Portland Business Journal: Oregon's 2019 Most Admired Companies Oregon Business: 100 Best Companies to work for in Oregon 2019 Oregon Business: 100 Best Green Workplaces in Oregon 2019
Laurie R. Hager
503.243.1661 x 220
 

Potential Traps for Construction Lien Claimants

November 2008

Laurie R. Hager
503.243.1661 x 220

Published in The Daily Journal of Commerce.

Anyone familiar with Oregon's construction lien statutes knows that there are many deadlines and hoops to jump through in order to protect a claimant's construction lien rights. There are two statutory deadlines that may be unfamiliar to many lien claimants, because they are not invoked very often. If you work in the construction industry and have to protect lien rights on occasion, you should be aware of these rules.

Under many circumstances, contractors, suppliers, and certain other parties who have a right to file a construction lien on an Oregon project are required to serve on certain parties, including a project owner, a pre-lien notice of right to a lien ("pre-lien notice") in order to protect their lien rights. These parties should be aware that project owners, upon receipt of the pre-lien notice, have a statutory right to issue a written request seeking certain information about the basis for the charges and nature of the contract giving rise to the lien rights. The statute requires the party issuing the pre-lien notice to deliver a response with certain required information within 15 days of the date it received the request. Once the party with lien rights files its lien claim and has given the owner the statutory notice of intent to foreclose its construction lien, another statute shortens the deadline for compliance to 5 calendar days. If the lien claimant does not timely comply with the owner's request under either statute, the lien claimant will not be entitled to recover any attorney fees or costs incurred in enforcing the construction lien, even if the claimant ultimately wins in the lien foreclosure lawsuit. This can be a big blow to a lien claimant, who may be forced to invest a lot of money in attorney fees and costs to foreclose its construction lien.

In a recent case, the lien claimant did everything to perfect its lien rights except timely comply with the owner's request for information after the owner received the lien claimants' pre-lien notice. This turned out to be a big mistake. While the lien claimant was entitled to foreclose its lien, it was not entitled to recover roughly $75,000 in attorney fees and costs it incurred in obtaining a judgment of foreclosure on the lien claim.

The deadlines discussed above are just two of the many pitfalls under Oregon's construction lien statutes that put a claimant at risk for jeopardizing its lien rights, lien priority, or ability to recover attorney fees and costs. As you can see, when it comes to protecting lien enforcement rights, potential or actual lien claimants should comply with all required deadlines and take even the most casual written or oral request for information seriously, even if they do not refer to the applicable statute. A party with any questions about protecting its lien rights should consult with an attorney who can work through the complicated and precarious construction lien statutes.

THIS ARTICLE IS NOT INTENDED TO BE (AND SHOULD NOT BE USED) AS A SUBSTITUTE FOR LEGAL ADVICE SINCE LEGAL ADVICE MAY ONLY BE GIVEN IN RESPONSE TO INQUIRIES REGARDING SPECIFIC FACTUAL SITUATIONS.

Laurie Hager is an attorney with the Portland law firm of Sussman Shank LLP and is a member of its Business Litigation and Construction Law Groups. She can be reached at 503-227-1111 or laurie@sussmanshank.com.

Related Practice Areas

Construction

Return to Articles