Construction Lien

Every person who provides labor, professional services, materials, machinery, fixtures, or tools in the construction, alteration, or repair of any building, or other structure, or improvement, shall have a lien on such building, structure, or improvement for the work, labor, professional services, materials, machinery, fixtures or tools furnished.^[1]

Design professionals are also protected by Arizona Lien Laws. According to Arizona’s Lien Law, in order to have lien rights, the design professional must have an agreement with the owner of the property or with an architect, engineer, or contractor who has an agreement with the owner of the property.^[2]

The term “person” includes individuals, businesses, corporations and other business entities.^[3]

List of Cited Statutes and Case Laws for further research

• ^[1] Arizona Revised Statutes § 33-981(A).
• ^[2] Arizona Revised Statutes § 33-981(F).
• ^[3] Lanier v. Lovett, 25 Ariz. 54, 213 P. 391 (1923).

In order to have lien rights in Arizona, a “Preliminary 20-day Notice” must be served to the property owner, the general contractor, the construction lender, if any, and the person with whom the claimant has contracted with.^[1]

The term claimant refers to the person or company who is filing or making a claim. The term claimant may also refer to the person or company who is sending a Preliminary 20-day Notice.

Every person who furnishes labor, professional services, materials, machinery, fixtures, or tools must serve the Preliminary 20-day Notice otherwise he/she may lose lien rights. Persons performing actual labor for wages are exempt from having to serve this notice.^[2] The Preliminary 20-day Notice shall be served no later than twenty days (20) after the claimant has first provided labor, professional services, materials, machinery, fixtures or tools to the job site.^[3]

If the notice is not served within the required time frame, it may still be served late. However, a late notice will limit lien rights to twenty days (20) prior to the service of the notice and anytime thereafter.^[4] Below is an example of the limited lien rights of a Preliminary 20-day Notice served late:

• Example: ABC Construction is a subcontractor that commenced work at the job site on August 1, 2005 but did not serve the Preliminary 20-day Notices until August 31, 2005. According to Arizona law, the notices must be served no later than 20 days from the start date and ABC Construction has served their notice 10 days late. Although the notice can still be served on the 31st of August, their lien rights will be limited.

• Since the notice was served 10 days late, ABC Construction will lose lien rights for all of the work that was completed during the first 10 days on the job site. Let’s assume that the work provided during the first 10 days was worth $2,500 and the total price of the construction project is $75,000. There are no rights to a construction lien for the $2,500 but ABC Construction still retains the right to file a lien for $72,500.

Arizona law also requires the claimant to provide a secondary Preliminary 20-day Notice if the actual estimated total price for the labor, professional services, materials, machinery, fixtures or tools furnished or to be furnished exceeds the estimated total price in any prior original or subsequent preliminary notice by twenty percent (20%) or more.^[5]

Service of the Preliminary 20-day Notice is considered complete once the notice has been delivered to the Post Office.^[6] Actual receipt of the Preliminary 20-day Notice is not required.^[7]

The term “days” are calculated by calendar days and NOT business days unless otherwise stated. Time is calculated by excluding the first day and including the last day, unless the last day is a holiday, then it is also excluded.^[8]

List of Cited Statutes and Case Laws for further research

• ^[1] Arizona Revised Statutes §§ 33-992.01(B), 33-1056(B).
• ^[2] Ibid.
• ^[3] Arizona Revised Statutes § 33-992.01(C).
• ^[4] Arizona Revised Statutes § 33-992.01(E).
• ^[5] Arizona Revised Statutes § 33-992.01(G).
• ^[6] Arizona Revised Statutes § 33-992.01(F).
• ^[7] Columbia Group Inc v. Jackson, 151 Ariz. 76, 725 P.2d 1110 (1986).
• ^[8] Arizona Revised Statutes § 1-243(A).

The construction lien must be filed within 120 days after the “completion” of the project.^[1] Arizona law requires a copy of the lien to be served on the property owner within a reasonable time after filing.^[2]

If a Notice of Completion was filed, the claimant has 60 days from the date that the Notice of Completion was filed to file a construction lien.^[3] In order for the Notice of Completion to be effective, the property owner must, within 15 days after filing the notice, serve a copy of the document by certified mail to the general contractor, original contractor, and any potential lien claimants who supplied a Preliminary 20-day Notice.^[4] If proper notification was not made, lien claimants should have the full 120 days to file a lien.

The term “completion” is defined as the earliest of the following events:

• 30 days after final inspection and written final acceptance by the governmental body which issued the building permit for the building, structure or improvement;^[5]

or

• Cessation of labor for a period of sixty consecutive days, except when such cessation of labor is due to a strike, shortage of materials or act of God;^[6]

or

• If a governmental body does not issue final acceptances or its equivalent, then from the last date on which any labor, materials, fixtures or tools were furnished to the property.^[7]

The term “days” are calculated by calendar days and NOT business days unless otherwise stated. Time is calculated by excluding the first day and including the last day, unless the last day is a holiday, then it is also excluded.^[8]

List of Cited Statutes and Case Laws for further research

• ^[1] Arizona Revised Statutes § 33-993(A).
• ^[2] Ibid.
• ^[3] Ibid.
• ^[4] Arizona Revised Statutes § 33-993(I).
• ^[5] Arizona Revised Statutes § 33-993(C).
• ^[6] Ibid.
• ^[7] Arizona Revised Statutes § 33-993(D).
• ^[8] Arizona Revised Statutes § 1-243(A).

A construction lien can be enforced by filing a lawsuit to foreclose on the lien. The lawsuit is often very complex and should be processed by an attorney licensed to practice law in the state where the property is located. If you need a referral to a construction law attorney in your area, please contact our office.

The lien will expire after 6 months from the date the lien was filed unless the lien is enforced by a foreclosure lawsuit.^[1] Even though a lien is considered expired, it will still continue to “cloud” the property title and make it difficult for the property owner to sell the property or obtain a loan until the lien is removed by the person who filed the lien. Due to expensive litigation costs and overcrowded courts, most contractors use the construction lien as leverage to obtain payment and settle outside of court

List of Cited Statutes and Case Laws for further research

• ^[1] Arizona Revised § Section 33-998.

Contractors, subcontractors, material suppliers, equipment lessors, laborers, design professionals, and other persons who perform work authorized for a “work of improvement” will have lien rights.^[1] Furthermore, any claimant who, at the request of or agreed to by the owner (or any other person acting by his authority or under him, as a contractor or otherwise) of any lot or tract of land, who has made "site improvements" also has lien rights.^[2]

A “work of improvement” is very broadly defined as, but not limited to, construction, alteration, addition to, or repair, in whole or in part, of any building, wharf, bridge, ditch, flume, aqueduct, well, tunnel, fence, machinery, railroad, or road, the seeding, sodding, or planting of any lot or tract of land for landscaping purposes, the filling, leveling, or grading of any lot or tract of land, the demolition of buildings, and the removal of buildings.^[3] A “site improvement” is defined as the demolishing or removing of improvements, trees, or other vegetation located thereon, or drilling test holes or the grading, filling or otherwise improving of any lot/tract of land, or the street, highway, or sidewalk in front of or adjoining any lot/tract of land, or constructing or installing sewers or other public utilities therein, or constructing any areas, vaults, cellars, or rooms under said sidewalks or making any improvements thereon.^[4]

In California, actual visible work must commence before a lien will attach to the property.^[5] For example, a design professional who provides services during the pre-construction phase cannot attach a construction lien until there is actual visible work that evidences the commencement of construction.

However, design professionals that provide services where there is no visible construction and comply with California Civil Code Sections 8300 to 8318 can file a special lien called a “Design Professionals Lien” which is exempt from requiring “actual visible work.” To file a Design Professional Lien, please contact our office at 1-800-820-2144.

List of Cited Statutes and Case Laws for further research

• ^[1] California Civil Code § 8400
• ^[2] California Civil Code §§ 8402 and 8404
• ^[3] California Civil Code § 8050
• ^[4] California Civil Code § 8042
• ^[5] D’Orsay Int’l Partners v. Superior Ct of Los Angeles County, 123 Cal. App. 4th 836 (2004)

In order to have lien rights in California, a “Preliminary Notice” must be served to the property owner, the prime/general contractor, the construction lender (if any), and the surety (if any).^[1]

The term claimant refers to the person or company who is filing or making a claim. The term claimant may also refer to the person or company who is sending a Preliminary Notice.

Every person who furnishes labor, professional services, materials, machinery, fixtures, or tools must serve the Preliminary Notice otherwise he/she may lose his/her lien rights. Contractors who have a direct contract with the property owner or any “laborer” is exempt from having to serve this notice.^[2] However, if there is a construction lender involved, all contractors (including prime/general contractors) must serve a Preliminary Notice to the lender in order to retain claim rights against the lender. The Preliminary Notice should be served no later than twenty days (20) from when the claimant first provided labor, professional services, materials, machinery, fixtures or tools to the job site.^[3]

If the notice is not served within the required time frame, it may still be served late. However, late notices will limit your lien rights to twenty days (20) prior to the service of the notice and anytime thereafter.^[4] Below is an example of the limited lien rights of a Preliminary Notice served late:

• Example: ABC Construction is a subcontractor that commenced work at the job site on August 1, 2005 but did not serve the Preliminary Notice until August 31, 2005. According to California law, the notices must be served no later than 20 days from the start date and ABC Construction has served their notice 10 days late. Although the notice can still be served on the 31st of August, their lien rights will be limited.

• Since the notice was served 10 days late, ABC Construction will lose lien rights for all of the work that was completed during the first 10 days on the job site. Let’s assume that the work provided during the first 10 days was worth $2,500 and the total price of the construction project is $75,000. There are no rights to a construction lien for the $2,500 but ABC Construction still retains the right to file a lien for $72,500.

If the estimated price listed on the original Preliminary Notice has changed substantially, a “Pre-Lien Amendment” is typically served in order to document the change. A court case denied lien rights to an equipment rental company whose Preliminary Notice contained an estimated price of $10,000 and the actual price invoiced was $160,000. The courts rejected the equipment rental company’s request to enforce the construction lien because the estimated price was substantially different from the actual price.^[5]

Service of the Preliminary Notice is considered complete once the notice has been delivered to the Post Office.^[6]

The term “days” are calculated by calendar days and NOT business days unless otherwise stated. Time is calculated by excluding the first day, and including the last, unless the last day is a holiday or weekend, then it is also excluded.^[7]

List of Cited Statutes and Case Laws for further research

• ^[1] California Civil Code § 8200.
• ^[2] Ibid.
• ^[3] California Civil Code § 8204.
• ^[4] Ibid.
• ^[5] Rental Equipment Inc. v. McDaniel Builders Inc., 91 Cal.App.4th 445 (2001).
• ^[6] California Civil Code § 8116.
• ^[7] California Code of Civil Procedure §§ 12, 12(a).

In order to have an enforceable construction lien, any original contractor who has a direct contractual agreement with the property owner must file his/her lien within 90 calendar days from the date of “completion.”^[1] If a “Notice of Completion” or “Notice of Cessation” is filed, the original contractors have 60 calendar days from the date that the “Notice of Completion” or “Notice of Cessation” was filed to file a construction lien.^[2]

All other contractors (subcontractors, material suppliers, equipment renters, etc.), are also given 90 calendar days to file a construction lien.^[3] If a “Notice of Completion” or “Notice of Cessation” is filed, all other contractors have 30 calendar days from the date that the “Notice of Completion” or “Notice of Cessation” was filed to file a construction lien.^[4]

If a “Notice of Completion” or “Notice of Cessation” is filed improperly it can become ineffective. A Notice of Completion must be filed within 15 calendar days of the true date of completion.^[5] A Notice of Cessation is only effective if the document is filed after 30 calendar days of continuous cessation of labor.^[6] The property owner must also give a copy of the filed notice to the general contractor, original contractor, and any contractor that served a Preliminary Notice.^[7] The notification must be sent within 10 days from the date the Notice of Completion or Cessation is filed.^[8] Residential owner-occupied homes that have four units or less are exempt from having to notify the contractors of the filing of a Notice of Completion or Cessation.^[9] If these strict requirements are not met, the Notice of Completion or Cessation may be invalidated and all claimants should have the entire 90 days to file a lien.

A project is deemed “complete” if any one of the followings have occurred:

• Actual completion of the work of improvement;^[10]

or

• The work of improvement supplied is being used or occupied by the owner or his agent accompanied by cessation of work;^[11]

or

• A cessation of work for 60 continuous calendar days;^[12]

or

• The filing of a Notice of Cessation provided that the notice was filed after 30 calendar days of continuous cessation of labor.^[13]

Generally, the deadline to file a lien begins on the date the entire project is complete and not the date a particular contractor has finished his/her work.^[14] For example, a framing contractor can finish his job very early in the project, but his 90-day deadline does not begin until the date that the last contractor finished his/her work in the whole project. However, this does not mean that he/she cannot file a lien before the entire job is complete. The contractor can file his/her lien anytime after his/her own work is complete, but before the statutory deadlines. Below is an example:

• Example: XYZ Construction is a framing contractor that started work on March 1, 2005. They are only contracted for their expert framing services and complete their work on May 1, 2005. XYZ Construction was promised that they would be paid soon, but never received payment. One year later, on July 10, 2006 XYZ Construction files a lien even though the overall project is still ongoing.

• XYZ Construction is still within the time frame because they can file their lien anytime within the statutory deadlines. Let’s assume that the final date of completion of the entire project is October 1, 2006. If no Notice of Completion or Notice of Cessation was filed, the latest for any contractor to file a lien is 90 days from October 1, 2006. Assuming that every month has 30 days, the last day any contractor can file a lien is December 1, 2006.

The term “days” are calculated by calendar days and NOT business days unless otherwise stated. Time is calculated by excluding the first day, and including the last, unless the last day is a holiday or weekend, then it is also excluded.^[15]

List of Cited Statutes and Case Laws for further research

• ^[1] California Civil Code § 8412.
• ^[2] Ibid.
• ^[3] California Civil Code § 8414.
• ^[4] Ibid.
• ^[5] California Civil Code § 8188.
• ^[6] California Civil Code § 8180.
• ^[7] California Civil Code § 8190.
• ^[8] Ibid.
• ^[9] Ibid.
• ^[10] California Civil Code § 8180.
• ^[11] Ibid.
• ^[12] Ibid.
• ^[13] Ibid.
• ^[14] Century Superior Gunite, Inc. v. Rodriguez, 118 Cal.App.3d Supp. 12, 173 Cal.Rptr. 661 (1981).
• ^[15] California Code of Civil Procedure §§ 12, 12(a).

A construction lien can be enforced by filing a lawsuit to foreclose on the lien. The lawsuit is often very complex and should be processed by an attorney licensed to practice law in the state where the property is located. If you need a referral to a construction law attorney in your area, please contact our office.

The lien will expire after 90 calendar days from the date the lien was filed unless a “Extension of Lien” is filed or the lien is enforced by a foreclosure lawsuit.^[1] Even though a lien is considered expired, it will still continue to “cloud” the property title and make it difficult for the property owner to sell the property or obtain a loan until the lien is removed by the person who filed the lien.

Due to expensive litigation costs and overcrowded courts, most contractors use the construction lien as leverage to obtain payment and settle outside of court. In California, a “Notice of Credit” a.k.a. “Extension of Lien” will extend the time a contractor has to file a lawsuit to foreclose for up to a maximum of one year from the date that the construction project was completed.^[2] In order to file an extension the property owner must agree and sign the Extension of Lien.^[3]

List of Cited Statutes and Case Laws for further research

• ^[1] California Civil Code § 8460.
• ^[2] Ibid.
• ^[3] Ibid.

Any “person” who provides work, material or equipment with a value of $500 or more to be used in or for the construction, alteration or repair of any improvement, property or work of improvement has lien rights.^[1] The term “person” includes, but is not limited to, every artisan, builder, contractor, laborer, provider or renter of equipment, material supplier, miner, subcontractor or other person who provides work, material or equipment, and any person who performs services as an architect, engineer, land surveyor or geologist, in relation to the improvement, property or work of improvement.^[2]

The term “improvement” means the development, enhancement or addition to property, by the provision of work, materials or equipment.^[3] The term "improvement" includes, but is not limited to:

• A building, railway, tramway, toll road, canal, water ditch, flume, aqueduct, reservoir, bridge, fence, street, sidewalk, fixtures or other structure or superstructure;^[4]
• A mine or a shaft, tunnel, adit or other excavation, designed or used to prospect, drain or work a mine;^[5]
• A system for irrigation, plants, sod or other landscaping;^[6]
• The demolition or removal of existing improvements, trees or other vegetation;^[7]
• The drilling of test holes;^[8]
• Grading, grubbing, filling or excavating;^[9]
• Constructing or installing sewers or other public utilities; and^[10]
• Constructing a vault, cellar or room under sidewalks or making improvements to the sidewalks in front of or adjoining the property.^[11]

List of Cited Statutes and Case Laws for further research

• ^[1] Nevada Revised Statutes § 108.2214
• ^[2] lbid.
• ^[3]
• ^[4] Nevada Revised Statutes § 108.22128
• ^[5] lbid.
• ^[6] lbid.
• ^[7] lbid.
• ^[8] lbid.
• ^[9] lbid.
• ^[10] lbid.
• ^[11] lbid.

In order to have lien rights in Nevada, a “Notice of Right to Lien” must be served on the property owner.^[1] Subcontractors and material suppliers must also to serve a Notice of Right to Lien to the general contractor.^[2]

Every person who furnishes labor, professional services, materials, machinery, fixtures, or tools must serve the Notice of Right to Lien otherwise he/she may lose his/her lien rights. Contractors who have a direct contract with the property owner or any “laborer” is exempt from having to serve this notice.^[3] In order to retain full lien rights, the Notice of Right to Lien should be served no later than 31 calendar days from the date that the claimant first delivered material or performed work under his/her contract.^[4]

The term claimant refers to the person or company who is filing or making a claim. The term claimant may also refer the person or company who is sending a Pre-Lien.

If the notice is not served within the required time frame, it may still be served late. However, late notices will limit your lien rights to 31 calendar days prior to the service of the notice and anytime thereafter.^[5] Below is an example of the limited lien rights of a Notice of Right to Lien that is served late:

• Example: ABC Construction is a subcontractor that commenced work at the job site on July 1, 2005 but did not serve the Notice of Right to Lien until August 16, 2005. According to Nevada law, the notice must be served no later than 31 days from the start date and ABC Construction has served their notice 14 days late. Although the notice can still be served on the 16th of August, their lien rights will be limited.

• Since the notice was served 14 days late, ABC Construction will lose lien rights for all of the work that was completed during the first 14 days on the job site. Let’s assume that the work provided during the first 14 days was worth $2,500 and the total price of the construction project is $75,000. There are no lien rights for the $2,500 but ABC Construction still retains lien rights for $72,500.

RESIDENTIAL PROPERTIES ONLY – ADDITIONAL NOTICE REQUIRED

If a work of improvement involves the construction, alteration or repair of a multifamily or single-family residence, including, but not limited to apartment houses, a “15-day Notice of Intent to Lien” must be served to both the property owner and the general contractor before filing a lien.^[6] Only laborers and commercial construction projects are exempt from serving the 15-day Notice of Intent to Lien.^[7]

A properly served 15-day Notice of Intent to Lien gives an additional 15 day credit towards the construction lien filing deadline.^[8]

The term “days” are calculated by calendar days and NOT business days unless otherwise stated. Time is calculated by excluding the first day and including the last day, unless the last day is a holiday, then it is also excluded.

List of Cited Statutes and Case Laws for further research

• ^[1] Nevada Revised Statutes § 108.245(1).
• ^[2] Ibid.
• ^[3] Nevada Revised Statutes §§ 108.245(1), (5).
• ^[4] Nevada Revised Statutes § 108.245(6).
• ^[5] Ibid.
• ^[6] Nevada Revised Statutes § 108.226(6).
• ^[7] Ibid.
• ^[8] Ibid.

The construction lien must be filed within 90 days from the latest of the following events:

• The “completion of the work of improvement”;^[1]

or

• The last delivery of material or furnishing of equipment by the lien claimant for the work of improvement;^[2]

or

• The last performance of work by the lien claimant for the work of improvement;^[3]

If a “Notice of Completion” is filed, every person will have 40 days from the date that the Notice of Completion was filed to file his/her construction lien.^[4] In order for this notice to be effective, the property owner must, within 10 days after filing the notice, serve a copy of the document by certified mail to any original contractor who has a direct contractual agreement with the property owner and any other contractors who supplied a Notice of Right to Lien.^[5] If proper notification was not made, every person should have 90 days to file a lien.

After filing the claim of lien, a copy of the lien must be served to the property owner within 30 calendar days from the filing date.^[6] Subcontractors and material suppliers should also deliver a copy of the notice to the general contractor.^[7] The notice must be served by certified mail with return receipt, personal delivery, or by posting. If the notice is not served properly, the lien can be invalidated.

The term “completion of the work of improvement” is defined as:

• The occupation or use by the owner, an agent of the owner or a representative of the owner of the work of improvement, accompanied by the cessation of all work on the work of improvement;^[8]

or

• The acceptance by the owner, an agent of the owner or a representative of the owner of the work of improvement, accompanied by the cessation of all work on the work of improvement;^[9]

or

• The cessation of all work on a work of improvement for 30 consecutive days, provided a notice of completion is timely recorded and served and the work is not resumed under the same contract;^[10]

The term “days” are calculated by calendar days and NOT business days unless otherwise stated. Time is calculated by excluding the first day and including the last day, unless the last day is a holiday, then it is also excluded.

List of Cited Statutes and Case Laws for further research

• ^[1] Nevada Revised Statutes § 108.226(1).
• ^[2] Ibid.
• ^[3] Ibid.
• ^[4] Nevada Revised Statutes § 108.226(1)(b).
• ^[5] Nevada Revised Statutes § 108.228(4).
• ^[6] Nevada Revised Statutes § 108.227(1).
• ^[7] Nevada Revised Statutes § 108.227(3).
• ^[8] Nevada Revised Statutes § 108.22116.
• ^[9] Ibid.
• ^[10] Ibid.

A construction lien can be enforced by filing a lawsuit to foreclose on the lien. The lawsuit is often very complex and should be processed by an attorney licensed to practice law in the state where the property is located. If you need a referral to a construction law attorney in your area, please contact our office.

The lien will expire after 6 months from the date the lien was filed unless a “Extension of Lien” is filed or the lien is enforced by a foreclosure lawsuit.^[1] Even though a lien is considered expired, it will still continue to “cloud” the property title and make it difficult for the property owner to sell the property or obtain a loan until the lien is removed by the person who filed the lien. Due to expensive litigation costs and overcrowded courts, most contractors use the construction lien as leverage to obtain payment and settle outside of court.

In Nevada, an “Extension of Lien” will extend the time a contractor has to file a lawsuit to foreclose for up to a maximum of one year from the date that the lien was filed.^[2] In order to file an extension the property owner must agree and sign the Extension of Lien.^[3]

List of Cited Statutes and Case Laws for further research

• ^[1] Nevada Revised Statutes § 108.233.
• ^[2] Ibid.
• ^[3] Ibid.