Opinion ID: 2033199
Heading Depth: 1
Heading Rank: 5

Heading: protected party contracting owner

Text: The Lancasters contend that their lien liability under the Nebraska Construction Lien Act, §§ 52-125 through 52-159, is limited to the amount of their purchase agreement with Daugherty, minus payments made thereon. Specifically, they cite § 52-136(5), which states: A protected party contracting owner's lien liability under a particular prime contract is the prime contract price less payments properly made thereon. Accordingly, if the Lancasters are protected party contracting owners, their purchase agreement with Daugherty would be the prime contract, and their satisfaction of that agreement at closing would constitute the limit of their liability. The threshold issue of the Lancasters' defense is whether they satisfy the statutory definition of a protected party contracting owner. Protected party and contracting owner are defined separately under the act, and a party must satisfy the requirements of each protected status in order to assert this defense. See Midlands Rental & Mach. v. Christensen Ltd., supra . Under § 52-129(1)(a), a protected party is [a]n individual who contracts to give a real estate security interest in, or to buy or to have improved, residential real estate all or a part of which he or she occupies or intends to occupy as a residence. The Lancasters satisfied the requirements of a protected party by contracting to have improvements made to property they intended to purchase as their own residence. Protected parties under the act are allowed to take free of all construction liens that are not of record at the time his or her title document is recorded. § 52-139(5). The construction liens of Lincoln Lumber and Kaser, however, were both recorded before the filing of the Lancasters' title document, so protected party status does not avoid liability for the Lancasters. Next, we must determine whether the Lancasters are contracting owners. Section 52-127(3) defines contracting owner as a person who owns real estate and who, personally or through an agent, enters into a contract, express or implied, for the improvement of the real estate. The Lancasters argue that the purchase agreement they signed to buy improved real estate from Daugherty carried a sufficient ownership interest in the subject property to qualify them as contracting owners. Brief for appellants at 13. In support of this contention, the Lancasters cite May Plumbing Co. v. Shaver, 182 Neb. 251, 256, 153 N.W.2d 911, 915 (1967): `[O]wner' as used in our mechanic's lien law is not limited in its meaning to an owner of the fee, but means the owner of any interest in the lands and includes every character of title, whether legal or equitable, fee simple, or leasehold. May Plumbing Co., however, does not support the Lancasters' position that they are contracting owners. May Plumbing Co. stands for the proposition that a husband or wife can be an agent of their spouse for purposes of having lien liability imposed. While the definition of owner in May Plumbing Co. was expanded, it was done so in order to ensure that the mechanic's lien would be valid, not to limit liability for the purchaser. See, also, Bohn Mfg. Co. v. Kountze, 30 Neb. 719, 725-26, 46 N.W. 1123, 1125 (1890) ([w]here a vendee, owning the equitable title, contracts for the erection of a building upon the express authority of the owner of the legal title, it is but just that the lien of the mechanic should attach to the interest of both vendor and vendee in the premises, and be paramount to the lien of the vendor). The expansion of the term owner in Nebraska cases has been in keeping with this court's consistent holdings that `[t]he object of the mechanic's lien being to secure the claims of those who have contributed to the erection of a building, it should receive the most liberal construction to give full effect to its provisions.' Midlands Rental & Mach. v. Christensen Ltd., 252 Neb. 806, 810, 566 N.W.2d 115, 118 (1997), quoting Blue Tee Corp. v. CDI Contractors, Inc., 247 Neb. 397, 529 N.W.2d 16 (1995). Here, the Lancasters ask us to expand the definition of owner in order that they may avoid their lien liability. We decline to do so. This court recently addressed the issue of defining a contracting owner in Midlands Rental & Mach. v. Christensen Ltd., supra . The record owner of the property, Christensen Ltd., contracted to give a builder the right to construct homes for individuals who contracted with the builder to purchase the homes. Christensen did not transfer title for the lots to the builder until the construction was completed. The builder would then transfer title to the purchaser. One of the builder's contractors failed to pay a supplier, which, in turn, filed a construction lien against Christensen, as the property owner. Christensen contended that the amount of the subcontractor's lien should be determined under § 52-136(2). Like § 52-136(5) at issue in this case, § 52-136(2) gives special protection to protected party contracting owners. Christensen argued that because the houses were subject to purchase agreements with third-party buyers who intended to occupy the houses as their residences, the buyers were protected party contracting owners and, thus, § 52-136(2) was invoked. We noted that the parties had stipulated that Christensen was the record titleholder of the properties and stated, There can be little doubt, therefore, that Christensen is a contracting owner.... Moreover, despite the fact that the properties and houses are subject to purchase agreements, the interest in the real estate a vendor retains is subject to a construction lien. Midlands Rental & Mach. v. Christensen Ltd., 252 Neb. at 814, 566 N.W.2d at 121, citing Bohn Mfg. Co. v. Kountze, supra . Likewise, in this case, Daugherty was the vendor and record titleholder of the property at the time the liens were filed. Daugherty's ownership interest was sufficient to charge the property with a construction lien, and the Lancasters were put on notice of the construction liens before closing with Daugherty. We conclude that the Lancasters' interest in the property as potential purchasers does not make them contracting owners. Thus, the Lancasters do not qualify as protected party contracting owners and cannot limit their liability for the construction liens of Lincoln Lumber and Kaser under § 52-136(5).