Payment in the construction industry can be a mess. If there is a significant payment mishap on a construction project, the companies affected may look to using their mechanics lien rights to secure payment and make sure they get paid what they have earned.
While filing a lien is usually one of the last resorts to get paid – it is a very powerful tool, and can be the difference between getting paid what you are owed and writing off debt as un-collectible. Because of a lien’s power – and the fact that it can be a complex, time-consuming, and relatively expensive undertaking to get a mechanics lien filed (especially when trying to file it on your own) – construction companies sometimes want to file a lien against multiple projects, or multiple properties.
A less common but still important question is: ‘can the same party file more than one mechanics lien against the same project?’ The answer to this question – like it is with so many things about mechanics liens – is “it depends.”
How could this come about?
When contemplating whether multiple liens can be filed by the same party on the same project, the first question to ask is, ‘how could this situation come about in the first place?’
Generally, if a payment situation has devolved to the point that a mechanics lien is filed, there is no further work being done on the project by the claimant. In order to need to file multiple mechanics liens on a project, a considerable amount of time must have elapsed since the claimant’s furnishing of labor or materials to the project, such that the nonpayment situation has become a significant financial problem to the claimant, and yet there is still more work to do (which apparently also remains unpaid to the point of requiring a lien to be filed).
Possibilities
States with deadlines based on completion of the project (and states in which you can file too early)
As a practical matter, in states that set the deadline to file a mechanics lien based on the completion of the project as a whole (rather than the last furnishing by the claimant) – it would seem to make most sense to file one lien for the total amount due. And, in some states, that may be a strict requirement.
Note California mechanics lien law which states that:
“A direct contractor may not enforce a lien unless the contractor records a claim of lien after the contractor completes the direct contract.”
In this situation, the contractor must have ceased work on the project prior to filing a mechanics lien in order for the lien to be valid. If the contractor has finished work, then there should never be the need for an additional lien, since the claimant is not adding any more value to the real property.
Mechanics lien or bond claim deadlines “driven by completion” establish a time frame for filing a claim that is based on when the entire construction project is substantially or finally complete. This scenario is quite rare on private projects with only 5 or 6 states calculating its deadlines in this way. Most famously, California’s lien deadlines start counting from the project’s completion.
States with deadlines based on claimant’s date of last furnishing
The question may get a bit more complex in states where the deadline to file a mechanics lien is based on the date of the claimant’s last furnishing of labor or materials to the project. It is conceivable that a situation could arise in which a claimant believes they have completed their furnishing of labor and materials, files a lien for an amount due, and is then called back to the project to do more work for which they also go unpaid. While the wisdom of returning if still unpaid for the previous work is a different question, this situation is not too far fetched to consider.
In this circumstance, there could be a genuine debate as to whether coming back to the project extended the lien filing deadline, or was either a) punch list work that did not extend the deadline (but for which the claimant still should be paid); or, b) additional work that actually constituted a separate “project” or work of improvement.
A secondary lien filing may be the safest bet in this type of situation, rather than hoping the second round of furnishing automatically extended the original deadline that was in place from the first round of work on the project.
Free Payment Rights Advisor Tool
One of the most important questions about lien rights concerns whether a potential claimant even has the right to file a lien in the first place. What happens if filing a mechanics lien isn’t an option? What are some other actions to take when you’re having a payment issue? We have a free tool that will help you with these questions.
It’s called the Payment Rights Advisor. It only takes a couple of minutes — just answer 5 quick questions about your job, and the Payment Rights Advisor will give you all of your best options, including whether or not you qualify for mechanics lien rights.
States where multiple liens are specifically considered due to statutory requirements
In some states, the answer to this question is a simple “yes,” because filing multiple liens is specifically contemplated by the statute. One such example is Virginia, which has a unique aspect to its lien law statute, the “150-day rule.”
While the deadline to file a mechanics lien in Virginia is 90 days from the date the claimant last furnished labor or materials to the project, the lien may not include labor or materials furnished more than 150 days prior to the claimant’s last furnishing date.
In order to get around this limitation for long projects, Virginia law states that:
a “lien claimant may file any number of memoranda but no memorandum filed pursuant to this chapter shall include sums due for labor or materials furnished more than 150 days prior to the last day on which labor was performed or material furnished. . .”
Accordingly, Virginia specifically allows for the filing of multiple liens by the same party on the same project as a necessary offshoot to its lien rules.
WAHOO Virginia! If only other states could be so clear…