7-423(1))
A lis pendens notice must be filed with commencement of the "payment action" and furnished to the owner and contractor (Miss. Code Ann. §85-7-405(1)(d)(ii)).
The court in its discretion may award reasonable costs, interest and attorney’s fees to the prevailing party in an action against the owner to enforce a lien against the property (Miss. Code Ann. §85-7-405(3)(c)).
The statute provides a procedure for "bonding off" a lien. The amount of the bond is required to be one hundred ten percent (110%) of the amount of the "claim of lien" (Miss. Code Ann. §85-7-415).
There are also substantial penalties for not complying with certain aspects of the lien law and filing a false "claim of lien".
The penalty for filing a knowingly false "claim of lien" is three (3) times the value of the "claim of lien" (Miss. Code Ann. 85-7-429).
The penalty for not paying a subcontractor after securing a waiver and release of lien without good cause is three (3) times the amount claimed on the face of the waiver and release (Miss. Code Ann. §85-7-407(3)).
There is a penalty of three (3) times the actual damages suffered by an owner, purchaser or lender if the contractor falsely and knowingly submits a statement that the agreed price or reasonable value of the labor, services or materials has been paid or waived in writing by the lien claimant. (Miss. Code Ann. §85-7-413(1)(b))
There is a penalty for failing to cancel a "claim of lien" if not accomplished within fifteen (15) days after fully paid of not less than $500/day plus reasonable attorney’s fees and costs. (Miss. Code Ann. §85-7-421(3))
Residential projects require a slightly different process. Lien claimants on residential projects must give the residential owner a pre-lien notice at least ten (10) days notice before filing a "claim of lien". (Miss. Code Ann. §85-7-409(2))
This is just a taste of what the new Mississippi lien law contains and is neither intended to be a complete summary of the new lien law nor should it be solely relied upon in filing a "claim of lien". The new statues are filled with hoops to jump through and hazards for those who have not carefully read it. If you have any questions about this Mississippi’s new lien law you can contact Christopher Solop at csolop@bislawyers.com, Lynn Thompson at lynnthompson@bislawyers.com or go to the website for Biggs, Ingram & Solop, PLLC at www.bislawyers.com.
Tags: Claim of Lien, Construction, Contractor, Legal, Materialman, Materialmen, Notice, Payment Action, Penalty, Special Lien, Waiver, lien, subcontractor
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