Mechanics lien and notice requirements can be difficult to figure out even in the best of circumstances. When additional confusion is thrown into the mix, like confusion over precise definitions of project roles, it can be even tougher. A recent Missouri case provides some clarification on the definition of terms related to project roles in that state, and how that applies to the specific notice requirements.
Original Contractor and General Contractor Are Not Necessarily the Same
In the recent Missouri case, a mechanics lien was determined to be unenforceable because the contractor failed to give a required notice prior to the liens filing. The lien claimant (“Bazin”) acknowledged that it failed to provide the “original contractor” notice required by Missouri’s Construction Lien Law, V.A.M.S. § 429.012.1, but argued that it was not an original contractor for those purposes. Bazin’s argument, essentially, was that because the party with whom it contracted was acting as a general contractor, Bazin should be considered a subcontractor for notice purposes. The court disagreed.
[quote style=”boxed” float=”left”]an “original contractor” is any party who contracts directly with the owner of the property – whether or not that owner is acting as a general contractor.[/quote] The determining factor of project role comes solely from the party with whom you contract – not the “practical” role that party is playing. In this case, the party with whom Bazin contracted may very well have been acting as the general contractor, but the deciding factor was that it also owned the property. Cases like this showcase the confusion that can result by not using specifically tailored language.
General contractor, direct contractor, prime contractor, original contractor . . . all of these terms are thrown around interchangeably. In most cases this doesn’t cause a problem, because on many projects there is no meaningful distinction between the terms. However, as the Missouri case shows, just because somebody is acting as a general contractor, a contract with that party does not necessarily make that contracting party a subcontractor. The key point to consider is that, for most notice purposes, the determining factor is who owns the property. This, an “original contractor” is any party who contracts directly with the owner of the property – whether or not that owner is acting as a general contractor. This means that original contractor is not exactly synonymous with general contractor, at least as that term is generally understood in the construction industry.
The determination of a lien claimant as an original contractor only requires looking to see if that lien claimant contracted with the property owner. This can result in a project where there are multiple original contractors and no subcontractors. This is fine.
Download the Missouri Notice 1-page Fact Sheet which includes all notice templates used in the ‘Show Me’ state
It Doesn’t Matter What Parties May “Actually Know” – Notice Still Required
The lien claimant Bazin also attempted to make an argument (that was always doomed to failure) that the required notice served no practical purpose, and was therefore not needed. The argument stems from the fact that Bazin had a long-standing business relationship with the owner/contractor and had worked on multiple other subdivision projects with it in the past. Based on this, Bazin argued, the owner/contractor presumably knew of Bazin’s right to file a mechanics lien on the project, so giving the required notice would serve no practical purpose.
[quote style=”boxed” float=”right”]The language of the statute requiring the notice is plain, and the failure to give the notice is fatal to the lien claim.[/quote] While Bazin may deserve some credit for the attempt, and it can seem impossible to predict what a court will do in any given situation, there was no way this argument was going to work. The statute clearly sets forth the requirements that must be met to file a valid mechanics lien, and giving the notice is a condition precedent to doing so. The presumed knowledge of a third party has no bearing on compliance with the requirement. Likewise, Bazin’s argument that the lien law should be liberally construed in favor of the lien claimant was doomed to failure. This argument may have some legs if there was something to construe, but in the case of complete non-compliance there is nothing for the court to construe. The language of the statute requiring the notice is plain, and the failure to give the notice is fatal to the lien claim. If, in another circumstance, notice was given, but did not strictly conform with the specific notice requirements the “liberal construction” argument might be better placed.
So, notice must be given no matter what the party receiving notice knows (or should know), and the only thing that matters in determining an “original contractor” is whether that party contracted with the property owner.