Among the most misunderstood, and oftentimes loathed, areas of law in Missouri is the the mechanic’s lien law found in Chapter 429 of the Revised Statutes of Missouri.
The name is a blatant misnomer, in my opinion. It doesn’t apply to “mechanics” that work on your car or motorcycle.
Instead, the mechanic’s lien statutes apply to suppliers, contractors and sub-contractors in the construction industry.
Under the mechanic’s lien law, any party that provides work or materials in a construction project that remains unpaid may file a mechanic’s lien, file suit to foreclose on the lien, have the property sold, and have the proceeds paid in satisfaction of its lien.
Two things stand out about this statutory scheme.
First, it can lead to what many may consider injustice to an innocent owner of property.
Second, it is very, very strict and detailed in its enforcement requirements, and consequently a lien claimant needs to be prepared to invest some fairly significant legal resources into the process.
The potential for perceived injustice can be exemplified in a scenario where an owner or builder hires a subcontractor to pour the foundation for a building, and then pays the foundation subcontractor after its work is done, but the foundation subcontractor does not pay the concrete supplier.
And so the concrete supplier files a mechanic’s lien on the owner’s property, with an eye toward a suit to foreclose if it does not get paid.
This leaves the owner/builder in the untenable position of having to pay off the concrete supplier, even though it has paid the foundation subcontractor who was supposed to have done so, or face losing his property.
Hence, the owner/builder is required, in essence, to pay twice for the concrete to avoid losing the property to foreclosure in a mechanic’s lien lawsuit.
The strict and detailed technical requirements that go into the proper enforcement of the mechanic’s lien law include that the lien claimant has to file the lien within six months of the date its work was completed or materials were supplied. But before that, in most cases, it must serve a notice of intent personally on all parties having an interest in the property at least 10 days before filing the lien.
This requires that title work be done in advance to determine the identity of parties of interest, including all owners, all lenders, and all other parties that show up in the title work, which, in some construction projects can be quite a list.
The requirements of everything that must go into the lien is also very detailed, including, a “just and true account” of all sums claimed due, with credit for all payments that have been received. The just and true account is required to be very detailed. For instance, a lumber company must list the boards, nails, shingles and everything else that make up the sum claimed, and a per unit price.
And the lawsuit to foreclose must be filed within six months of filing the lien or it expires.
Thus, the mechanic’s lien statute is really too expensive for small potatoes claims, and I typically consider that a minimum of $25,000.00 or more is a necessary precondition to making it worthwhile. Still, in those cases involving big projects, and big money, it can be a handy tool for a subcontractor or supplier who gets stiffed, to get its money from the owner if necessary.
And owners need to always be aware, that if there are intermediate parties who aren’t taking care of their subs or suppliers, they may get stuck with the bill.
– Ken Garten is a Blue Springs attorney. Email him at email@example.com.