Lien Law Update: Cappelli Wins $250K Mechanics Lien Ruling and More

Every month we gather the most pressing developments in lien law nationwide, so that you can stay informed and on top of any developments affecting your projects or company. Here are our highlights for the month of June:

Cappelli Company Wins Ruling for $250K Mechanics Lien: A debate between a developer and contractor has led to an interesting court ruling in Rye, New York. The contractor, Cappelli, won the ruling stating that the mechanics lien filed against the developer, Old Post, was a valid lien. Old Post contested the lien saying that the only work completed was updating the budget for the project and attending meetings. Cappelli was retained by Old Post for 11 months to provide construction management services, though Old Post claims they were never formally hired. While no construction work had started, the judge did rule that pre-construction services qualified for mechanics liens.

Mortgage Vs. Mechanics Lien Priority Issues In Indiana: A recent case in Indiana, Kellam Excavating Inc. v. Community State Bank, discussed priority issues between a mortgage holder and a construction contractor placing a mechanics lien. The court held that the mortgage has priority, even in situations where the mortgage is structured in a non-traditional fashion but operates in the same fashion as a mortgage.

Federal Court in New Hampshire Holds That Subcontractor May Pursue a Mechanics Lien Despite Signing Written Lien Waivers and Releases: The process of filing a mechanics lien often involves many steps of notification to all parties involved and, at some point in this process, a contractor may sign a conditional lien waiver. In this case, the general contractor hired a subcontractor to handle the mechanical and plumbing work in a project. The project was then accelerated, resulting in a claim from the subcontractor on labor inefficiencies and resulting reimbursement. The contractor also required lien waivers to be submitted with all invoices. The court held that the subcontractor had the right to file a lien because the contractor was aware of the subcontractor's intent to do so, despite having submitted the lien waivers required with invoices.

The team at National Lien & Bond pays attention to both the national news, construction specific news, and the interesting cases that arise and give us insight on how to avoid those issues for our clients. We work to ensure our clients are complying with all local laws and regulations and their businesses are following the right processes for mechanics liens in every jurisdiction and are informed on changes to laws that may have an impact. Reach out to our team of experienced construction lawyers today to schedule a consultation.