Opinion ID: 2516359
Heading Depth: 1
Heading Rank: 2

Heading: ownership of the property

Text: The Chartrands next argue that because they were prospective homeowners and equitable owners of the property, Owen Lumber should have sent notice of its mechanic's lien to them as well as to Design Build. K.S.A. 60-1103(c) describes the procedure for recording a mechanic's lien and states: Recording and notice. When a lien is filed pursuant to this section, the clerk of the district court shall enter the filing in the general index. The claimant shall (1) cause a copy of the lien statement to be served personally upon any one owner and any party obligated to pay the lien in the manner provided by K.S.A. 60-304, and amendments thereto, for the service of summons within the state, or by K.S.A. 60-308, and amendments thereto, for service outside the state, (2) mail a copy of the lien statement to any one owner of the property and to any party obligated to pay the same by restricted mail or (3) if the address of any one owner or such party is unknown and cannot be ascertained with reasonable diligence, post a copy of the lien statement in a conspicuous place on the premises. (Emphasis added.) Owen Lumber sent a notice of its mechanic's lien to Design Build on January 5 1996, but never sent any notice to the Chartrands. At the time that Owen Lumber filed its mechanic's lien, Design Build was the legal owner of the property in question. The Chartrands were prospective owners. The Chartrands filed a notice of equitable interest, however, on December 24, 1995, and took the property by quitclaim deed on February 5, 1996. In ruling in favor of the Chartrands, the district court found that Owen Lumber had not given sufficient notice of its mechanic's lien to the Chartrands pursuant to K.S.A. 60-1103(c). In doing so, the district court stated: The Court also finds that the lien claim of Owen Lumber Company fails because notice was not given as required by K.S.A. 60-1103(c). That statute requires that notice be given through service personally upon any one owner and any party obligated to pay the lien. Service must be made in the manner provided by K.S.A. 60-304. In this case, not only was service not provided in the manner required by K.S.A. 60-304, no notice of any kind of the lien filing was given to the Chartrands by Owen Lumber. An affidavit of equitable ownership was on file prior to the date the lien claim was made by Owen Lumber, and prior to the date of the filing of their lien claim. In the case of Toler v. Satterthwaite , [citation omitted], the Kansas Supreme Court noted that the term owner, for purposes of the mechanic's lien statutes in Kansas `does not admit of any narrow construction that it includes only the holder of the fee, but means the owner of an interest or estate in real property, and include every character of title, whether legal or equitable, fee simple or leasehold, unquote.' The Court of Appeals reversed the district court, holding that the language in K.S.A. 60-1103(c) only required notice to any one owner and did not require Owen Lumber to notify all owners having an interest in the property. The Court of Appeals further held that the Chartrands were not a party obligated to pay the lien. Owen Lumber, 27 Kan. App.2d at 77-78.
Analysis of the ownership language in K.S.A. 60-1103(c), as amended in 1978, is an issue of first impression for this court. See L. 1978, ch. 230, § 3. The Chartrands argue that as equitable owners of record, Owen Lumber was required to notify them, pursuant to K.S.A. 60-1103(c), of the filing of the mechanic's lien. The statutory language in K.S.A. 60-1103(c) only requires notice to any one owner and does not specifically require notice to be sent to all parties having an ownership interest in the property. In making its decision, the district court referenced Toler v. Satterthwaite, 200 Kan. 103, 434 P.2d 814 (1967). In Toler, a subcontractor had filed a mechanic's lien against property owned by a husband and wife, the Satterthwaites. After subcontractor Toler filed bankruptcy, suit was filed to foreclose on the lien. The district court held that the lien filed by the subcontractor was valid. The Satterthwaites argued on appeal that the lien was not valid as it had designated the wrong person as owner of the property. The lien had named the Satterthwaites as owners of the property, even though at the time the lien was filed they were merely prospective owners who had an executory contract with the legal owner to purchase the property upon completion. Because the Satterthwaites were not owners of the property, they argued that the lien was not enforceable. At the time the Toler decision was made, K.S.A. 60-1103 (Corrick) required that notice of the mechanic's lien be given to the owner of the property and not any one owner as the statute now requires. This court held that the Satterthwaites were owners of the property sufficient to satisfy the requirements of K.S.A. 60-1103, stating: The [Satterthwaites] argue they were not the owners of the real estate when the [subcontractors] contracted for and furnished the labor and materials. The statute requires that the subcontractor's lien statement contain `the name of the owner, the name of the contractor,' and that the lien be perfected `by serving a notice in writing of the filing of such a lien upon the owner of the land.' As used in the statute relating to liens for labor and material, the word `owner' does not admit of any narrow construction that it include only the holder of the fee, but means the owner of an interest or estate in real property, and includes every character of title, whether legal or equitable, fee simple or leasehold. [Citations omitted.] Were the [Satterthwaites] at all times material the owners of an interest or estate in the property involved? We think they were. The record shows that their contracts with [the general contractor] required [the general contractor] to purchase the lot and build the house and upon completion, to convey fee simple title free and clear for the price stated. At least not later than October 11, 1960, when [the general contractor] acquired title to the lot, the [Satterthwaites] became the owners of an equitable interest or estate in the property. Pursuant to the contracts, [the general contractor] ... began construction of the house and entered into contracts with [Toler], as subcontractors, to furnish labor and materials for the construction. As [Toler] parted with a valuable consideration in the form of labor and materials, the construction progressed, and as construction progressed, the equitable interest or estate of the [Satterthwaites] increased.... During all the time labor was performed and materials furnished, the [Satterthwaites] had title to an equitable interest or estate in the property which was subject to the liens, and when they received the fee simple title, the liens attached to the full extent of their ownership.... In view of the foregoing, we are of the opinion the [Satterthwaites] at all times material herein were the owners, equitable, legal, or both, of the property involved and were properly named the owners of the property in [Toler's] lien statements when they were filed, and written notice of the liens was properly served upon them as owners. 200 Kan. at 109-11. A little over 4 years later, Schwaller Lumber Co., Inc. v. Watson, 211 Kan. 141, 505 P.2d 640 (1973), was decided. In Schwaller Lumber, the subcontractor mailed notice of the mechanic's lien to Mr. Watson but did not notify Mrs. Watson who also owned the property as joint tenant with rights of survivorship. This court held that K.S.A. 60-1103 required each owner to be notified of the mechanic's lien and that the mechanic's lien in Schwaller Lumber was only valid as to Mr. Watson's interest in the home but was not valid as to Mrs. Watson's interest in the home. This court stated: So far as is now pertinent, K.S.A. 1968 Supp. 60-1103(a) provides that a subcontractor shall mail a copy of his lien statement to the owner of the property. The Watsons advance the argument that the term `owner' implies the entire ownership of the real estate in question, and that a subcontractor must mail copies of his lien statement to all owners in order to perfect his lien as to any one of them. In other words, the appellants would have us define the term `owner' as `owners' and would have us require that all the owners be served before a statutory lien may come into being. .... We have said that the purpose of requiring service of a notice of lien is to advise the owner of the property of the existence of the lien, afford him opportunity to investigate the claim and determine its validity and to avoid paying the same account twice. [Citation omitted.] .... It is the general rule that service of a mechanic's lien statement on one cotenant is not binding on a cotenant, or other owner, and such is true even though the co-owner happens to be a spouse. [Citations omitted.] .... We conclude that the [subcontractor's lien] claims are not enforceable against Doris M. Watson, since she is not shown to have been personally served with notice.... .... ... [A] mechanic's lien may be enforced against the interest of an owner who has properly been served with the required statutory notice, even though the interest of other owners who were not so served may not be subject to the lien. [Citations omitted.] 211 Kan. at 144-46. Following Schwaller Lumber, the Kansas Legislature amended K.S.A. 60-1103 to require that the notice of a mechanic's lien be served upon any one owner of the property instead of the owner of the property. Following the amendment, the Court of Appeals decided Scott v. Strickland, 10 Kan. App.2d 14, 691 P.2d 45 (1984). In Scott, the subcontractor filed suit against the homeowners seeking to enforce his mechanic's lien for an unpaid lumber bill. As was the case in Schwaller Lumber, the lien filed by the subcontractor identified the owner of the property as the husband, Jimmie Scott, even though the property was owned in joint tenancy by Cecelia and Jimmie Scott. Based upon the holding in Schwaller Lumber, the Scotts argued that the lien could only attach to the interest owned by Jimmie Scott but that it could not attach to any interest owned by Cecelia Scott. After noting that the language of K.S.A. 60-1103 had been amended, the Court of Appeals held that the subcontractor's lien was valid and attached to the interest owned by Cecelia Scott as well as the interest owned by Jimmie Scott despite the fact that only Jimmie Scott had been identified as the owner of the property. In doing so, the Court of Appeals stated: [A] person holding any legal or equitable interest in realty may be an owner for the purposes of the mechanic's lien statutes [citation omitted]. ....  [The Scott's] reliance on Schwaller Lumber is misplaced in light of the changes effected in K.S.A. 60-1103 since that decision was reached. The lien statement no longer has to be served upon `the owner' but must only be delivered to `any one owner of the property.' Thus, the statute now recognizes the possibility of joint ownership and inferentially overrules the conclusion of Schwaller Lumber that one owner is not agent for another. The statute now permits service on one owner to satisfy the entire notice to the owner requirement. 10 Kan. App.2d at 22-23. In the present case, we are not faced with a situation where the owners have joint tenancy interests, but owners which have interests of a legal and equitable nature. Design Build was clearly the legal owner of the property when Owen Lumber filed its mechanic's lien. The Chartrands argue that they had an equitable interest in the property as they had filed a notice of equitable ownership with the district court before Owen Lumber filed the mechanic's lien. The question is whether K.S.A. 60-1103(c) was satisfied when Owen Lumber notified the legal owner of the property but did not notify the equitable owner of the property. We hold that it was. Notifying Design Build of the mechanic's lien satisfied the language in the statute requiring Owen Lumber to provide notice to any one owner of the property. The statute does not require that Owen Lumber provide notice to every person having an interest in the property, and failure to do so was not fatal to Owen Lumber's mechanic's lien. It appears the legislature has now come full circle. It now appears the legislature, in its own unique way, is attempting to go back to the original requirement. Anyone filing a lien statement would be well advised to examine H.B. 2905; L. 2000, ch. 175, § 7 which was passed in the waning minutes of the 2000 legislative session. The legislature amended K.S.A. 60-1103 so that it applies to an equitable interest that is duly recorded. The unique part is that it only applies if this court denies the petition for review in this case, or, if we accept review, it applies effective the date our decision is filed if we affirm the Court of Appeals' decision. H.B. 2905 is unique and raises several legal questions, none of which are before us. The district court also found that Owen Lumber had not complied with the requirements set forth in K.S.A. 60-304 in providing proper service to Design Build. It is uncontested that Design Build had actual notice pursuant to K.S.A. 60-1103(c). Owen Lumber's mechanic's lien filed with Design Build as the designated legal owner of the property is a valid and enforceable lien.
K.S.A. 60-1103(c) also requires that a subcontractor notify any party obligated to pay the lien. The Chartrands argue that they were obligated to pay the lien, and since Owen Lumber failed to notify them of the mechanic's lien, the lien is unenforceable. The district court ruled in favor of the Chartrands, finding that they were obligated to pay the lien and that Owen Lumber should have provided them notice pursuant to K.S.A. 60-1103(c). In doing so, the district court stated: In this case, with respect to a statute that requires service of the notice upon `any party obligated to pay the lien,' I think it is clear that a party who has filed a notice of equitable ownership and who is the party against whom the creditor who is the only party the creditor chooses to proceed against must be given notice of the lien claim in the manner required by K.S.A. 60-1103(c). At the time the mechanic's lien was filed, the Chartrands were not any party obligated to pay the lien. The only party obligated to pay the lien was Design Build, as owners of the legal interest in the property. The Chartrands only became a party obligated to pay the lien after they took legal interest in the property by quitclaim deed from Design Build. By taking the property by quitclaim deed from Design Build, the Chartrands chose to voluntarily make themselves a party obligated to pay the lien. Owen Lumber, however, was under no obligation to provide notice of the mechanic's lien to the Chartrands when Design Build was the legal owner of the property and the only party obligated to pay the lien. The parties do not address the effect of a quitclaim deed. We, therefore, do not consider it either. We would draw the parties' attention to Ennis v. Tucker, 78 Kan. 55, 96 Pac. 140 (1908), and Schwalm v. Deanhardt, 21 Kan. App.2d 667, Syl. ¶ 2, 906 P.2d 167 (1995). We express no opinion as to their applicability to this case. We hold that the district court erred in ruling that the mechanic's lien filed by Owen Lumber is unenforceable and remand to the district court for further proceeding in accordance with this opinion.