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Alabama State Lien Law Summary

Who May Have A Lien?

Private

Furnishers of labor, materials, etc. who have contract with owner, proprietor, agent, architect, trustee, contractor or sub. Contractors and subcontractors must be licensed; if not, they will not be entitled to payment. If a contractor is licensed but the sub isn’t, the owner will not be required to pay the general for the sub’s work. Suppliers to suppliers are not covered.  But if a supplier to the general does not give a preliminary notice, its claim is limited to the amount still owing to the general from the owner. Also, if the owner receives the prelien and, before the claimant’s materials are used, the owner notifies the claimant that the owner will not be responsible for the price of the materials, then the claimant’s claim will be limited to the unpaid balance of the contract.   NOTE that Alabama does recognize equitable liens where a person improves another person’s property because of fraud, duress, undue influence or mistake.  [35-11-210; ThyssenKrupp Steel USA, LLC v. United Forming, Inc., 926 F.Supp.2d 1286 (S.D.Ala., 2013); Pinecrest Apartments, Ltd. v. R.P. McDavid Co., Inc., 535 So.2d 12 (Ala.1988); Schor at §§2.03[A] and [B]]   Note that where a supplier contracts with a lessee, but the lessee does not comply with the terms of the lease in performing the tenant improvements, the supplier will not have lien rights against the property owner.  [Matador Holdings, Inc. v. HoPo Realty Investments, L.L.C., 77 So.3d 139, (Ala.2011)]   Apparently architects and engineers have lien rights but surveyors do not. [Schor at §2.03[C]]

Furnisher of labor, materials or supplies to at least general or sub.  Suppliers to suppliers MAY be covered, but only where the materials supplied make up a large portion of the overall contract, and are specially fabricated..  Contractors and subcontractors must be licensed.  Where a subcontractor subcontracts with an unlicensed sub-sub, the general will not be required to pay the sub, so all parties should make sure that everyone with whom they contract , and ideally all lower-tier subcontractors, are in fact licensed.  Where a public entity arranges to pay suppliers (including suppliers to the contractor and subs) directly, in order to avoid paying sales tax, if the public entity fails to pay, the suppliers may bring a claim on the payment bond. [39-1-1; Sparks Const., Inc. v. Newman Bros., Inc., 288 So.2d 749 (Ct.App.Ala. 1974); Consolidated Const. Co. of Alabama v. Metal Bldg. Components, L.P., 961 So.2d 820 (Ala. 2007); White-Spunner Const., Inc. v. Construction Completion Co., LLC, 103 So.3d 781 (Ala., 2012); Johnson Controls, Inc. v. Liberty Mut. Ins. Co., — So.3d —-, 2014 WL 1874599  (Ala. 2014)]

What Is The Lien Against?

The building or improvement and the land on which it is situated, to the extent of an entire lot or parcel, or if not in a city or town, to the extent of one acre in addition to the land on which the building is situated.  Amount is limited to the amount due the contractor by the owner, unless a material supplier gives its preliminary notice before materials are furnished. [35-11-210] Note that retainage may be withheld, though there is no provision for bringing a claim against it.  See “Special Notes,” below. [8-29-3] Note that where a supplier contracts with a lessee, but the lessee does not comply with the terms of the lease in performing the tenant improvements, the supplier will not have lien rights against the property owner.  [Matador Holdings, Inc. v. HoPo Realty Investments, L.L.C., 77 So.3d 139 (Ala.2011)]

Payment bond of party contracting with public body. NOTE that the terms of the payment bond may differ from the terms of the claimant’s contract, thus, for example, a surety cannot assert a pay-when-paid clause in the subcontract, because that would defeat the purpose of the payment bond. It MAY, however, be able to invoke a “pay-if-paid” clause.  [39-1-1; Federal Ins. Co. v. Kruger, Inc., 829 So. 2d 732 (Ala.2002)]  Note, however, that the court has also upheld a pay-if-paid clause in a private works setting.  See “special notes” in the private works column.

Who Must Give The Preliminary Notice?

Private

All claimants who supply materials to someone other than the owner, and who wish to have lien rights for the full amount of the materials supplied. If it is not given, then the supplier’s lien rights will be limited to the amount due to the contractor at the time written notice (the interim notice below) is received.  The liens of all claimants who are not material suppliers and who do not contract directly with the owner are limited to the unpaid contract balance, and they cannot give this preliminary notice.  [35-11-210; Schor at §2.03[B]]

A preliminary notice is not required.

To Whom Is The Preliminary Notice Given?

Private

Owner or agent. [35-11-210] -Owner’s construction lender, if it can be reasonably determined.  [Bailey Mortg. Co. v. Gobble-Fite Lumber Co., Inc., 565 So.2d 138 (Ala. 1990)]

Not applicable.

When Must Preliminary Notice Be Given?

Notice must be received before furnishing any material.  If it is received later, or not at all, the claim is valid but will be limited to the amount due to the contractor at the time written notice (the interim notice below) is received. [35-11-210, 35-11-218]

Not applicable.

Contents of Preliminary Notice

Private

Please contact Levy von Beck & Associates for this information.

Not applicable.

How Must Preliminary Notice Be Given?

Private

No specific provision, therefore personal service is advised, but registered or certified mail may be acceptable. If the notice is not actually received, then the claimant’s lien will be limited to the amount due the contractor.  [35-11-210]

Not applicable.

8. Who Must Give Interim Notice?

Private:

All materials suppliers who do not supply the owner, and who did not give preliminary notice before furnishing materials, and who only seek a lien against the unpaid balance.  Once this notice has been given to the owner, the owner must hold on to the unpaid funds for the benefit of the lien claimant.  [35-11-218; Valley Joist, Inc. v. CVS Corp., 954 So.2d 1115 (Ala.Civ.App., 2006)]

Not applicable.

9. Contents of Interim Notice.

Private:

-Statement that the claimant claims a lien on the building or improvement

-Amount claimed-Statement of what work or materials the claim is for

-From whom the debt is owed. [35-11-218]

Not applicable.

10. When Must Interim Notice Be Given?

Private:

Notice must be received prior to filing a lien. It is safest to have already obtained the judgment against the claimant’s customer prior to giving this notice. [35-11-218; Burch v. First Coastal Bldg. Supply, Inc., 606 So.2d 146 (Ala.Civ.App 1992)]

Not applicable

11. Who Must Give Final Notice?

Private:

All claimants.  [35-11-213, 35-11-218] NOTE, however, that in some cases filing a lien MAY be considered substantially invoking the litigation process, which could, in some circumstances, be deemed a waiver of the claimant’s right to arbitrate.   The mere fact of filing a lien should not be so deemed, but it may depend on the facts of the case.  [Paragon Ltd. V. Boles, 987 So.2d 561 (Ala. 2007)

All claimants. [39-1-1]

12. To Whom Is Final Notice Given?

Private:

-Office of the judge of probate in the county where the property is located.

-It is recommended to also give a copy to the owner, but this is not required. [35-11-213]

-Construction lender, if it can be reasonably determined. [Schor at §2.03[B]]

Surety on bond. It is advisable to also send a copy to the contractor. Notice to the public body is not required, but if notice is given to the public body, they will send claimant a certified copy of the bond. [39-1-1]

13. When Is Final Notice Given?

Private:

-By laborers and journeyman: Within 30 days of last performing work.

-By original contractor: Within six months of last performance

-By all others: Within 4 months after last labor performed or last material furnished by claimant. [35-11-215]

Claimant must give written notice to surety at least 45 days before filing suit, and suit must be filed within one year of the final settlement of the contract. Advisable to send notice within 30 days after last delivery. It is best to ensure that surety has received the notice more than 45 days before starting suit, but if the claim is not paid within 45 days from the mailing of the notice, then the claimant may also recover interest and attorney’s fees. [39-1-1]

14. How Is Final Notice Given?

Private:

-Filed with probate judge

-No specific provision; and since giving a copy is optional, regular, certified or registered mail should be fine. [35-11-215, 35-11-218]

Registered or certified mail. [39-1-1]

15. Contents of Final Notice

Private:

NOTE THAT The statute states that the lien should be verified by the claimant or some other person having knowledge of the facts, but per case law, where the lien was filed in the claimant’s name by the claimant’s attorney with the claimant’s authorization, the claimant has substantially complied with the statute. Firestone v. Howell, 582 So.2d 1113 (Ala. 1991)

NOTE ALSO THAT in any of the following circumstances, the claimant’s claim will be limited to the amount owing to the general contractor from the owner, presumably at the time the final notice is given:

1) Where a supplier to the general does not give a preliminary notice BEFORE furnishing the materials.

2) Where the owner receives the claimant’s prelien and, BEFORE the claimant’s materials are used, the owner notifies the claimant that the owner will not be responsible for the price of the materials.

3) Where the claimant is not a material supplier, AND does not contract directly with the owner. [35-11-210]

To surety: Amount claimed and nature of the claim.

To public body letting the contract, in order to obtain a copy of the bond: Description of the labor, materials or supplies that have been supplied, and that payment has not been made. [39-1-1]

16. Time to Start Suit / Foreclose?

Private:

Within 6 months of maturity of entire indebtedness, which is usually the date when the last labor was performed or the last materials furnished, but it may depend on the claimant’s billing practices or expectations. To avoid the possibility of an intervening sale to an innocent purchaser after the suit has been filed, the claimant should file a lis pendens. [35-11-221, 35-4-131]

More than 45 days after notice given to surety, but less than one year after final settlement of the contract. [39-1-1]