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NEW HAVEN COUNTY BAR ASSOCIATION   CONTINUING LEGAL EDUCATION     TIPTOE THROUGH THE MINEFIELD:  FILING AND FORECLOSING ME...
C.G.S. Section 49-33(a)Parties entitled to file mechanic’s liens: Unpaid claim for $10 or more Materials furnished or se...
Persons Entitled to Mechanic’s Liens, cont. General Contractors, i.e. those who have contracted  directly with the landow...
REQUIREMENTS: C.G.S.         SECTION 49-34 Recorded on the land records within 90 days of the  substantial completion of ...
SERVICE OF THE LIEN: C.G.S. SECTION 49-35 If the owner resides in the same town where the  work was performed, either by ...
NOTICE OF INTENT TO CLAIM LIEN: C.G.S. SECTION                    49-35 Required of any party who does not have a direct c...
NOTICE OF INTENT TO CLAIM LIEN, CONTINUED Provided to the owner of the property Provided to the General Contractor With...
Avoiding the Landmines• The mechanic’s lien must be ―subscribed  and sworn to‖ (see C.G.S. Section 49-34)  by the claimant...
Avoiding the Landmines, continued• If utilizing abode service, recognize that  the property location may not be the same  ...
Avoiding the Landmines, continued• The 90-day period runs from the date of  ―substantial completion‖ of the work.• Insist ...
Avoiding the Landmines, continued• Confirm the identity of the property  owner(s), i.e. by checking with the taxing  autho...
Avoiding the Landmines, continued• Insert the legal description of the property into  the body of the mechanic’s lien (and...
Saving Graces• Despite the fact that the  mechanic’s lien remedy is a  creature of statute and,  accordingly, subject to s...
DECISIONS• Thomas v. Malek Construction, LLC, 49  Conn. L. Rptr. No. 5 (2010):The General Contractor was ―Seth Malek d/b/...
Thomas v. Malek Construction, LLC• JTR Seymour Hendel denied the property  owner’s application to discharge the lien,  hol...
SAVING GRACES, continued• Northeastern Clearing, Inc. v. Applegate  Estates, LLC, 48 Conn. L. Rptr. No.  11(2009):• Lienor...
BUT ….• Not every Court may be so lenient. In Premier  Building & Development, Inc. v. Falotico, 44  Conn. L. Rptr. 864 (2...
Foreclosing Mechanic’s Liens• The foreclosure action must be commenced  within one year from the date of perfection (i.e. ...
Foreclosure, continued• ―Commencement‖ of the action means: Service of the writ, summons and complaint                   ...
DEFENSES                     Payment C.G.S. Section 49-33(e): prohibits a  subcontractor from liening a property in an  a...
DEFENSES, continued              • Payment, continued• Any amounts paid by the property owner to the  General Contractor p...
DEFENSES, continued             • No Consent of Property Owner• See Centerbrook Architects and Planners v. Laurel  Nursing...
DEFENSES, continued      • Equal Priority of Other LienorsApportionment of claims among lienors (except for the General C...
DISCHARGE OF MECHANIC’S LIEN             • C.G.S. Section 49-35(a) Permits the property owner, where no action to  forecl...
DISCHARGE OF MECHANIC’S LIEN, continued                 • Burden of Proof At the hearing, the lienor has the initial burd...
DISCHARGE OF MECHANIC’S LIEN, continued     • Appeal (C.G.S. Section 49-35c)• Any order entered, following the hearing  pe...
DISCHARGE OF MECHANIC’S LIENS, continued• If the action to foreclose has been filed,  the property owner may not move for ...
SUBSTITUTIOIN OF BOND C.G.S. Section 49-37 permits a property owner  to apply to the Court for permission to substitute  ...
SUBSTITUTION OF BOND, continued• The surety may thereafter apply to the  Court for discharge or reduction of its  bond, in...
SUBSTITUTION OF BOND, continued• Notwithstanding the lack of equity in the  property on which a lien had been  recorded, t...
REMEDIES Equitable relief, i.e. strict foreclosure or  foreclosure by sale, depending upon the equity  profile of the pro...
REMEDIES, continued Attorneys’ fees permitted for appeal, not just  Superior Court proceedings; see Gagne v.  Vaccaro, 11...
EXCEPTIONCf. DuBaldo Electric v. MontanoConstruction, 45 Conn. L. Rptr. 688 (2008)(no attorneys’ fees permitted in action ...
CONNECTICUT’S ―LITTLE MILLER ACT‖• Mechanic’s liens may not be filed on public  works projects.• Instead, aggrieved suppli...
CONNECTICUT’S LITTLE MILLER ACT, continued Modeled after a federal statute, the ―Miller Act,‖ 40  U.S.C. Sections 270a – ...
CONNECTICUT’S LITTLE MILLER ACT,continued If no payment made within 10 days of the notice  of claim, interest in the amou...
Connecticut’s Little Miller Act, continuedIf the General Contractor denies the claim, the claimant may commence an action...
Connecticut’s Little Miller Act, continued                     • Remedies Money damages Costs Interest, at the rate spe...
QUESTIONS??????•   Tom Sansone•   Carmody & Torrance LLP•   195 Church Street•   New Haven, CT 06510•   (203) 784-3100•   ...
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N0877110

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Webinar presentation to New Haven County Bar Association: "Tiptoe Through the Minefield--Filing and Foreclosing Mechanic\'s Liens (March 3, 2011)

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N0877110

  1. 1. NEW HAVEN COUNTY BAR ASSOCIATION CONTINUING LEGAL EDUCATION TIPTOE THROUGH THE MINEFIELD: FILING AND FORECLOSING MECHANIC’S LIENS Presented by: Thomas J. Sansone Carmody & Torrance LLP
  2. 2. C.G.S. Section 49-33(a)Parties entitled to file mechanic’s liens: Unpaid claim for $10 or more Materials furnished or services rendered in construction, removal, raising, repair of any building, or the improvement of any lot of site development of a subdivision or plot of land By someone who has entered into an agreement with the landowner, or has the consent of the landowner By someone having authority from or rightfully acting on behalf of the owner in procuring labor or materials
  3. 3. Persons Entitled to Mechanic’s Liens, cont. General Contractors, i.e. those who have contracted directly with the landowner ―First-Tier‖ Subcontractors, i.e. those who have contracted directly with the General Contractor ―Second-Tier‖ Subcontractors, i.e. those who have contracted directly with a First-Tier SubcontractorSee Seaman v. Climate Control Corp., 181 Conn. 592, 595-596 (1980)
  4. 4. REQUIREMENTS: C.G.S. SECTION 49-34 Recorded on the land records within 90 days of the substantial completion of services Containing a legal description of the premises to which goods were furnished or services rendered Name(s)/address of property owner(s) Date of commencement of services Amount owed Subscribed and sworn to by the claimant Served on the owner within 30 days of recording (a sample is provided in the seminar materials)
  5. 5. SERVICE OF THE LIEN: C.G.S. SECTION 49-35 If the owner resides in the same town where the work was performed, either by personal or abode service upon each owner by an indifferent person, state marshal or other proper officer If the owner does not reside in the same town where the work was performed, service may be made by registered or certified mail by an indifferent person, state marshal or other proper officer
  6. 6. NOTICE OF INTENT TO CLAIM LIEN: C.G.S. SECTION 49-35 Required of any party who does not have a direct contractual relationship with the property owner (i.e. someone other than the General Contractor), or who does not have a written contract with the General Contractor in which the property owner has provided its written assent thereto (a sample is provided in the seminar materials)
  7. 7. NOTICE OF INTENT TO CLAIM LIEN, CONTINUED Provided to the owner of the property Provided to the General Contractor Within 90 days of the substantial completion of services Served upon the property owner and the General Contractor in the same manner in which the mechanic’s lien is served
  8. 8. Avoiding the Landmines• The mechanic’s lien must be ―subscribed and sworn to‖ (see C.G.S. Section 49-34) by the claimant.• Thus, the lien must contain an attestation clause—not an acknowledgement• See Kesco, LLC v. 201 Salem Turnpike, LLC, 48 Conn. L. Rptr. No. 16 (2009)
  9. 9. Avoiding the Landmines, continued• If utilizing abode service, recognize that the property location may not be the same as the owner’s abode.• See Northwest Builders & Home Supply, LLC v. Winer, 45 Conn. L. Rptr. (2008)
  10. 10. Avoiding the Landmines, continued• The 90-day period runs from the date of ―substantial completion‖ of the work.• Insist that your client demonstrate sufficiently that the date it identifies was truly one when ―substantial‖ services were provided• See Martin Tire & Rubber Co. v. Kelly Tire & Rubber Co., 99 Conn. 396 (1923)
  11. 11. Avoiding the Landmines, continued• Confirm the identity of the property owner(s), i.e. by checking with the taxing authorities of the municipality in which the property is located• Obtain an accurate legal description of the property by procuring a copy of the deed- in to the current property owner
  12. 12. Avoiding the Landmines, continued• Insert the legal description of the property into the body of the mechanic’s lien (and, where applicable, the Notice of Intent to claim lien) itself.• This will prevent any uncertainty as to whether a property description was affixed to the lien (or Notice of Intent), and preempt any challenges to the accuracy of the description
  13. 13. Saving Graces• Despite the fact that the mechanic’s lien remedy is a creature of statute and, accordingly, subject to strict construction, our Courts have been fairly lenient about technical noncompliance.
  14. 14. DECISIONS• Thomas v. Malek Construction, LLC, 49 Conn. L. Rptr. No. 5 (2010):The General Contractor was ―Seth Malek d/b/a Malek Construction‖ (a proprietorship)The lienor was identified as ―Malek Construction, LLC‖
  15. 15. Thomas v. Malek Construction, LLC• JTR Seymour Hendel denied the property owner’s application to discharge the lien, holding that courts:• “have long endorsed a policy favoring liberal construction of claimed inadequacies in certificates of mechanic’s liens in order to achieve the remedial purposes of mechanic’s lien law …”
  16. 16. SAVING GRACES, continued• Northeastern Clearing, Inc. v. Applegate Estates, LLC, 48 Conn. L. Rptr. No. 11(2009):• Lienor misstated the date of commencement of services• Judge Robert Vacchelli upheld the lien, essentially finding no-harm/no-foul
  17. 17. BUT ….• Not every Court may be so lenient. In Premier Building & Development, Inc. v. Falotico, 44 Conn. L. Rptr. 864 (2008), JTR Robert Satter dismissed an action that had been filed by the wrong party, notwithstanding the fact that the lien had been filed by the correct party (a close affiliate of the plaintiff); by the time the error was detected, and the correct party (i.e. the original lienor) was substituted as the plaintiff, the one- year period in which to bring a foreclosure action had expired.
  18. 18. Foreclosing Mechanic’s Liens• The foreclosure action must be commenced within one year from the date of perfection (i.e. recordation) of the lien. See C.G.S. Section 49- 39 • Or• Within 60 days of the conclusion of any appeal of a court’s decision, which resulted in the denial of the property owner’s application to discharge the mechanic’s lien. See C.G.S. Section 49-35c
  19. 19. Foreclosure, continued• ―Commencement‖ of the action means: Service of the writ, summons and complaint and Recording and service of the Notice of Lis PendensWithin the one-year period, following perfection of the lien.
  20. 20. DEFENSES Payment C.G.S. Section 49-33(e): prohibits a subcontractor from liening a property in an amount greater than what the property owner has agreed to pay the General Contractor C.G.S. Section 49-36(a): prohibits a lien from being filed for an amount greater than the amount that the property owner agreed to pay for the work being performed on the property
  21. 21. DEFENSES, continued • Payment, continued• Any amounts paid by the property owner to the General Contractor prior to the owner receiving notice of a subcontractor’s notice of intent to claim a lien, made in good faith, in accordance with the schedule set forth in the owner’s contract with the General Contractor, shall be allowed as a credit to the owner against any sums claimed by the lienor. See C.G.S. Section 49-36(c)
  22. 22. DEFENSES, continued • No Consent of Property Owner• See Centerbrook Architects and Planners v. Laurel Nursing Services, Inc., 224 Conn. 580 (1993) Particularly significant where the party contracting with the lienor is a prospective purchaser of the property, who is under contract with the owner to buy that property But see, Torno & Donaher, Inc. v. Covino, 19 Conn.Sup. 55, 58 (1954) (―it is enough if [the materials] are furnished with the consent of the owner of the land, so that there is an implied contract by him to pay for them.‖)
  23. 23. DEFENSES, continued • Equal Priority of Other LienorsApportionment of claims among lienors (except for the General Contractor) where the aggregate amount of all liens exceeds the amount the property owner agreed to pay for the work being performed on the property. See C.G.S. Section 49-36(b)
  24. 24. DISCHARGE OF MECHANIC’S LIEN • C.G.S. Section 49-35(a) Permits the property owner, where no action to foreclose has yet been filed, to apply to the Court to discharge (or reduce the amount of) a mechanic’s lien (see subsection (a)) Permits the property owner, where the foreclosure has been commenced, to move for discharge (or reduction of ) a mechanic’s lien (see subsection (c))
  25. 25. DISCHARGE OF MECHANIC’S LIEN, continued • Burden of Proof At the hearing, the lienor has the initial burden to demonstrate probable cause for the filing of its lien The burden then shifts to the property owner to prove, by clear and convincing evidence, that the lien should be discharged or reduced in amountSee C.G.S. Section 49-35b(a)
  26. 26. DISCHARGE OF MECHANIC’S LIEN, continued • Appeal (C.G.S. Section 49-35c)• Any order entered, following the hearing permitted under C.G.S. Section 49-35b, may be appealed:Within seven days of the orderNo automatic stay, after seven-day period has run, even if an appeal has been taken
  27. 27. DISCHARGE OF MECHANIC’S LIENS, continued• If the action to foreclose has been filed, the property owner may not move for discharge or reduction of the mechanic’s lien if an application to do so had previously been filed and ruled upon, prior to the institution of the foreclosure action. See C.G.S. Section 49-35a(c)
  28. 28. SUBSTITUTIOIN OF BOND C.G.S. Section 49-37 permits a property owner to apply to the Court for permission to substitute a bond, with sufficient surety, to pay the amount of the lien, along with costs and interest, thereby permitting dissolution of the lien. The lienor may then bring an action to foreclose the bond, in lieu of an action to foreclose its lien.
  29. 29. SUBSTITUTION OF BOND, continued• The surety may thereafter apply to the Court for discharge or reduction of its bond, in the same fashion permitted under C.G.S. Section 49-35a for discharge or reduction of the mechanic’s lien, provided that the Court has not previously ruled upon a prior application to do so. See C.G.S. Section 49-37
  30. 30. SUBSTITUTION OF BOND, continued• Notwithstanding the lack of equity in the property on which a lien had been recorded, the subsequent substitution of a bond for that lien does not give the surety any right thereafter to seek to discharge or reduce the amount of its bond. See Sarracco Mechanical Services, Inc. v. Bank of Scotland, 47 Conn. L. Rptr. No. 13 (2009)
  31. 31. REMEDIES Equitable relief, i.e. strict foreclosure or foreclosure by sale, depending upon the equity profile of the property being foreclosed Attorneys’ fees and costs (see C.G.S. Section 52-249(a)) Title search fee (see C.G.S. Section 52-249(b))
  32. 32. REMEDIES, continued Attorneys’ fees permitted for appeal, not just Superior Court proceedings; see Gagne v. Vaccaro, 118 Conn. App. 367 (2009) Attorneys’ fees permitted in Superior Court proceedings; see Northeast Tank & Environmental Services, Inc. v. TA Operating Corp., 46 Conn. L. Rptr. 124 (2009); Abele Tractors & Equipment Co. v. Norwalk Excavating Co., 45 Conn. L. Rptr. 416 (2008)
  33. 33. EXCEPTIONCf. DuBaldo Electric v. MontanoConstruction, 45 Conn. L. Rptr. 688 (2008)(no attorneys’ fees permitted in action toforeclose bond substituted for mechanic’slien, in situations where the bond wassubstituted prior to October 1, 2007, thedate the statute was amended to permitrecovery of attorneys’ fees in actions toforeclose bonds)
  34. 34. CONNECTICUT’S ―LITTLE MILLER ACT‖• Mechanic’s liens may not be filed on public works projects.• Instead, aggrieved suppliers and contractors may avail themselves of the remedial provisions of C.G.S. Sections 49-41, et seq., which permit claims made against bonds posted by General Contractors on public works projects. See Blakeslee Arpaia Chapman, Inc. v. E.I. Constructors, Inc., 239 Conn. 708, 714 – 715 (1997)
  35. 35. CONNECTICUT’S LITTLE MILLER ACT, continued Modeled after a federal statute, the ―Miller Act,‖ 40 U.S.C. Sections 270a – 270d Permits materialmen or contractors (first and second-tier subcontractors) to make a claim against the General Contractor’s bond by written notice, sent by certified or registered mail, for any amounts unpaid 60 days after application for payment (a sample is provided in the seminar materials) Claims must be made, in writing, within 180 days of the last date of the provision of material or services (see C.G.S. Section 49-42(a))
  36. 36. CONNECTICUT’S LITTLE MILLER ACT,continued If no payment made within 10 days of the notice of claim, interest in the amount of 1%/month will be imposed on any amount found due and owing (see C.G.S. Section 49-41a(b)) Upon written demand by the claimant, the General Contractor must establish an escrow account for the amount of the claim, plus 1% interest, in an interest-bearing account (Id.)
  37. 37. Connecticut’s Little Miller Act, continuedIf the General Contractor denies the claim, the claimant may commence an action in Superior Court to recover what it claims to be owed. See C.G.S. Section 49-42(a)The matter shall be entitled to privilege in scheduling. Id.
  38. 38. Connecticut’s Little Miller Act, continued • Remedies Money damages Costs Interest, at the rate specified in the parties’ contract or, if no rate is specified, at the rate provided under C.G.S. Section 37-3a Attorneys’ fees
  39. 39. QUESTIONS??????• Tom Sansone• Carmody & Torrance LLP• 195 Church Street• New Haven, CT 06510• (203) 784-3100• tsansone@carmodylaw.com

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