LIEN LAW OUTLINE

GIVEN AT AUBURN-OPELIKA SEMINAR

BY GULLAGE, TICKAL, AND FELLOWS

1) WHAT IS A LIEN?

a)      AN INTEREST IN PROPERTY

b)      A process that may help get you paid

2) ALABAMA’S LIEN LAW IS OFTEN CONFUSING.

i)        It’s statutory –created by the legislature.

(1)   Many hoops to jump through and if you miss one you may lose your lien.

3) WHAT ITEMS ARE LIENABLE?

a)      Work, Labor, or Material improving the land.

4) AMOUNT OF THE LIEN

a)      The amount owed after “all just credits have been given” (keep good records)

b)      Intentionally overstating the lien amount may void the lien.

5)      PRIORITY OF LIEN-  who’s first in line, you, the bank, or another contractor?

a)      Priority is based on your 1^st day of work. (Keep records.)

6) FULL PRICE LIENS

a)      Based on Direct -notice to the Owner that the Owner is expected to foot the bill.

b)      REQUIREMENTS

i)        Before furnishing material shall notify the Owner in writing materials to be provided along with price and credit terms.

ii)      An original contractor is not required to provide this notice because he or she is already in direct contract with the owner.

7) UNPAID BALANCE LIEN

a)      Lien on the property which is limited to the amount the owner still owes the GC.

i)        Example

b)      It is always safer to assume you only have an unpaid balance lien and do all the notice requirements.

c)      NOTICE OF INTENT TO FILE LIEN on an unpaid balance lien is given after performance but before filing a lien.

i)        REQUIREMENTS

(1)   state Lien is claimed,

(2)   state amount claimed

(3)   Who is claiming the lien

(4)   describe subject of the lien

(5)   state the person/company who owes the debt

ii)      DELIVERY REQUIREMENTS

(1)   Owner

(2)   Lender

(3)   Contractor

(4)   Others with Property Interest

(a)    * Do title search

d) FILING OF STATEMENT OF LIEN ITSELF

i)        TIMING- after Notice of Intent

ii)      FORM-  Must Contain

(1)   Demand Amount

(2)   Description of the property liened

(3)   Name of the Owner(s) of the land

(a)    An under oath personal knowledge verification

(4)   WHERE FILED- in each probate court where the land lies.

(a)    WHEN FILED-: after notice and within 30 days for laborers, 4 months for 2^nd tier, and 6 months for original contractors.

FILING SUIT TO PERFECT THE LIEN

a)      WHERE- in Circuit Court s where the property is located.

i)        WHEN- Within 6 months of the maturity of indebtedness.

b)      WHO-  Named Defendants must include

(1)   Owner(s) of property

(2)   Lender /Mortgage Holders

(3)   General Contractor (on unpaid balance lien)

(4)   The contractor who was to pay you.

(5)   All other interest holder’s in the property including lease tenants.

(6)   Any subsequent purchasers.

ii)      WHAT:  Must include a judgment for Money due claim as well as normal lien claim.

iii)    Watch out for 1)Bankruptcy or 2)” Pay if Paid” clauses.

9)      SUBSTITUTE SECURITY-  Liens can be bonded off until final resolution.

10) RELEASING YOUR LIEN

a)      Once satisfied, the lienor must acknowledge satisfaction on the margin of the Lien in probate Court. w/i 30 days of request to do so.

b)      FAILURE- can lead to a claim against you and possibly slander of title.