Source: https://levy-law.com/arizona-state-lien-law-summary/
Timestamp: 2020-04-06 18:59:59
Document Index: 573378724

Matched Legal Cases: ['§4', '§4', '§4', '§4', '§4', '§4', '§33', '§33', '§4', '§33', '§4', '§4', '§4']

Arizona State Lien Law Summary | Levy | von Beck | Comstock | P.S.
Arizona State Lien Law Summary
ALL PROJECTS EXCEPT OWNER-OCCUPIED 1- OR 2-FAMILY DWELLINGS:
Contractor, sub, and labor­ers, and suppliers of ma­terials, machinery, fix­tures or tools, to owner, general, 1st-tier sub, or other person having charge or control of the project or a portion of it. In addition, union fringe-benefit trust funds have lien rights, where trust funds were part of the consideration that the contractor agreed to pay for the services of labor and were part of the compensation owed to the employees. Per Schor, suppliers to suppliers and those supplying second tier subcontractors do not have lien rights. [Schor at §§4.02[D][2] and 4.03[B]; B. J. Cecil Trucking, Inc. v. Tiffany Const. Co, 597 P.2d 184 (Ariz. App. Div.1, 1979); Performance Funding, L.L.C. v. Arizona Pipe Trade Trust Funds, 203 Ariz. 21, 49 P.3d 293, (App. Div.1, 2002) review denied.] NOTE that if a contractor or provider of professional services is required to be licensed, but does not have a valid license, that person loses his or her lien rights. The court may, however, determine that the claimant has substantially complied with the registration requirement and allow the lien. [32-1153; Archicon, L.C. v. TPI Properties, LLC, Not Reported in P.3d, 2013 WL 1174059 (Ariz.App. Div. 1, 2013)] NOTE ALSO that an architect or other provider of professional services may have lien rights against the property even where no improvement is actually built. [Archicon, L.C. v. TPI Properties, LLC, Not Reported in P.3d, 2013 WL 1174059 (Ariz.App. Div. 1, 2013)] NOTE ALSO that where an unlicensed subcontractor supplies materials, and has a licensed contractor install them, the unlicensed subcontractor may recover the cost of the materials from the lien. An unlicensed subcontractor that does no installation work is exempt from registration requirements.
Additionally, for a provider of professional services to have lien rights, they must have an agreement with the owner, or with an architect, engineer or contractor who has such an agreement with the owner.
ALSO, no lien is allowed by anyone other than the general contractor where owner re­quires gener­al contractor to pro­vide a bond. No specific provi­sions as to how to claim against such a bond, other than adding the surety to the foreclosure suit. [33-1003]
NOTE that a lien for work or material requested by a tenant cannot be enforced against an owner unless the tenant acted as the owner’s agent. Where a lease requires a tenant to extensively remodel the property, and especially where the improvements must be made in accordance with plans and specifications approved by the owner, the tenant will be deemed to be the owner’s agent for lien purposes. [Wang Elec., Inc. v. Smoke Tree Resort, LLC, 283 P.3d 45 (Ariz.App. Div. 1, 2012)]
OWNER-OCCUPIED 1- OR 2-FAMILY DWELLINGS:
Only a claimant who has a writ­ten contract directly with the owner-occupant can have a lien. [33-981, 33-1002]. (In other words, only the general contractor with a written contract with the owner-occupant has lien rights on a single-family or two-family dwelling.) NOTE that where a person owns the unimproved property before construction, and has a house constructed on the property, with the intention of living in the house, that person will be an owner-occupant, even if they transfer ownership of the property into a trust prior to moving in. [Marco Crane & Rigging Co. v. Masaryk, 341 P.3d 490 (Ariz.App. Div.1, 2014)
Suppliers of labor or materials to the contractor or subcontractor. [34-222] Suppliers to suppliers cannot bring a claim. [Schor at §4.02[D][2]; Advance Leasing & Crane Co. v. Del E. Webb Corp., 573 P.2d 525 (Ariz. App. 1977)]
NOTE that where an unlicensed subcontractor supplies materials, and has a licensed contractor install them, the unlicensed subcontractor may recover the cost of the materials from the bond. An unlicensed subcontractor that does no installation work is exempt from registration requirements. [Butch Randolph & Associates, Inc. v. International Fidelity Insurance Co., 212 Ariz. 550, 136 P.3d 232 (Ariz.App.Div. 1, 2006)]
-The building, structure or improvement and its lot, up to 160 acres if incor­porated into a town, or up to 10 acres if un­incorporated [33-981, 33-983, 33-991]
-Payment bond, where owner requires general to provide one. In this case, the claimant should obtain a copy of the bond to determine the notice requirements. If the bond is a bond in lieu of lien rights, then it will be recorded and the claimant will be required to follow the requirements of the public works bond; if it is another kind of payment bond, then it may have its own notice requirements. If the general contractor posts a payment bond, then everyone claiming through the general will have a claim only against the bond; in that case, only one contracting directly with the owner will have a lien on the property. [33-1003; Schor at §4.02[D][1]]
A claimant may also give a stop notice, to directly attach the contract funds. Stop Notices are allowed on all projects EXCEPT owner-occupied residential construction. (Note that a general contractor can give a stop notice to a construction lender, but not an owner.) [33-1054, 33-1055; Schor at §4.03[H]{1}]
NOTE: Highway construction is not discussed here. Please contact Levy von Beck & Associates for more information.
Payment bond. [34-222]
There is a provision for retainage, but there is no provision for collecting against it. [34-221]
LIEN AND STOP NOTICE:
Every supplier of labor, professional services, materials, machinery, fix­tures or tools, EXCEPT “one performing actual labor for wages”. NOTE that labor unions and their trust funds ARE required to give the preliminary notice. Even the general contractor and others contracting directly with the owner must give notice, even though this means the general is notifying itself. [33-992.01, 33-1054, Schor at §4.03]
CONTRACTOR’S PAYMENT BOND:
Same as for public works. [Schor at §4.02[D][1]]
Every supplier of labor or materials who has a direct contract with a sub but no direct contract with the general. [34-223]
Owner or reputed owner, original contractor, claim­ant’s customer, AND con­struction len­der, if any. If claimant is supplying more than one customer on the job, then claimant must send separate notice for each customer’s labor or materials. [33-992.01] Note that, while not encouraged, where a claimant timely serves more than one preliminary notice naming different owners and reputed owners, subsequent preliminary notices do not extinguish the prior ones. [Wang Elec., Inc. v. Smoke Tree Resort, LLC, 238 P.3d 45, (Ariz.App. Div. 1, 2012)]
NOTE ALSO that where a tenant is acting as the agent of the owner when causing the improvements to be made, the claimant’s lien will survive the termination of the lease. The tenant may be considered the agent of the owner where the lease requires the tenant to extensively remodel the property, and where the improvements must be made in accordance with plans and specifications approved by the owner. [Wang Elec., Inc. v. Smoke Tree Resort, LLC, 238 P.3d 45, (Ariz.App. Div. 1, 2012)]
Original contractor. [34-223]
Within 20 days after first delivery. If notice given later, it will cover only materials furnished during 20 days prior to service of notice. Service of a notice is complete at the time it is deposited in the mail, thus it is apparently it is acceptable for the notice to be sent within 20 days after first delivery, rather than received within that time, but the sooner it is sent, the better. [33-992.01; Markham Contracting Co. Inc. v. First American Title Ins. Co. , Not Reported in P.3d, 2013 WL 3828690 (Ct. App. Div. 1, 2013)]
NOTE: If the estimat­ed price given in the pre­limi­nary notice is in fact ex­ceeded by more than 20%, the claimant needs to give an additional notice, re­vising the esti­mated amount.
NOTE ALSO: If the claimant receives information show­ing that the preliminary notice is inaccurate in any way, the claimant must re­vise the prelien within thirty days of obtaining such information.
Note that if claimant receives from the owner a written demand to give a stop notice, the claimant must do so within 30 days or lose the right to claim a stop notice for the work described in that demand. Note that the owner’s demand notice must be sent by registered or certified mail, and must state that it is a “demand for service of stop notice pursuant to A.R.S. §33-1054.” Note further that if the claimant is given a demand notice from the construction lender, that notice must be sent by registered or certified mail, and must state that it is a “demand for service of stop notice pursuant to A.R.S.§33-1055.” [33-1054, 33-1055]
Within 20 days after first delivery. If notice given later, it will cover only materials furnished during 20 days prior to service of notice. Service of a notice is complete at the time it is deposited in the mail, thus it is apparently it is acceptable for the notice to be sent within 20 days after first delivery, rather than received within that time, but the sooner it is sent, the better. [34-223, 33-992.01]
CONTRACTS IN EXCESS OF $1,000:
-The name, business address and license number of the contractor.
-The name and mailing address of the owner and the jobsite address or legal description. (Note that if claimant names a “reputed owner”, then the claimant must show that it took reasonable efforts to ascertain the owner or reputed owner. [Fagerlie v. Markham Contracting Co., Inc. 258 P.3d 185 (Ariz.App. Div. 1, 2011)])
-The date the parties entered into the contract.
-The estimated date of completion of all contract work.
-A description of all work to be performed under the contract.
-The total amount to be paid to the contractor by the owner for all work to be performed under the contract, including all taxes.
-The amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.
-The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.
-Statement that the property owner has the right to file a written complaint with the registrar for an alleged violation of the statutes governing contractors. The contract must include the registrar’s telephone number and website address, and must state that complaints must be made in the applicable time period set forth in sec. 32-1155, subsection A. This information must be prominently displayed in the contract in ten point bold type, and the contract must be signed by the owner and the contractor or the contractor’s designated representative. [32-1158]
-General description of labor, materials, etc. A statement that claimant provided “materials and/or labor” is insufficient. [Delmastro & Eells v. Taco Bell Corp., 263 P.3d 683 (Ariz.App. Div. 2,2011)]
-Estimate of total price (Note: the notice may be defective if the actual total price exceeds the estimate by more than 20%. If the actual price exceeds the estimate by such an amount, then the claimant must give another preliminary notice.) [Schor at §4.03[D]]
-Name and address of per­son furnishing labor, materials, etc.
-Name of person who con­tracted for purchase of labor, materials, etc.
-Legal description, address, or other descrip­tion of jobsite sufficient for identification
-Copy of statement in bold-faced type. Please contact Levy von Beck & Associates for more information.
-It is acceptable, though NOT recommended, for a notice to state “Signature and Title on File” in the signature line on the form, at least when other contact information is included as well. [Allstate Utility Const., LLC v. Towne Bank of Arizona, 263 P.3d 694 (Ariz.App. Div. 1,2011)]
-Acknowledgement of re­ceipt of notice. A notice may still be valid if it lacks the acknowledgement form, but it is NOT recommended to omit it. [Allstate Utility Const., LLC v. Towne Bank of Arizona, 263 P.3d 694 (Ariz.App. Div. 1,2011)]
NOTE: If an invoice con­tains all of this informa­tion, it will suffice as notice if served in same manner as preliminary notice [33-992.01]
-General description of labor, materials, etc.
-Estimate of total price (Note: the notice may be defective if the actual total price exceeds the estimate by more than 20%)
-Name and address of claimant
-Legal description, address, or other descrip­tion of jobsite sufficient for identification.
[34-223, 33-992.01]
Personal service or registered or certified mail, with certificate of mailing. Service is complete at the time of mailing, however proof of service is re­quired. Please contact Levy von Beck & Associates for more information. [United Metro Materials, Inc. v. US Development Land, L.L.C., Not Reported in P.3d, 2010 WL 845922 (Ariz.App. Div. 1,2010)] If the recipient of the no­tice fails to sign and return the acknowledgment within 30 days from the date of mailing, then the claimant may make proof of mail­ing by affida­vit, showing the time, place and manner of mailing and facts show­ing that such service was made in accor­dance with §33‑99­2.01. The affidavit shall show the name and address of the person to whom a copy of the prelimi­nary twenty-day notice was mailed, and, if appropri­ate, the title or capacity in which he was given the notice. If mail­ing was made by first class mail sent with a certifi­cate of mailing, the certificate of mailing shall be attached to the affida­vit. If the mailing was by certified or registered mail, the re­ceipt of cer­tification or registration shall be at­tached to the affidavit. [33-992.01, 33-992.02]
Served by registered or cer­tified mail to any office or the residence of the con­tractor. The consequences of refusal of service are not clear, but there is a case allowing service where the notice was timely sent and received by regular mail. Though it may not be required, personal service is recommended if service by registered or certified mail is refused. [34-223]
All claimants. Any claimant entitled to record a claim of lien is entitled to give a stop notice, EXCEPT that the general cannot give a stop notice to the owner. NOTE, HOWEVER, that no stop notice is allowed where the project is an owner-occupied residence. [33-993, 33-1053, 33-1054, 33-1055]
Any claimant with a contract with a sub but no direct contract with the general. [34-223]
-County recorder in county where property is located
-Owner [33-993]
-Owner (except that a general contractor cannot give a stop notice to an owner)
-Construction lender [33-1054]
To the general contractor [34-223]
To County Recorder:
Filed within 120 days after com­pletion of project, or, if a Notice of Completion was recorded (and served by certified or registered mail on the claimant, if the claimant filed a preliminary notice), within 60 days of the recording of that Notice. If Notice of Completion is filed but not sent to claimant, then the claimant must give notice within 120 days of actual completion of the project. Completion of the project means:
-30 days after final inspection and written final acceptance by government body issuing permit; OR
-Cessation of labor for 60 days consecutively; OR
-If no permit is issued, or if the agency issuing the permit doesn’t do final inspections, then the last date of actual work performed or materials delivered. [33-993]
To Owner: within “a reasonable time” after recording
After the prelien is given, but within the same time frame as the lien notice, i.e., within 120 days after completion of the project or the recording of the Notice of Completion. HOWEVER, if the owner gives the claimant a written demand to serve a stop notice, the claimant MUST give a stop notice within 30 days of receiving that notice from the owner, or the claimant will lose its right to bring a stop notice for the work described by that demand. Note that this notice apparently needs to be received within 90-day period. [33-1054]
Within 90 days of last sup­plying labor or materials. Note that this notice apparently needs to be received within 90-day period. [34-223]
-Record one copy with coun­ty recorder;
-Serve copy on owner if owner is within the county [33-993] Per Schor, service may be made by first class registered or certified mail. [Schor at §4.03[F]] The consequences of refusal of service are not clear, thus it is recommended to follow the steps set out for preliminary notices.
-Owner: Certified mail or personal delivery, or left at residence with person of suitable age and discretion, or at the owner’s place of business. The consequences of refusal of service by mail are not clear, thus personal service is recommended if service is refused.
-Construction lender: Certified mail or given to or served on the manager or other responsible officer or person at office or branch that administers or holds the construction funds. [33-1056]
-Registered or certified mail. The consequences of refusal of service are not clear, but there is a case allowing service where the notice was timely sent and received by regular mail. Though it may not be required, personal service is recommended if service by registered or certified mail is refused. [34-223]
-Legal description;
-Name of owner or reputed owner;
-Name of person who employed claimant or to whom claimant supplied materials;
-A statement of the terms, time given and con­ditions of the contract, if it is oral, or a copy of the con­tract, if written;
-Statement of claimant’s demand, less credits and offsets;
-Statement of date of com­pletion of improvement;
-Statement of date prelimi­nary notice served;
-Must attach copy of prelimi­nary notice and proof of service;
-The claimant or someone with knowledge of the facts must make claim under oath. Although it appears to be permissible, neither the statute nor the case law indicates clearly whether the claimant’s attorney would be allowed to sign the notice.
-If project is construction of more than one building in a multi-building residential project or subdivision, each building is deemed a separate work, following a separate time frame, and requiring separate lien notices. [33-993]
-A description of the labor, professional ser-vices, materials, machinery, fixtures or tools furnished or agreed to be furnished by the claimant
-The name of the person to or for whom the labor, professional services, materials, machinery, fixtures or tools were furnished or agreed to be furnished.
-The amount in value of the labor, professional services, materials, machinery, fixtures or tools already furnished and the total amount agreed to be furnished.
-The amount, if any, of payment received by the claimant for the labor, professional services, materials, machinery, fixtures or tools furnished or agreed to be furnished.
-The name and address of the claimant
-Signed and verified by the claimant or its agent. Although it appears to be permissible, neither the statute nor the case law indicates clearly whether the claimant’s attorney is allowed to sign the notice. But since the notice must be verified, it is recommended to have the claimant sign the notice.
NOTE, HOWEVER, that if the stop notice is not a BONDED stop notice, then the construction lender may opt to not withhold the funds (Also, if the general gave a payment bond, then the construction lender also may choose not to withhold the funds). To require the construction lender to give the claimant notice of its decision, the claimant must include with the stop notice a written request for notice of the construction lender’s decision, along with a preaddressed stamped envelope. [33-1051, 33-1058]
-Demand for payment (per Schor, §4.02[D][2])
-Amount claimed;
-Name of party to whom materials or labor was sup­plied. [34-223]
Within six months after lien recorded. Must also record notice of pendency of action. If the notice of pendency of action is not recorded within five days after beginning the lien foreclosure action, then the action must be dismissed. [33-998; HCZ Constr. V. First Franklin Financial Corp., 18 P.3d 155 (Ariz.Ct.App.2001)]
NOTE, HOWEVER, that if the owner or general contractor provides a lien discharge bond, then the claimant must amend its complaint to include the principal and surety on the bond within 90 days of receiving the bond, and must also record a release of the lis pendens. [Schor at §4.03[G], citing 33-1004] NOTE ALSO that if a lien discharge bond is recorded before the foreclosure suit has been filed, then the claimant must file suit against the bond within 90 days after being served with a copy of the recorded bond, or, if not so served, then 6 months after learning of the recorded bond, but not more than 2 years after the bond has been recorded. [Hanson Aggregates Arizona, Inc. v. Rissling Const. Group, Inc., 212 Ariz. 92, 127 P.3d 910 (Ariz.App. Div. 1 2006)] NOTE, HOWEVER, that the recording of a lien discharge bond, does not extend the time for filing the original foreclosure action, only the time for adding the surety and its principals to an action. Thus if the bond is received within 90 days of the deadline but before the foreclosure action has been filed, the foreclosure action must still be filed within 6 months of recording the lien; there is just an additional 90 days for adding the surety and its principals as parties. (Alliance TruTrus, L.L.C. v. Carlson Real Estate Co., 270 P.3d 911 (Ariz.App. Div. 1,2012)]
More than ten days after serving stop notice on owner or construction lender, but less than 3 months after deadline for filing lien. All parties involved, however, can stipulate in writing to one three-month extension of this deadline. [33-1063]
More than 90 days, but less than one year after last date materials or labor sup­plied by claimant. [34-223]