Category

Mechanic’s Lien

Mar 20
0
Caronavirus Attorney

Handling a Legal Case In the Middle of a Pandemic

By | Collections, Contractor Law, Family Law, Liens, Mechanic's Lien, Personal Injury, Probate, Real Estate Law, Wills | No Comments

Corona Virus

…and your legal cases

As of March 16, 2020, it is clear America is in the fight of its life against an invisible foe known as Covid-19 aka the coronavirus. This foreign invader grows faster than compound interest. It is a true monster with exponential superpowers. In the course of 55 days (the number of days since the first American was confirmed to have this virus to now), this virus caused one of the strongest bull markets in stock market history to lose three years of gains and send a thriving economy into a recession.

With no cure or vaccine to fight it, self-imposed quarantining is the only way to slow its spread. Scientists do not even talk in terms of “stopping it”, their best hope is to merely slow it down while an under prepared healthcare system struggles to catch up. This is what has been described as flattening the curve. While older citizens with chronic health problems are believed to be the most vulnerable, young healthy people can spread the virus and that makes this a battle that everyone must join. It requires nearly complete cooperation.

The businesses most immediately impacted by this pandemic are those that rely on crowds to gather in their restaurants, gyms, and theaters, or at their stadiums, convention halls, or theme parks. If not now, sometime soon, even businesses who don’t depend upon crowds will feel the pressure of this pandemic as they depend on other businesses or those businesses employees to sustain their cash flow.

Some businesses will continue to operate as their employees work from home or work in isolation zones within the business itself. In the end, everyone will be negatively impacted. “What should we do”, you ask? There are certainly some very fundamental things all Americans must do now.

1. Get informed and stay informed. Listen to credible sources of news and information. Avoid unreliable sources. Currently, the Centers for Disease Control (CDC) is deemed a reliable source.

2. Honor the Federal, State, and local governments mandates on travel restrictions, business closures, and self-quarantine.

3. Be prepared, if necessary, to reinvent yourself. It may turn out that unemployed workers, such as waitresses and bar tenders or even out-of-work lawyers (for example), will need to be trained to work in special coronavirus wards to help fight this pandemic.

4. Prioritize your spending, if you have limited resources.

5. Be part of the solution by thinking of ways you can help keep businesses moving while protecting patrons. (I have a vision of a movie theater full of movie goers in hazmat suits).

6. Help those who need help. Give of yourself.

BUT WHAT ABOUT MY CASE?

Caronavirus AttorneyYes, indeed, you have legal issues and you may be wondering what all this means for your particular case. Most law offices are prepared with a continuity plan for emergencies like this. Lawyers can do much of what they do from home. They can continue to work on your case, generally, without the need to meet with you in person or to leave home, as long as they have a computer and a link to the internet.

For cases that are transactional in nature, such as preparing a Will or a Trust or a contract or forming a new business, lawyers are will suited to accomplish this work from their couch or home office. If your case is a matter pending before a court of law, then some work can be done outside of court by your lawyer working from home, but where hearings or trial are concerned, courts around the country are continuing trials and postponing everything on their calendars for the foreseeable future. This may be good, if you are a reluctant participant desiring to postpone the inevitable, but it may be bad, if you want your day in court so justice can prevail.

Some legal disputes avoid court all together where the parties agree to submit their dispute to an arbitrator or arbitration panel. These arrangements are typically worked out in advance by inserting these agreements into a contract. However, sometimes litigants make the decision to have an arbitrator decide their case after the dispute arises. This might be the case where they desire to have the matter decided quickly and avoid the long delays often forced upon traditional litigants in the trial courts.

The pandemic is changing the dynamics of everyday life in so many ways it is difficult to anticipate everything that will impact us. However, it is reasonable to expect many litigants who desire a quick resolution to their dispute to agree to submit their case to an arbitrator and therefore the demand for arbitration services is very likely to explode over the next few weeks and months.
Where litigants are cash starved, they may actually benefit from these delays as it will permit them to modulate their cash flow with the circumstances impacting the court’s calendar. Being cash starved may also compel those who are desperate for cash to settle for less than they might otherwise accept under normal circumstances.

All litigants must take care to at least file their claims timely in order to avoid statutes of limitation and for that reason, even where cash or the lack of it is a concern, talking this point through with an attorney could enable them to anchor their claim now while delaying the progression of the procedural process. Some things just can’t wait.

If you are not impacted by cash flow and you have the means to bring or defend a case, you should know that most every lawyer in practice today will be able to assist you, provided they can work from home and have access to the internet. Hopefully, the coronavirus will not alter that in the future.

Attorneys at Indy Advocate

Nov 19
2

10 Common Questions Asked About Indiana Mechanic Liens

By | Mechanic's Lien | No Comments


Indiana Mechanic Liens

1. What is a lien, and what does it do?

  • ANSWER: A lien is a right that attaches to the property of another individual or entity. Once a lien is created the lien holder generally has the right to restrict the transfer of title to the property, whether that property is an automobile or a parcel of real estate.

2. How do Indiana mechanic liens differ from other types of liens?

  • ANSWER: Mechanic liens are generally created the minute a contractor provides services in the building, remodeling, or repair of a structure that is or will be permanently affixed to real estate. Other liens arise from other types of activity, such as a warehouseman’s lien for unpaid storage, a mortgage lien when a home buyer borrows money from a lender, or a judgment lien, when someone loses their case in court.

3. How is a Mechanic Lien created?

  • ANSWER: Generally, the minute a contractor, subcontractor, material supplier, or equipment rental company provides services, materials, or equipment for the construction, remodeling or repair of any type of structure, such as a home, commercial building, or a bridge, a lien against the structure being built, modified or repaired is automatically created as a matter of law. However, the mere creation of the lien does not make it enforceable.

4. When and how does a mechanic lien become enforceable?

  • ANSWER: In order for Indiana mechanic liens to become enforceable, it must first be “perfected”. In order to perfect a mechanic lien, the lien holder must follow the statutory requirements for recording the lien and observe the time limitations for recording the notice with the county recorder’s office. Mechanic liens on “type 2” structures, which are essentially all single or double unit residential homes, must be recorded within 60 days of the last date work, material or services were provided, or the mechanic lien is void. For all other structures, including commercial buildings, the lien holder has up to 90 days from the last date work, materials or services were provided on the project. Indiana requires a pre-lien notice be recorded in the office of the recorder 60 days from the first day work is performed on a residential type 2 structure and 90 days for new residential construction.

5. What can a property owner do to remove the lien from the real estate?

  • ANSWER: If the lien is valid and there is no dispute over the amount owed, then paying the lien holder in exchange for a release of lien or satisfaction of lien document may be the easiest way of removing it. If the amount demanded by the lien holder is unacceptable to the property owner, then the property owner may wish to challenge the lien. Indiana mechanic liens might be defeated for a number of reasons, including the failure to “perfect the lien” properly, or the failure to respond to a properly worded written demand to the lien holder to foreclose within 30 days or lose its lien rights, or through litigation that places the issues in dispute in the hands of a judge for resolution. A bond may also be secured to insure the payment of the lien, if the dispute can’t be resolved quickly, and the property owner needs to free up the property for the purpose of resale or refinancing.

6. How long does a mechanic lien last?

  • ANSWER: Indiana mechanic liens are good for one year from the date the notice of intention to hold a mechanic lien is recorded with the county recorder’s office. If the lien holder fails to file a lawsuit within that one-year period, the lien becomes void automatically by operation of law.

7. Who is responsible for paying attorney fees, when a mechanic lien is recorded?

  • ANSWER: Indiana courts, like most other states, follow the American Rule when it comes to awarding attorney fees. Under the American Rule each party is responsible for paying their own attorney fees, unless there is a provision written into a contract which is at the heart of the dispute, or there is a statute that gives the right to recover attorney fees to one party or another. Indiana’s mechanic lien statute just happens to be one of those statutes. In other words, if the contractor who properly records his lien notice has properly perfected his lien, and the contractor becomes the prevailing party in a lawsuit to enforce or foreclose on the lien, then it would be entitled to recover attorney fees. There is one exception, however, and that exception is created when the property owner has paid the general contractor the full amount of the contract prior to a subcontractor filing its lien notice. The subcontractor in that situation would still be entitled to recover the amount of his lien, but would not be entitled to recover attorney fees from the property owner.

8. What can be done if the contractor overstates the lien amount?

  • ANSWER: There are very few Indiana cases (common law) that discuss the ramifications of a mechanic lien that overstates the amount that is actually due. There is at least one Indiana case that appears to say the intentional act of grossly overstating the amount due on a mechanic lien may void the lien, while good faith and inadvertent mistakes will not void the lien. However, it also appears that the intentional act of grossly overstating the lien amount must also have either defrauded the property owner or caused some other type of harm. As of 3/26/2016 this issue has precious few appellate cases from which to turn for guidance. The door is open, however, and it is likely more appellate cases will develop to help clarify this issue.

9. Can real estate be sold with a mechanic lien filed against it?

  • ANSWER: Legally, the property can be sold by the owner, but the lien goes with it, so the new buyer will inherit the lien. The practical effect of this is to essentially bar the property owner from selling or refinancing the real estate. However, there are a number of ways to sell the property with a lien on it and they include the posting of a bond to remove the lien and/or escrowing funds from the sale of the property to insure payment of the lien pending the outcome of litigation.

10. What does it mean to foreclose on a mechanic lien?

  • ANSWER: Once Indiana mechanic liens are recorded and perfected, the lien holder may file a lawsuit to have its mechanic lien reduced to a judgment. The judgment then becomes a lien on the real estate. Although there may be other liens on the real estate that come before the mechanic’s lien and therefore have a priority status, the real estate can be sent to a Sheriff’s Sale after the lien holder secures a judgment. At the Sheriff’s Sale, the property will be sold to the highest bidder, subject to any other liens that have not been reduced to judgment as part of the litigation. The lien holder who becomes the judgment holder may bid some or all of its judgment at the Sheriff’s Sale, and if it is successful, the Sheriff will issue the successful bidder a new deed (a Sheriff’s Deed) to the real estate. For this reason most mortgage companies will call the loan and join in the foreclosure proceedings, when a mechanic lien foreclosure lawsuit is filed.

Rob McNevin is partner in the law firm of Kreider McNevin Schiff, LLP and an Indiana trial lawyer whose practice is primarily focused on issues pertaining to real estate and construction law. If you have questions about this article or the law to which it relates, contact him by e-mail at Rob@indyadvocate.com or by phone at 317-939-3000.

Feb 16
2
Indiana lien law

No Lien Contracts in Indiana

By | Contractor Law, Liens, Mechanic's Lien | No Comments

No-Lien Contracts in IndianaUnder Indiana law suppliers of labor, materials and equipment have the right, under certain circumstances, to hold and enforce a mechanic lien to insure they are paid for their efforts.  Those lien rights can be quite vexing for the property owner, when payment issues arise.  In order to avoid the problems associated with mechanic liens, property owners and general contractors may specify in their contracts that the contractors and subcontractors waive their rights to record a mechanic lien.  However, such provisions, under Indiana law, are null and void on commercial construction projects pursuant to Indiana Code 32-28-3-16.

No Lien Contracts in Indiana

Essentially, no lien contracts in Indiana are fair game for Class 2 structures.  Under this same statute, “class 2 structures” as well as projects involving certain types of public utilities, are excluded.  Indiana Code 22-12-1-5 defines a class 2 structure as any building that contains one or two dwelling units.  It does not require the owner to live in one of those units, but it does require that the unit(s) be used as a residence.  Essentially residential buildings with one or two units are exempt from the prohibition of the commercial no-lien contracts.

Where a contract for a commercial project contains a no-lien provision, the contract itself is not void, but rather the offending provision(s) within the contract are void and unenforceable.  Any provision in a commercial construction contract that attempts to bar contractors from filing such liens or otherwise contain language that would require them to waive such lien rights before they are paid for their services is void and unenforceable.

It is apparent that the general assembly felt the size and scope of commercial projects had the potential to do great harm to subcontractors, if no-lien contract provisions were permitted.  They did not have the same concerns for subcontractors working on residential properties and therefore, subcontractors working on residential properties should take care to insure that the owners has not recorded a no-lien contract with the county recorder in an effort to eliminate those lien rights.

The no-lien contract provision is alive and well for owners or general contractors who wish to keep liens from being recorded and enforced on residential construction projects in Indiana.  The statutory support for this no-lien contract is found at Indiana Code 32-28-3-1(e) and (f).   In order to properly utilize this no-lien provision, the contract must be in writing, provide an accurate legal description of the real estate, be notarized, and recorded with the county recorder within five (5) days of the date the contract was fully executed.  Failure to satisfy these requirements will void the no-lien provision.

Feb 05
2

Indiana Mechanic Lien For Residential Real Estate

By | Mechanic's Lien, Real Estate Law | No Comments

INDIANA MECHANIC LIEN FOR RESIDENTIAL REAL ESTATE

Anyone who deals with the construction or remodeling of a new home in Indiana should have a basic understanding of Indiana’s mechanic lien law. When contractors, suppliers, or equipment rental companies provide labor, material or equipment for the construction or improvement of a residential property, they may have lien rights. If they do not get paid, they may file a lien against the property. The filing of a lien against any real estate will in most cases prevent the owner from selling or refinancing their home, and it may also be construed as a breach of the terms of a promissory note and mortgage on the property. Consequently, a properly filed mechanic lien can be a powerful tool for a contractor, supplier or equipment rental company to collect money due them for the project.

The actual filing of a mechanic lien requires the contractor, supplier or equipment rental company prepare and record duplicate copies of a written notice to the owners of the property that they intend to hold a lien on the owner(s)’ real estate. According to the Indiana Mechanic Lien statute, the holder of the lien must provide a written notice to the owners which contains the name and address of the lien holder, the amount of the lien, the last date labor, materials or services were provided to the job site, a statement that the lien is being filed within 60 days of the last date labor, services, or equipment was provided to the job site, a brief description of the labor, materials or services provided. The notice must be signed and notarized and recorded with the county recorder in the county where the property is located. The recording of the notice must be technically accurate and timely filed, or the lien may be invalid. Real estate attorneys are generally very well equipped to make sure the liens are perfected, which is to say filed in accordance with Indiana law.

Once a Indiana mechanic lien for residential real estate is perfected, the holder of the lien has one year in which to file a lawsuit to foreclose on the lien. Failure to file a lawsuit within the one year period, will cause the lien to become void and unenforceable. If the holder of the lien fails to foreclose on the lien before the one year expiration date, he or she may still have the right to sue the general contractor or the property owner under a theory of breach of contract or unjust enrichment, but unless there is a contract that gives them the right to recover attorney fees, they will not be able to recover attorney fees, as they might when suing to foreclose on a mechanic lien.

Contractors who work under other contractors rather than the property owners must record a “Pre-Lien Notice” with the county recorder’s office within 60 days of the first day they provided labor, materials or services to the job site. Failure to record and send the owners a copy of the pre-lien notice will invalidate any subsequently filed mechanic lien on a residential property. The purpose of this notice is to give the property owner sufficient notice that someone other than the contractor they contracted with is working on their home and may ultimately file a lien on the property, if they are not paid. By having notice of the identity and the scope of the work being performed by subcontractors, the homeowner can take steps to insure the subcontractors are properly paid and, accordingly, no liens are filed. Obtaining lien releases or putting every contractor’s name on the check may help guard against the filing of a mechanic lien.

If the contractor contracts directly with the homeowner then no pre-lien notice is required. However, the lien notice on a residential property must be recorded within 60 days of the last day labor, material or equipment was provided to the website, whether a pre-lien notice is required or not. For commercial projects, no pre-lien notice is ever required and the lien notice must be filed within 90 days of the last date labor, materials or equipment was provided to the job site.

This article is a general overview of Indiana’s mechanic lien statute (sometimes referred to as Indiana’s Mechanic’s Lien Statute). There are many technicalities to the statute and property owners and contractors would be well advised to hire a qualified real estate lawyer to assist them where a mechanic lien is an issue.

For more information on mechanic lien resolution recording and enforcement see our real estate page.

Jan 04
2

Indiana Mechanic’s Lien Statute

By | Mechanic's Lien, Real Estate Law | No Comments

Indiana Mechanic’s Lien Statute

NUANCES OF INDIANA’S PRE-LIEN NOTICE REQUIREMENTS

FOUND WITHIN THE INDIANA MECHANIC’S LIEN STATUTE

Indiana, like most states, has enacted a mechanic lien law designed to help insure those who provide labor, material and services on construction projects get paid. The statute found at I.C. 32-28-3-1 through I.C. 32-28-3-18 seeks to protect the contractor rather than the consumer. However, like any good sword, it has a sharp edge that can cut both ways.

This article provides a brief description of some of the appellate cases in Indiana that help shape the landscape of the Indiana Mechanic’s Lien Statute law within the state. These rulings help define the meaning of the words and establish boundaries for applying Indiana’s mechanic lien laws.

NEW CONTRACT-NEW RULES:

Where a “no-lien” contract was signed by the property owner and the general contractor, and the contract was recorded within 5 days, as required by the Indiana mechanic lien statute, neither the general contractor nor the sub-contractors working under it had any legal right to file a pre-lien notice or a lien notice. However, despite that fact, a sub-contractor, who was initially barred from filing a lien, was entitled to file a lien and was not required to record and give a pre-lien notice when he later contracted directly with the property owners after the general contractor walked off the job. Feitler v. Springfield Enterprises, Inc. ,981 N.E.2d 155 (Ind.App. 2013).

AN OWNER IS AN OWNER UNLESS:

Other cases have wrestled with meaning of the term “owner” within Indiana’s mechanic lien statute. In the Shackelford case, the Court determined that the contractor (Shackelford) properly perfected his lien by serving a pre-lien notice on the builder, who was the owner of record since there was no recorded evidence of the identity or address of the intended buyer of the house.

Shackelford v. Rise, 659 N.E.2d 1142 (Ind.App. 1996).

Conversely, in the Mid America case, the court held Mid America’s lien invalid even though they served the owner of record with a pre-lien notice. The Court in the Mid America case held that although Mid America followed the precise language of the mechanic lien notice statute by serving the owners of record at the time the notice was recorded, Mid America’s strict reliance upon the statute essentially frustrated the purpose of the statute by giving notice to a party who would have no interest in it. They had no interest in it because they had sold the property to the Horns and Mid America knew that was the case and failed to serve the new buyers. Consequently, the Court in the Mid America case, held Mid America failed to perfect its lien rights with the recording of the “technically correct” pre-lien notice.

For contractors, the take away should be send a notice to anyone they know or suspect to be an “owner” whether they are buying or selling.

WHAT’S IN A NAME?

In the Von Tobel case, the Court held that where the lien holder’s name on a pre-lien notice is sufficiently similar to that of the name on the actual lien notice as to apprise the property owner that the claimant has a lien for materials furnished, the lien should be perfected and validated. In that particular case the name on the pre-lien notice was from Von Toble Lumber & Home Center, Inc.” and the lien notice from Von Tobel Corporation.” The former being a wholly owned subsidiary of the later.

Web Statistics