Our office can tell when winter time has hit for the construction industry. One week contractors are calling and asking questions about subcontractors, AIA forms or OSHA inspections. The next week, the same contractors call and say they need help collecting bad debts from property owners (let’s face it – when business is good and the weather is nice, no one wants to chase down that lazy client who has not paid their bill). During these calls, we are frequently faced with the following question: “I just realized that I have not been paid on this job – can you help me get a lien on this guy’s property?” Each time, our office counters with our first question: “Did you provide the Preliminary Lien Notice to the owner of the property?” You can guess the answer: “No, but I want paid!”
While you are waiting for the winter blues and lulls to pass, help your legal counsel help you at this time next year by working on updating your lien process now. It is easier than you might think and, in the long-run, following this process may save you time, energy and expenses in dealing with those owners who snub their nose at your hard work. If followed correctly, Wyoming’s lien statutes (Wyo. Stat. § 29-2-101 et seq.) provide you as the contractor or subcontractor with the most effective tool to get paid – the ability to sell the owner’s property (and if you follow the steps in this article, you really only need to perform one task – you can tell us to do the others!). Should Wyoming’s lien statutes not be properly followed, you can expect to be going through at least twelve (12) months of legal proceedings, unpaid invoices and associated fees and expenses.
In Wyoming, before any lien can be filed, there are steps which must be taken. If these steps are not taken, a lien will not be valid, and you risk liability for filing a lien. Thus, it is important to make sure you follow these preliminary steps. These steps are: 1) send a Preliminary Notice; and 2) send a Notice of Intent to File Lien.
Send a Preliminary Notice: A Preliminary Notice must be sent to the owner and/or contractor as follows: (i) If acting as the contractor: Send the written notice to the property owner prior to receiving any payment from the owner, including advances; (ii) If acting as a subcontractor: Send the written notice to the property owner and give a copy to the contractor within thirty (30) days after first providing services or materials to the project.
It is important to note that there is nothing which states that the preliminary notice cannot be provided prior to the work being started. Consequently, we routinely advise our clients to send the preliminary notice to the applicable parties with the initial bid or proposal for the project. If you get into this practice, this is the only item you would need to complete prior to getting your legal counsel involved in a matter. Also, by including the preliminary notice in the initial bid documents, the other contractors, owners and project coordinators must sign your documents (effectively acknowledging your preliminary notice). To include this document is simple – print your bid or proposal and make the preliminary notice form as the very last page of your work documents.
If you are acting as the contractor for a project, you are obligated to provide all subcontractors with the name and address of the record owner of the property and a legal description of the site of the project work.
Send a Notice of Intention to File Lien: The next step is the provision of a Notice of Intention to File Lien. Before filing a lien, a lien claimant must send written notice to the property’s record owner of the intention to file a lien. This provides the parties with a window to resolve their issues prior to the lien being filed. If the person authorizing the work is different than the record owner, it is advisable to send the notice to both parties.
The notice must be sent no later than twenty (20) days prior to filing a lien statement. That is, the notice must be mailed at least twenty (20) days before the lien can be filed. Thus, it is important to plan ahead. For example, if acting as a subcontractor, you have 120 days (as detailed below) to file a lien statement. If this notice is not mailed until day 110, the timeline for filing a lien will have expired prior to the 20 day stay and the lien will not be enforceable.
In the end, as you can tell from above and in our next article, the lien process is not difficult. However, if you are not 100% certain, you should be asking your attorney questions early and often. We recommend not letting more than 30 days pass on an account without dealing with these issues. And, your attorney can only help you if the proper steps are taken up front, and so long as you take the preliminary step of providing your Preliminary Notice, you have anywhere from 3-6 months to deal with the remaining issues. However, if that preliminary step is missed, you have nothing.
In our next article, we will discuss the remaining steps of the lien process. Until then, take time this winter to add the Preliminary Notice Form to your initial documents, and then you can put the rest of the burden on your attorney.