The spread of COVID-19 in recent weeks is likely to impact construction projects across the state. While the State of Maine and local governments have deemed many construction activities essential, payments to contractors, subcontractors, and suppliers are likely to slow due to unprecedented economic uncertainty. As a result, contractors, subcontractors, and suppliers should take steps to protect their payment rights.
One of the most effective means to secure payment is a mechanics’ lien, which we previously wrote about here. Anyone furnishing labor or materials to a project with the owner’s consent automatically has a lien on the real property where the project is located. In order to perfect and enforce the lien, however, lienors must meet strict statutory deadlines. Otherwise, they risk losing their lien rights.
Generally speaking, anyone that provides labor or materials without a contract with the owner of the project must: (a) file a notice of lien in the appropriate registry of deeds; and (b) provide a copy of that notice to the owner within 90 days from the date that the labor or materials were last provided. Anyone claiming a mechanics’ lien must also file a lawsuit within 120 days from the date that labor or materials were last provided.
While Maine courts are now limiting the types of matters being heard during the current Coronavirus crisis, and have provided extensions for deadlines established by court orders and court rules, the strict statutory mechanics’ lien deadlines (described above) remain in place and are not subject to any extensions. Thus, contractors, subcontractors, and suppliers must take care to meet these deadlines even during this time.
It is also important to note that once lien rights are lost, they cannot be recovered. Therefore, while it is natural for lienors to want to extend additional time to project owners that are experiencing financial strain due to the Coronavirus crisis, lienors cannot delay in perfecting their liens. If they do, they risk losing not only their liens, but also their ability to recover payment for the work and/or materials supplied.
Perkins Thompson regularly helps owners, contractors, subcontractors and material suppliers with mechanic’s lien issues. If you would like to speak with the firm about a mechanics’ lien issue, you can send an e-mail to Joe Talbot or call him directly at 207-774-2635.