Contractors in the Show Me State should be aware of mechanic’s liens, an important legal tool that can allow them to seek recovery for nonpayment of construction or repair projects.
Imagine, for example, that your company was hired to install new windows on a home in Jefferson City. But at the end of the job, the owner (or the general contractor who hired you) failed to pay the full amount due and owing under the contract. Placing a lien on the property—known as “liening the job”—can give contractors some leverage with which to secure payment.
Filing a mechanic’s lien should never be your first step when faced with a dispute over payment. Most Missourians are reasonable people, and you should do your best to negotiate with the property owner prior to filing a lien.
Of course, the best way to begin is by mailing copies of your final invoice and/or statements to the property owner. If that receives no response, pick up the phone and call. Send an email as well, so as to create a paper trail. And then try writing a formal demand letter on your company’s letterhead.
Alternatively, hire a lawyer to write a demand letter on law firm letterhead, which will sometimes prompt a response more quickly. (The mere fact that you have a lawyer might frighten a nonpaying owner or general contractor to pay up.)
These initial steps demonstrate that you are serious about guarding your rights. You are clearly attuned to the breach of the agreement and that the property owner (or the owner’s contractor) owes you money. Strongly worded letters are often enough to save you the time, cost, and aggravation of a lien filing or lawsuit.
When calls, emails, and letters are not enough to force an owner or general contractor to pay for your work, you may need to turn to the legal system. Missouri law allows you to sue a homeowner who has not paid you for simple breach of contract, or based on other related causes of action (such as quantum meruit). The same theories apply if you are a subcontractor or supplier suing a general contractor. But regardless of whether you are a general contractor, subcontractor, or supplier, the state also allows you to file a mechanic’s lien.
Under Missouri law, most construction professionals are entitled to file liens if their work or materials have gone unpaid. R.S.M.O. 429.010 provides that those entitled to file a lien include anyone who does "any work or labor upon land," or who rents or uses any machinery or equipment, furnishes any material, fixtures, engine, boiler, or machinery for any building, erection, or improvements upon land, or for repairing, grading, excavating, or filling of the same, or who furnishes and plants trees, shrubs, bushes, or other plants or provides any type of landscaping goods or services, or who installs outdoor irrigation systems, so long as it's based on some contract with the owner or proprietor.
Once filed, the lien becomes a cloud on the Missouri owner’s title, meaning that the title, and any transfer of it, is subject to your company’s interest in it. This will make it difficult for the owner to sell the property or refinance it through a bank or other institutional lender. The result is that filing a lien can incentivize the owner to settle with you in order to get you to clear the title (or pressure the contractor to settle).
Missouri’s mechanic’s lien statute divides potential lien filers into (i) “original contractors” and (ii) all other contractors or lienors. Essentially “original contractors” are contractors that have a contract directly with the owner of the property (as opposed to a contract with another contractor who is overseeing the job). These are commonly called general contractors.
Immediately after the execution of the contract with the owner, original contractors must give the owner a formal notice that any failure to pay the contractor could result in a lien. The language of the notice is specifically given in R.S.M.O. 429.012: “FAILURE OF THIS CONTRACTOR TO PAY THOSE PERSONS SUPPLYING MATERIAL OR SERVICES TO COMPLETE THIS CONTRACT CAN RESULT IN THE FILING OF A MECHANIC'S LIEN ON THE PROPERTY WHICH IS THE SUBJECT OF THIS CONTRACT PURSUANT TO CHAPTER 429, RSMO. TO AVOID THIS RESULT YOU MAY ASK THIS CONTRACTOR FOR "LIEN WAIVERS" FROM ALL PERSONS SUPPLYING MATERIAL OR SERVICES FOR THE WORK DESCRIBED IN THIS CONTRACT. FAILURE TO SECURE LIEN WAIVERS MAY RESULT IN YOUR PAYING FOR LABOR AND MATERIAL TWICE.”
As the statute makes clear, compliance with this notice requirement is required before “the creation, existence or validity of any mechanic's lien in favor of such original contractor.” In other words, general contractors must remember to give this written notice at the beginning of the project, or they may lose their future ability to file a lien. But once this initial notice is given, an original contractor can go ahead and immediately file a lien (if owed money) with no further notice to the owner.
Importantly, contractors and lienors other than “original” (most likely, general) contractor do not need to provide any such statement to the owner at the beginning of the project. However, they cannot simply file their lien. R.S.M.O. 429.010 requires that they first provide ten days' written notice to the property owner stating their intention to file a lien. So, if you worked as a tiling subcontractor on a home renovation, for instance, you must first send this written notice to the owner and wait ten days before filing your lien.
While this notice process might feel frustrating, it might also be beneficial, since it provides the owner a chance to either settle the claim directly with you or negotiate with the general contractor to pay you.
Once you meet these various threshold notice requirements, you must file your mechanic’s lien with the office of the county clerk in the Missouri county where the real property is located. Broadly speaking, the lien must include your company’s name, the homeowner’s name, the location of the property, and the amount of money still due. You must also describe the labor or material you provided (in other words, how did you improve the property?).
You will see that your signature needs to be notarized, meaning that this form becomes a sworn statement—the legal equivalent of swearing to the veracity of the contents in court.
Special Rules for Liens Based on Rental Equipment
Missouri has somewhat different rules if you seek to file a lien for monies due on the rental of machinery or equipment. For example, perhaps you rented a particular machine or tool to a contractor who never paid you. Under R.S.M.O. 429.010, Missouri lets you file a lien in this situation, but with two important limitations. You can do so only if the “improvements are made on commercial property” and the claim amount is over $5,000. In other words, you cannot file this sort of lien for a residential home project.
If this lien would be in connection with a commercial project and you meet the dollar requirement of the claim, then you must provide “written notice within fifteen business days of the commencement of the use of the rental machinery or equipment to the property owner that rental machinery or equipment is being used upon their property.” This notice “shall identify the name of the entity that rented the machinery or equipment and the machinery or equipment being rented.”
Pursuant to R.S.M.O. 429.080, any lienor must file the lien “within six months after the indebtedness shall have accrued… with the clerk of the circuit court of the proper county a just and true account of the demand due him or them after all just credits have been given, which is to be a lien upon such building or other improvements, and a true description of the property, or so near as to identify the same, upon which the lien is intended to apply, with the name of the owner or contractor, or both, if known to the person filing the lien, which shall, in all cases, be verified by the oath of himself or some credible person for him.”
The deadline for liens based on rental equipment is a bit shorter: you must file within 60 days after the last of the rental equipment or machinery was removed from the property.
As you can see, the timing of lien filing and notice is perhaps the most critical piece of the puzzle. Missouri’s legislature is clearly trying to push potential lienors to file (or settle) their claims quickly, and not allow liens to be filed years after a construction project is completed. While this gives owners some comfort in knowing that lien periods have expired, it means that you must act quickly to ensure that you do not lose any lien rights.
Remember that filing a lien, in and of itself, will not force the owner to pay you, nor will it force the general contractor to pay you if you are a subcontractor. The lien is merely a point of leverage, which gives you the ability to file a lawsuit in your local Missouri Circuit Court to foreclose on the property—essentially a direct suit against the homeowner.
However, filing a lien will send an aggressive message. If you take this step, it might put the homeowner on the defensive, and encourage the homeowner to get lawyers involved, or to retaliate by publicly claiming that you did shoddy work. Perhaps this is the direction that you need to take, unfortunately, if the homeowner is refusing to pay.
Finally, remember that liens and the laws surrounding them in Missouri can be technical. Your lien rights may vary depending on the specific type of property and project involved. If you are owed a substantial sum of money, it might be worth your investment in a consultation meeting with an experienced Missouri construction attorney who can advise you of your rights. Check out Nolo’s Guide to Finding an Excellent Lawyer for assistance in identifying the right person.