Survey Of Recent Mechanics Lien Cases Shows More Confusion Than Clarity

This is a guest post from Scott Wolfe Jr, the founder and CEO of Zlien.  Zlien offers turn key mechanics lien and bond claim compliance solutions for the construction industry, consisting of compliance and deadline tracking, preliminary notice services, bond and lien claim filings, and claim collections.  Scott is a licensed construction attorney in six states.

I’ve written about mechanics lien laws and filing requirements for over five years on the Lien Blog, and dedicated a substantial amount of space there to specifically report on law changes across the nation. Whenever a case impacts a state’s mechanics lien statutes, or whenever the statute itself is changed legislatively, I report on the change under a designed “Lien Law Alerts” category.

Across the country, there is a mechanics lien case or legislative change just about every week, and so you can imagine the volume of cases and bills we’ve poured over through the years. The question I address in this article is whether a reflection on all of this analysis points to a single trend or overarching theme about mechanics lien laws that can be applied across the nation.

As the article’s title suggests, the answer here is a resounding no.

Why Aren’t The Fragmented Mechanics Lien Laws Harmonized?

But why so?  Why isn’t there a single national trend for mechanics lien laws, or an overarching theme that carries over from state-to-state or region-to-region?

As we’ll explore in the next section of this article, states have differing perspectives on the purpose of their mechanics lien laws. This is peculiar since these laws promulgated across the country from a single source (Thomas Jefferson’s first mechanics lien bill introduced in Maryland). The idea behind that law was to protect material men and laborers to encourage sound credit markets. The mechanics lien laws, therefore, had the primary purpose of protecting those in the construction industry furnishing to projects.

Over two centuries of legislation, however, the laws have become enormously complex. The National Conference of Commissioners on Uniform State Laws tried to remedy the problem in 1987 by drafting a Uniform Construction Lien Act, but the movement did not catch on and each state was left with its own set of rules.

It was inevitable that each state’s laws would take a life of their own, and that is exactly what happened. The result is a fragmented system so disjointed it’s hard to imagine an agreement on any common ground to harmonize the rules.

The National (Confusing) Battle Between Liberal And Strict Construction Of Mechanics Lien Laws

That brings us to the nitty-gritty. After reviewing hundreds of cases and legislative changes, is there absolutely any common thread or trend?

Unfortunately, if there is anything shared by the states in the way of mechanics lien laws, it is that they do not share anything at all.  Each state’s rules are substantially different from one another.

This is true even when they are clearly modeled after one another. Such is the case with California’s mechanics lien laws, which serve as a model for the rules in Arizona and the Guam territory. While the framework is similar, there are clear distinctions between the states in the statutory requirements and the jurisprudential treatment of the laws.

One key component to any review of a mechanics lien law dispute is whether the law must be strictly construed against the claimant or liberally construed in favor of the claimant. Determining which type of construction applies sometimes traces back to the purpose of the laws themselves, which as mentioned in the above-section, seems silly since the only purpose of these laws is to protect the furnishing party.

States are beginning to line up in the “strict” or “liberal” construction camp. On the Lien Blog we’ve tracked this through the “Strict v. Liberal Construction” tag.

If there is any type of national trend going on in the mechanics lien law world it isn’t a magnetism towards any single theory or rule, but maybe a sudden magnetism towards this “strict v. liberal construction” argument.

For whatever reason, there appear to be a lot of state supreme courts re-examining its case law (sometimes going back 50 or 75 years) and clarifying the type of construction afforded mechanics lien law claims. This recently happened in Pennsylvania and Washington, where in both states the lower courts had gotten into a groove of affording the claims “strict construction,” when the law should have required liberal construction.

Whether a court utilizes strict or liberal construction of the lien laws can make a big difference, as we’ve seen in 2012 when the Idaho Supreme Court and the California Supreme Court analyzed an identical issue but reached opposite results.

A survey of mechanics lien law cases will leave you scratching your head.  Sometimes, states disagree within itself. They nearly universally disagree with neighboring states. And, unfortunately, there seems to be no rhyme, reason or trend when you look at it from a bird’s eye view.

The lesson here is to be careful with mechanics lien compliance. While it is tempting, you shouldn’t ignore the mechanics lien remedy because of its complexity. Instead, you should partner with a provider who can help you navigate the rough waters, as mechanics lien security is the gold standard of credit protection in the construction industry.

Thanks again to Scott for writing this post. Mechanics liens and the laws that govern them can be very complex. Yet they remain a very crucial element in the design and construction of the built environment. I’m grateful for Scott’s wonderful introduction to both the diversity and relevance of lien laws. Scott and I welcome your comments below.

Image courtesy Bex Roxx