Lien Law Change in Idaho

By on November 22, 2022
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On July 1, 2022, the Idaho Legislature’s amendments to I.C. 45-507 came into effect. This statute regulates the steps and requirements to sustain a valid mechanics and materialmen lien. There were three changes to the statute: (1) clarification as to who may personally serve a notice of lien; (2) additional contents that must be included in a lien claim; and (3) authorization for attorney fees.

Prior to the amendments, any person could, on behalf of the entity (contractor) seeking to establish a lien, personally serve the owner of the property with a claim of lien. Now, for personal service to be considered effective, the owner or reputed owner must be personally served by an officer “authorized by law” to serve process. Essentially, a process server needs to be employed for personal service. A contractor may still serve an owner via certified mail

The second change relates to required disclosures. Now, in order to have a valid lien, a contractor must attach a copy of the required disclosures and acknowledgement of receipt of said disclosures with the claim of lien. If the claim does not contain the required documents, it will be considered invalid. This is an important change, because even if the contractor provides all required documents to the owner if there is no copy of the documents attached to the claim of lien the contractor will lose their lien rights – assuming the deficiency is not corrected prior to the statute of limitations running.

The most notable change to the statute is the potential to recoup attorney’s fees, by either party. The statute allows an award of attorney’s fees and costs to the prevailing party in any court proceeding regarding a lien filed pursuant to this section. This can be seen as beneficial and detrimental to contractors. While placing a lien on a property is a relatively simple process, doing so while ensuring all requirements have been met can be difficult, especially if a contractor files the lien without help from counsel. Should a lien be deemed invalid, the contractor will no longer have a lien and will likely be instructed to pay the homeowner’s attorney’s fees and costs.

Filed under Lien

School District Cannot Withhold Retention When the Only Dispute Is Whether Contractor Is Entitled to More Money for Change Orders

By on April 2, 2015
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In a decision that should be self-evident to most readers, the California Second District Court of Appeals held that a school district could not avoid prompt payment act penalties when the “dispute” it relied upon to hold retention longer than 60 days after project completion was a dispute over the contract price owed to the contractor for change orders and delay and disruption. In East West Bank v Rio School District (April 1, 2015) 2015 DJDAR 3677, the District at the end of the project withheld $676,436 in retention after project completion and after all stop notices were released. It was still holding the retention 10 years after project completion when the trial court issued its decision.

The only dispute after project completion was whether the contractor was entitled to more money for 150 proposed change orders. Pointing out that the purpose of the statute was to prevent public entities from wrongfully delaying the payment of retention, the Court noted that once the withholding was no longer necessary to provide security against mechanic liens and deficiencies in the contractor’s performance the funds should be released.  The District had no business holding the retention hostage as leverage to resolve the other disputed issues. The Court upheld the trial court assessment of the statutory 2% per month penalty.

Filed under Change Orders, Lien, Prompt Payment Act, Stop Notice Releases

Mechanic’s Lien Releases, Design Professional Lien Releases, and Stop Notice Releases Now Required to Contain Additional Language in Notary Acknowledgements

By on March 11, 2015
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Under new provisions governing all documents requiring notary acknowledgements (often referred to as “Certificates of Acknowledgement”) in the State of California, the following additional language must be set forth in a box on all forms utilizing a notary’s acknowledgement. Within the context of construction form documents, this requirement specifically applies to Mechanic’s Lien and Design Professional Lien Releases, as well as Releases of Stop Notices.

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

Your notary should be aware of this new provision, which became effective January 1, 2015.  This new provision is intended to clarify that the notary’s role is only to affirm the identity of the individual signing the document. Care should be taken to avoid using old forms on hand containing notary acknowledgements that do not contain this language.

Filed under Design Professionals, Lien, Notary Acknowledgements, Stop Notice Releases