10 Things You Should Know
1. What is the lien?
The Oklahoma Mechanics and Materialmen’s Lien should be called the Oklahoma Contractors and Suppliers Lien because it protects those in the building industry. Our lawmakers consider construction so vital to the Oklahoma economy that it gave those engaged in the industry special protections with this lien. The Oklahoma Mechanics and Materialmen’s Lien is available to contractors, subcontractors and materialmen. It is a powerful tool, yet many self-destruct by missing the deadlines and/or not filing the proper notices.
2. When must I file the lien?
It depends. Different filing deadlines attach, depending on your relationship with the property owner. Contractors are those that enter into an agreement with the property owner. All others are considered subcontractors. A. Contractors must file the lien within four (4) months of the date equipment was last furnished or labor last performed on the project. B. Subcontractors. Before a lien is filed, a pre-lien letter must be sent to the property owner and general contractor. The letter must be sent within seventy-five (75) days of the date equipment was last furnished or labor last performed on the project, and contain specific language as required by the Oklahoma statute (see below). The letter must be sent certified mail, return receipt requested. There are exceptions to the pre-lien letter requirement, but it’s always a good idea to send the letter. The lien must be filed within ninety (90) days.
3. What information must be included on the lien?
A lien must include: (1) a statement setting forth the amount claimed and identifying the material or labor supplied; (2) the name of the owner or owners, contractor and claimant; (3) the description of the property subject to the lien; and (6) a verification of the lien by affidavit. You should attach invoices or other itemized statements setting forth the amount claimed. Subcontractors must also file an affidavit verifying compliance with the pre-lien letter requirements.
4. What information must be included on the pre-lien letter?
A statement that the notice is a pre-lien notice; the complete name, address, and telephone number of the claimant, or the claimant’s representative; the date of supply of material, services, labor, or equipment; a description of the material, services, labor, or equipment; the name and last-known address of the person who requested that the claimant provide the material, services, labor, or equipment; the address, legal description, or location of the property to which the material, services, labor, or equipment has been supplied; a statement of the dollar amount of the material, services, labor, or equipment furnished or to be furnished; and the signature of the claimant, or the claimant’s representative.
5. Why is the Mechanic and Materialmen’s Lien so powerful?
The lien triggers a mortgage default. Mortgages have a clause that requires the owner to remove any liens that are filed against the property-these clauses are called negative lien clauses. Thus, if the owner of the property has taken out a loan and used the property as collateral, then that owner will be in default of the loan if the lien is not removed from the property. The lien is a cloud on the property’s title. The property cannot be sold nor borrowed against unless the lien is removed from the property. The majority of liens are resolved without the need for trial. Your attorney will ask for his/her fees, interest and costs in the negotiations, and if you have a strong case chances are you will get them. If the case goes to trial, then the “prevailing party” is awarded attorney’s fees. Since this is a two-edged sword, you will need to be confident in your case before filing suit.
6. Where do I file the lien?
The lien must be filed with the county clerk of the county in which the property is located. The county clerk mails a certified copy of the lien to the debtor. Check with the county clerk to ensure that the debtor accepted the certified mail. If not, you need to send a process server.
7. After I file the lien, what’s next?
After the lien is filed, the county clerk mails a copy of the lien statement via certified mail to all the parties. Some scallywags will not accept certified mail. So, remember to check with the county clerk to ensure that they accepted delivery. If the certified mail is not received, your attorney will use a private process server to provide notice of the lien. If the debtor does not pay the amount owed, then you are required to foreclose on the Mechanics and Materialmen’s Lien within one year of filing. Frequently, the property owner has more than one Mechanics and Materialmen’s Lien filed against the property. In such cases, the attorneys for the various lien claimants will discuss strategy, and the attorney representing the lien claimant with the largest claim will typically take the lead in the foreclosure action.
8. Is my lien superior to other liens and mortgages?
Often, questions of priority exist between a mortgage lien, a judgment lien and others that have filed Mechanics and Materialmen’s Liens. Regarding the mortgage lien and judgment lien, the Mechanics and Materialmen’s Lien refers back and applies from the date the first labor or material is furnished to the project. So, if the work began on the project prior to the recording of a mortgage or judgment lien, then the lien of the contractor, subcontractor or supplier is superior If others hold valid Mechanics and Materialmen’s Liens, then they stand in equal status toward each other. In other words, the lien claimant who supplies material at the end of a project will be equal in priority to the lien claimant, such as an engineer or surveyor, who provided services at the beginning of the project.
9. What if the debtor posts a bond?
A property owner can neutralize the Mechanics and Materialmen’s Lien by depositing with the county clerk either an amount of money equal to 125% of the lien amount, or a surety bond (called a lien release bond) in an amount equal to 125% of the lien amount. I see this tactic when the debtor disputes the charges or for some other reason feels that the charges are unjustified. In this case, you will need to foreclose on the lien as described above.
10. What if I already filed but made a mistake on the lien?
You cannot amend the lien for the amount claimed. So check and double-check the numbers before you file it. However, the courts will allow you to change the other information.