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What options do material suppliers have to secure payment in Alabama?

I am a material supplier typically hired by a subcontractor or GC. I usually have 0-2 days notice when I am hired to deliver roofing supplies to a job site in Alabama. The Alabama NTO law requires that I must deliver a NTO certified mail return receipt prior to being on site in order to secure lien rights. This is not feasible for my company. Are there any other options available in Alabama for securing payment in this situation (hand delivery of NTO, other options besides lien rights, etc.)?

1 reply

Oct 9, 2018

That's a great question, and when materials are turned around that quickly, it can be tough to protect yourself to the full extent available in Alabama. First, it's worth noting that regardless of whether a Notice to Owner is sent, the claimant will still be entitled to mechanics lien rights. Lien rights are better preserved when a Notice to Owner is sent though - if that notice is sent, the lien claimant will be entitled to what's called a "Full Price Lien", whereas an "Unpaid Balance Lien" will be available instead if notice is not sent. Basically, a Full Price Lien means that a lien claimant is entitled to the full price of what they're owed - and they can file a lien for that full amount. Meanwhile an Unpaid Balance Lien also encumbers the property - but such a lien is limited to amounts that are owed and unpaid to the prime contractor. i.e. If the owner pays the contractor in full, a lien claimant could be left empty handed with an Unpaid Balance Lien, while a Full Price Lien would still protect the full amount of the claim. Still, an Unpaid Balance Lien will provide protection for a lien claimant. Of course, sending the Notice to Owner and preserving an Full Price Lien is preferable. Alabama statute does not actually mandate that this notice may be given in any particular way - thus, if personally delivering a notice is a viable option to getting notice to the owner before materials are delivered, personal delivery will be effective to put an owner on notice. Of course, it's a good idea to generate proof that such a notice has been given - that way, if a mechanics lien does become necessary, there will be little argument as to whether the lien should be a Full Price Lien or an Unpaid Balance Lien. Finally, it's worth noting that a Notice of Unpaid Lien is required in Alabama - and, once a claimant sends that notice, the claimant will be entitled to lien against any amounts not yet paid to the contractor. Thus, if material is delivered and it's obvious that payment isn't coming, a material supplier can send a Notice of Unpaid Lien to the owner and preserve the right to lien up to the amount that's still owed from the owner to the contractor. Finally, for a little more more background on Alabama notices, this article should help: Alabama Mechanics Lien Law: Five Things You Should Know.

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