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.
