Mechanics liens, when used correctly, represent a virtual guarantee of payment for construction industry participants. A construction participant’s ability to secure the amount owed for furnishing labor or materials to a construction project through an interest in the property itself is an exceptionally powerful tool. Because of the power of this tool – the potential ability to foreclose on and force the sale of property to satisfy a debt – there are strict requirements that must complied with in order for a potential lien claimant to retain their right to file a valid lien. These requirements include notice requirements, formal and content requirements, and timing requirements.
All mechanics lien statutes provide a strict time period with hard deadlines before which a lien must be filed in order to be valid and enforceable. These deadlines are critical to the claimant, since missing the deadline means the difference between remaining secured and losing the right to file a valid lien. Given this crucial importance, it’s no wonder that construction participants routinely have questions related to how the deadlines are calculated and if there are actions that affect the deadlines of which they should be aware.
One particular question that comes up often is: Does returning to a project to do more work change the lien deadline?
Does Your Last Furnishing Date Matter to the Lien Deadline?
The first question that needs to be answered in order to determine if returning to a project modifies the lien deadline is whether or not your date of last furnishing labor or materials to the project is relevant to the lien deadline at all. The answer in many states is yes.
For several other states, the lien deadline is calculated from the completion of the project as a whole, not the individual claimant’s last furnishing of labor or materials. In these states (California, for example) the last date you provided work on the project is inconsequential to the lien deadline unless you were the last party working on the project – probably the GC. Read more about the impact of project completion date.
To the extent that you were the last party working on the project (and the lien deadline is based upon the project completion), the question becomes whether the return to the project extended the project itself.
In some cases, this is fairly easy to determine. If a notice of completion (or notice of substantial completion) was filed, or if the project was approved and a certificate of occupancy has been issued, the return to the project is probably not something that will extend the lien deadline. In these cases, the return to the job is probably only for minor “punch-list” work that wouldn’t change the fact that the project was substantially competed onto prior date. Learn how you can tell if a notice of completion was filed.
If the work is significant, however, it may be a “new” improvement giving rise to additional lien rights, (or a difficult argument could be made that a prior notice of completion/cessation was filed improperly).
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Your Last Furnishing Date Matters – What Now?
For situations in which your last date of furnishing labor or materials to the project is relevant to your lien deadline – the question of whether returning to the project “counts” to determine your last date is of critical importance.
The general rule – although, like many things in lien law, this is not universal – is that remedial/warranty/corrective work often called “punch-list” work does not extend the lien deadline, while work pursuant to a valid change order does extend the lien deadline.
While punch-list or warranty work may extend the lien deadline in certain specific cases in certain states, it is a best practice to treat this type of work as irrelevant to the calculation of the lien deadline. And, it’s clear by the court decisions in many states (Florida, Illinois, Washington, Pennsylvania, etc.), that this work does not extend the deadline and a lien filed after the deadline based on the “true” end of work is untimely and invalid whether or not punch-list work was accomplished later.
But hold on. Further complicating matters is the fact that, if it can be determined that the “new work” is actually necessary for the completion of the scope laid out in the original contract, then the “new work” may extend the lien deadline.
The analysis is different, however, when the work is not “trivial,” remedial, or insignificant in scope compared to the entire contract. If the work is substantial and pursuant to a change order, it is likely that the work would extend the lien deadline.
Finally, there is another potential scenario for extra work on a project: What happens if there is a new contract created for work on the same “project?”
This is a complicated scenario, but generally, the lien deadline for the work completed under the first contract would be determined as one deadline, and a “new” lien deadline (and new notice requirements) would be created for work performed under the second contract. This is a messy area, however, in that lien rights are not contractual rights, and are related to the improvement of the property itself. If the project could be argued as a single “work of improvement” the analysis could be different.
California Subs and Suppliers:
Returning to the Job May Mean You Haven’t Ceased Work
Best Practices
So, what are the best practices? One universal best practice is to pay careful attention to lien deadline and don’t wait until the very last minute to file a lien (should a lien become necessary). Usually, returning to the project will not extend the deadline. However, if substantial work is undertaken under a change order – that deadline will likely be pushed back. Regardless – if the work is significant, a second lien could be filed anyway. Keep ahead of lien deadlines, and don’t get stuck in the position of hoping that a return to the project will work to extend your deadline.
How to Find Your Lien Deadline
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