Indiana State Lien Law Summary

LIEN:

Contractors, subs, and furnishers of labor or ma­terial and equipment to owner, contractors, or 1^st– or 2^nd-tier subs. Registered professional engineers, registered land surveyors, and registered architects also have lien rights. Suppliers to suppliers are not protected. Note that unionized employees may, in some cases, be able to collect for vacation pay or other benefits provided under a collective bargaining agreement. NOTE, HOWEVER, that where a no-lien provision is part of a single-unit residential construction contract, and the contract is timely recorded, claimants will not have lien rights. See the ‘can lien rights be waived’ section, below. Per case law, a construction manager who provides only supervisory or management services, and not labor or materials, is not entitled to a mechanic’s lien. Activities such as on-site supervision, coordination of work, cleanup, protection and security for materials are all considered supervisory activities and are not lienable, however, services for decontamination and hazardous waste removal and disposal are covered. [32-28-3-1, 32-28-11-1; In re Bentz Metal Products Co., Inc., 253 F.3d 283 (7^th Cir. 2001); Kinney Elec. Mfg. Co. v. Modern Elec. Co., 149 N.W.2d 69 (1967); Murdock Constr. Management, Inc. v. Eastern Star Missionary Baptist Church, Inc., 766 N.E. 2d 759 (Ind. App. 2002); Cho v. Purdue Research Foundation, 803 N.E.2d 1161 (App. 2004); Midwest Biohazard Services, LLC v. Rodgers, 893 N.E.2d 1074 (Ind. App.,2008)]

CLAIM AGAINST CONTRACT FUNDS:

Subcontractors, laborers, journeymen, lessors of equipment or tools, or materials suppliers. There is no explicit limit as to tier of subcontractor or supplier, and in at least one case, a supplier to a sub-sub-contractor was allowed to bring a claim against the contract funds owed by the owner to the general contractor, regardless of whether anything was still owed to the sub-subcontractor. Nonetheless, suppliers to suppliers are not covered. [32-28-3-9; Gibson-Lewis, LLC v. Teachers Credit Union, 854 N.E.2d 392 (Ind. App. 2006); R.T. Moore Co., Inc. v. Slant/Fin Corp., 966 N.E.2d 636 (Ind.App.2012)]

Furnishers of labor or mate­rial or services to at least general or first-tier sub. A supplier to a sub-subcontractor on a Department of Transportation project is too remote to be covered. Employee benefit trust funds do have lien rights, at least on Title 36 (local) projects. One case (which is not citable) has held that the statute does NOT limit coverage to those contracting with the general or first-tier subcontractor, and allowed the union to collect for workers working for a sub-sub. [5-16-5-2, 36-1-12-1.2, 36-1-12-13.1, 8-23-9-9, 8-23-9-26, 4-13.6-7-2; Alberici Constructors, Inc. v. Ohio Farmers Ins. Co., 866 N.E.2d 740 (Ind. 2007); Seaboard Sur. Co. v. Indiana State Dist. Council of Laborers and Hod Carriers Health and Welfare Fund, 645 N.E.2d 1121 (Ct.App.Ind.1995); Fidelity & Deposit Co. of Maryland v. Sheet Metal Workers’ Intern. Ass’n Local Union No. 20, 2014 WL 934424, unpublished disposition, 7 N.E.3d 1024 (Table) (Ct.App.Ind. 2014)]

It appears that there is no limit on the tiers of claimants for bonds provided by construction managers as constructors. Note that these statutes only apply to state education institution construction projects that are scheduled to begin on or after 7/1/17, and the statutes expire 7/1/2020. [5-32-6-1, 5-32-1-1]

LIEN:

Structure and entire land upon which it is situated. NOTE, HOWEVER, that where work is performed for tenant, without approval of landlord, claimant cannot file a lien against the landlord’s interest in the property, only the tenant’s interest. [32-28-3-1, 32-28-3-2; Cho v. Purdue Research Foundation, 803 N.E.2d 1161 (App. 2004)] For a lien to attach to the owner’s interest, the improvements must have been made under the authority and direction of the landowner and something more than the owner’s inactive or passive consent is required. [R.T.B.H., Inc. v. Simon Property Group, 849 N.E.2d 764 (Ind. App. 2006)]

CLAIM AGAINST CONTRACT FUNDS:

Funds held by the owner at the time the final notice is given. [32-28-3-9]

PAYMENT BOND:

Where a payment bond is given, it is essential that the claimant obtain a copy of the entire bond, to familiarize itself with its requirements. Ohio Farmers Ins. Co. v. Indiana Drywall & Acoustics, Inc., 970 N.E.2d 674 (Ind.App.2012)]

1) Contractor’s or design-builder’s payment bond on state or local projects. [5-16-5-2; 4-13.6-7-6]

2) Final payment due con­tractor. [5-16-5-1, 36-1-12-12]

3) Retainage withheld from the contractor on certain state jobs. [4-13.6-7-2, 4-13.6-7-8, 4-13.6-7-9] NOTE, HOWEVER, that where a subcontractor is unpaid and the public body pays another contractor more than the retainage amount to complete the contract upon the general contractor’s default, then the subcontractor may not be allowed to recover from the retainage. [State Dept. of Natural Resources v. CCI, LLC, 860 N.E.2d 651 (Ind.App. 2007)]

4) Contractor’s performance bond, on transportation projects. [8-23-9-9]

5) Contractor’s retainage, on transportation projects. [8-23-9-26]

6) Payment bond of the construction manager as constructor, on a state educational institute project that begins after 6/30/17. The statute is scheduled to expire 7/1/2020. [5-32-1-1, 5-32-6-1]

LIEN:

Suppliers of labor, ma­teri­als or machin­ery to anyone other than the own­er, for new con­struction or remod­el of an OWNER-OCCUPIED 1- OR 2-FAMILY DWELLING ONLY. [32-28-3-1] NOTE that claimant should ensure that there is not a no-lien contract recorded for the project, because if there is, the claimant may not have lien rights. (NOTE that where a subcontractor or supplier claimant fails to give timely notice, the general contractor can still file a lien for those amounts.) [Ford v. Culp Custom Homes, 631 N.E.2d 468 (Ind. Ct. App. 2000); Schor update at §15.03[D]; Feitler v. Springfield Enterprises, Inc., 978 N.E.2d 1160 (Ind.App. 2012), revised at 981 N.E.2d 155 (Ind.Ct.App.2013)]

CONTRACT FUNDS:

All covered claimants may give this notice. The notice must be given if the claimant wishes to have a claim against the contract funds. [32-28-3-9]

A preliminary notice is not required.

LIEN:

Remodel: To occupying own­er.

New Construction: To oc­cu­pying owner, AND county recorder. [32-28-3-1]

CONTRACT FUNDS:

-To property owner, and, if owner is absent, to owner’s agent. [32-28-3-9]

Not applicable.

LIEN:

Owner occupied 1- or 2-family dwellings:

-For alteration, remodel or re­pair: Notice must be received within 30 days of first delivery.

-For new construction: Notice must be received wi­th­in 60 days of first de­liv­ery. [32-28-3-1]

CONTRACT FUNDS:

Notice must be received before labor or materials are furnished. [32-28-3-9]

Not applicable.

LIEN:

-Notice that claimant has supplied materials or performed work or delivered machinery.

-Notice of the existence of lien rights against the property. [32-28-3-1; Schor at §15.03[C]]

NOTE that where the name listed on the preliminary notice differs slightly from the name on the lien, the lien will be enforced. The court must evaluate the degree of noncompliance with the letter of the law; the policy underlying the statute, and the resulting prejudice to the owner or other parties with an interest in the property. [Von Tobel Corp. v. Chi-Tec Const. & Remodeling, Inc., 994 N.E.2d 1215

(Ct. App. 2013)]

CONTRACT FUNDS:

The amount of labor, materials or machinery the person has contracted to perform or furnish for the employer or lessee. [32-28-3-9]

Not applicable.

LIEN:

Owner occupied 1- or 2-family dwellings:

No specific requirements, however personal delivery or certified or regu­lar mail recommended, and filed with the county recorder. Actual receipt is essential. [32-28-3-1]

CONTRACT FUNDS:

No specific requirements, however certified and regu­lar mail recommended. [32-28-3-1, 32-28-3-9]

Not applicable.

An interim notice is not required.

An interim notice is not required.

LIEN:

Every claimant. [32-28-3-3] NOTE that there is a case that states that where the subcontractor fails to give timely notice to the property owner, the general contractor is entitled to file a lien for those amounts. [Schor, case law at §15.03[D]]

NOTE ALSO that where a lien is filed by a general for work performed by a sub, and the owner pays the sub directly, and the sub’s lien and release are on file, the general may be found to have slandered the homeowner’s title and may be liable for damages and attorney’s fees. [Country Contractors, Inc. v. A Westside Storage of Indianapolis, 4 N.E.3d 677 (Ct.App.Ind. 2014)]

CLAIM AGAINST CONTRACT FUNDS:

All claimants wishing to make a claim against the funds currently held by the owner. [32-28-3-9; Schor at §15.03[J]]

Every claimant.

LIEN:

County recorder. [32-28-3-3]

CLAIM AGAINST CONTRACT FUNDS:

To the owner or, if the owner is absent, to the owner’s agent. [32-28-3-9]

STATE PROJECTS (most):

BOND:

TITLE 4 PROJECTS (i.e., projects involve the construction or improvement of state public works projects solicited by the Indiana Department of Administration):

-The division that entered into contract with general contractor.

-Surety.

-A subcontractor or supplier must deliver a copy of the claim to the contractor. NOTE that apparently this will also preserve a claim against the contract funds. [4-13.6-7-10]

TITLE 5 PROJECTS (i.e., projects for the Indiana Commission for Higher Education, state educational institutions, military and armory boards of the state, the State Fair Commission, and certain entities that have the power to issue bonds):

-The public body, i.e., the board, commission, trustee, officer, authorized clerk or agent of the state or commission that entered into the contract. The public body will deliver the duplicate copy of the notice to the surety.

-The contractor.

TITLE 36 PROJECTS:

-Signed duplicate statement to the contracting public subdivision or agency.

-The contractor.

[5-16-5-1, 5-16-5-2, 36-1-12-13.1]

RETAINAGE:

-To the division letting the contract.

-A subcontractor or supplier must deliver a copy of the claim to the contractor. [4-13.6-7-10, 4-13.6-7-8]

LOCAL PROJECTS, SOME STATE PROJECTS: Board, officer or clerk of public entity that entered into contract with general contractor. [5-16-5-1, 5-16-5-2, 36-1-12-12, 36-1-12-13] Note that serving the notice upon the mayor for a project awarded by the city, even where it is the city parks department that actually issued the contract, is sufficient. [City of Fort Wayne v. Consolidated Elec. Distributors, Inc., 998 N.E.2d 733 (Ct.App. 2013)]

TRANSPORTATION PROJECTS:

BOND: The surety. [8-23-9-10]

RETAINAGE: The Department of Transportation. [8-23-9-26]

LIEN:

Residential, 1- or 2-dwelling units and outbuildings: Recorded within 60 days after claimant last fur­nishes labor or material.

All other projects: Recorded within 90 days after claimant last furnishes labor or materials. NOTE, however, that a claim is limited to the amount held by the owner and owed to the general contractor, or the claimant’s “employer,” at the time the notice is given. [32-28-3-3, 32-28-3-9; Walsh & Kelly, Inc. v. Intern. Contractors, Inc., 891 N.E.2d 673 (Ind.App.2008)] NOTE that if the contractor performs additional work not originally included in the original contract, and does so either gratuitously or under a new contract to make repairs or perform services, this work is not considered part of the original contract, and does not extend the deadline for filing a lien for work performed under the original contract. [Abbey Villas Dev. Corp. v. Site Contractors, Inc., 716 N.E.2d 91 (Ind. Ct. App. 1999),] Similarly, if a sub does work for a contractor who defaults before the end of the project, and the sub completes the work for the homeowner, a lien for work performed for the contractor must be filed based on the last date of work for the contractor; the sub cannot base it on the last day of work performed for the owner. [MSKTD & Associates, Inc. v. CCJ Enterprises, LLC,

973 N.E.2d 106 (Ind.App. 2012, citing

Kendallville Lumber Co. v. Adams, 176 N.E. 555 (Ind.Ct.App.1931)]. NOTE ALSO that if the subcontractor fails to give timely notice to the owner, the general contractor can file a lien for the amounts owed for the subcontractor’s work. [Ford v. Culp Custom Homes, Inc., 731 N.E. 2d 468 (2000), Schor update at §15.03[D]. The court reasoned that since the general contractor is responsible for making sure the sub’s work is done, and for paying the sub for work and materials supplied, the general is entitled to file a lien for the subcontractor’s work.]

CLAIM AGAINST CONTRACT FUNDS:

No specific time frame, but the claim is limited to the amount held by the owner and owed to the general contractor, or the claimant’s “employer” at the time the notice is received. [32-28-3-9]

STATE AND LOCAL PROJECTS:

BOND:

TITLE 4 PROJECTS (i.e., projects involve the construction or improvement of state public works projects solicited by the Indiana Department of Administration): Filed with the division and delivered to the contractor not later than 60 days after last furnishing of labor or material to the project. Per case law, this means the last furnishing of labor or material by anyone on the project. [4-13.6-7-10, 36-1-12-12, 36-1-12-13.1; Electrical Specialties v. Siemens Building Technologies, Inc., 8378 N.E.2d 1052 (Ind. Ct. App. 2005)]

TITLE 5 PROJECTS: Filed and delivered within 60 days after last furnishing of labor or material to the project BY THE CLAIMANT. [5-16-5-1; 5-16-5-2]

TITLE 36 PROJECTS: Filed and delivered within 60 days after last furnishing of labor or material to the project BY THE CLAIMANT. [36-1-12-13.1]

RETAINAGE: Received within 60 days after last furnishing labor or material, and in any event, within 60 days after substantial completion of the project. [4-13.6-7-8; 4-13.6-7-10; 4-13.6-7-9; 36-1-12-12]

TRANSPORTATION PROJECTS:

BOND: Received less than one year after acceptance of the labor, materials or services. [8-23-9-10]

RETAINAGE: Received more than 60 days after claimant’s last delivery but less than 30 days after final acceptance of the project. [8-23-9-26]

LIEN:

Filed, IN DUPLICATE, with county re­corder in county where pro­perty is locat­ed. Recorder mails, by first class mail, one duplicate to owner at last address shown on tax re­cords. [32-28-3-3]

CLAIM AGAINST CONTRACT FUNDS:

No specific provision. Personal service recommended; or certified and regular mail, if personal service is not possible. Recommend ensuring actual receipt.

MOST STATE PROJECTS:

BOND:

TITLE 4 PROJECTS: File with the division which entered into the contract, “send” a copy to the surety, and inform the division and the contractor that the surety was notified. Registered or certified mail is advised. [4-13.6-7-10]

TITLE 5 PROJECTS: File duplicate copies with the public body, who will then deliver the duplicate copy to the surety.

-“Deliver” to the contractor. [5-16-5-2]

TITLE 36 PROJECTS: File duplicate copies with the public body, who will then deliver the duplicate copy to the surety.

-“Deliver” to the contractor. [36-1-12-13.1]

RETAINAGE: File with the division letting the contract. [4-13.6-7-8]

LOCAL PROJECTS AND SOME STATE PROJECTS:

For a bond claim, deliver a copy of the statement to the contractor, and file signed duplicates of the statement with the public body, and the public body will deliv­er the duplicate to the surety. For a claim against the contractor’s final payment, only one copy is needed, and it only needs to be filed with the board. [5-16-5-2, 36-1-12-12 and -13.1]

TRANSPORTATION PROJECTS:

BOND: Notice is furnished to the sureties. Registered or certified mail is advised. [8-23-9-10]

RETAINAGE: Filed in triplicate with the Department of Transportation. The Department will then send copies of the notice to the contractor and surety. [8-23-9-26, 8-23-9-27]

LIEN:

Called a Sworn statement and Notice of Intention to File Lien.

-Statement must be sworn to and verified

-Intention to hold lien upon property

-Amount claimed. NOTE that if the amount is either intentionally or negligently overstated, the entire lien will be invalid, though a minor mistake will not void the whole lien if it is evident that no fraud was intended and the owner was not misled or prejudiced. [Abbey Villas Dev. Corp. v. Site Contractors, Inc., 716 N.E.2d 91 (Ind. Ct. App. 1999), Schor update at §15.03[C]]

-Name and address of claim­ant

-Name of owner (Note that if the wrong name is listed for the owner, then the lien will be invalid, even where the named owner is the president of the actual owner. [Capital Drywall Supply, Inc. v. Jai Jagdish, Inc., 934 N.E.2d 1193 (Ind.App.,2010)])

-Address of owner as shown on tax records

-Legal description and address of property

-Statement must be veri­fied and filed in duplicate

-Notice may be verified and filed BY AN ATTORNEY, IF THE ATTORNEY IS REGISTERED IN GOOD STANDING WITH THE INDIANA STATE SUPREME COURT. [32-28-3-3]

NOTE that where the name listed on the preliminary notice differs slightly from the name on the lien, the lien will be enforced. The court must evaluate the degree of noncompliance with the letter of the law; the policy underlying the statute, and the resulting prejudice to the owner or other parties with an interest in the property. [Von Tobel Corp. v. Chi-Tec Const. & Remodeling, Inc., 994 N.E.2d 1215

(Ct. App. 2013)]

NOTE THAT where a lien is filed by a general for work performed by a sub, and the owner pays the sub directly, and the sub’s lien and release are on file, the general may be found to have slandered the homeowner’s title and may be liable for damages and attorney’s fees. [Country Contractors, Inc. v. A Westside Storage of Indianapolis, 4 N.E.3d 677 (Ct.App.Ind.2014)]

CLAIM AGAINST CONTRACT FUNDS:

-Amount of claim (NOTE that the claim is limited to the amount held by the owner and owed to the general contractor, or the claimant’s “employer” at the time the notice is given. [32-28-3-9])

-Nature of services rendered or materials furnished for which the claimant’s employer or lessee is indebted to the claimant

-Statement that the claimant holds the owner responsible for payment of the claim. [32-28-3-9]

MOST STATE PROJECTS:

BOND:

TITLE 4 PROJECTS:

-Amount due and owing

-Give as much detail as possible explaining the claim

-Inform the Public Works Division that the surety was notified

-Statement must be verified. The statute and case law do not indicate who is authorized to sign the statement. [4-13.6-7-10; 5-16-5-2]

TITLE 5 PROJECTS:

-Amount due and owing.

-Statement must be verified. The statute and case law do not indicate who is authorized to sign the statement. The claimant must give duplicate copies of the notice. [5-16-5-2]

TITLE 36 PROJECTS:

-Amount due and owing.

-Statement must be signed by BOTH THE CLAIMANT AND THE CONTRACTING AGENCY. The statute and case law do not indicate who is authorized to sign the statement. The claimant must give duplicate copies of the notice. [36-1-12-13.1]

RETAINAGE:

-Amount due and owing

-Give as much detail as possible explaining the claim

-Statement must be verified. [4-13.6-7-8; 4-13.6-7-10]

ALL OTHER STATE PROJECTS, AND ALL LOCAL PROJECTS:

-Amount due and owing

-Statement must be verified and in duplicate. The statute and case law do not indicate who is authorized to sign the statement [5-16-5-2, 36-1-12-13.1]

LOCAL PROJECTS, CLAIM AGAINST CONTRACTOR’S FINAL PAYMENT:

Must contain the same information as a bond claim, but must also be signed by an individual from the political subdivision or agency who is directly re­sponsible for the project and who can verify quantity of a purchased item. [36-1-12-12]

TRANSPORTATION PROJECTS:

BOND: Amount due and owing. [8-23-9-10]

RETAINAGE:

-Itemized statement of the amount due the claimant

-Statement as to whether the labor or material was performed for or furnished to a contractor or subcontractor

-Name of the contractor or subcontractor

-Dates the labor or material was performed or furnished

-Rate or cost of labor, materials or services

-Character of the labor, materials, or services

-Post office address of the claimant

-The notice must be verified. The statute and case law do not indicate who is authorized to sign the statement. [8-23-9-26]

LIEN:

Notice to file an action given:

If the owner, mortgagee, or other lienholder gives written notice (by registered or certified mail) to file an action foreclosing a lien, then suit must be filed within 30 days after receiving the notice. If it is not so filed, then the lien can be released. If no notice is given, then the deadline for filing suit is set out below. [32-28-3-10]

No notice to file an action given:

Within 1 year after:

-the debt secured by the lien, as shown by the record of the lien, becomes due. If the record of the lien does not show when the debt secured by the lien became due, then the suit must be filed within one year after:

–recording the statement and notice of intention to hold a lien, or

–the expiration of the credit, if a credit is given. To extend the time for filing suit, the terms of the credit must be in writing, the credit must have been executed by the lienholder and all the owners of record, the credit must have been recorded in the same manner as the original statement and notice of intention to hold a lien, and the credit must have been recorded not later than one (1) year after the date the statement and notice of intention to hold a lien was recorded.

[32-28-3-6, 32-28-7-1, 32-28-7-2; Schor at §15.03[C]]

NOTE that filing a motion to intervene in a mortgage foreclosure action does not suffice as filing a complaint to foreclose a lien. [Wachstetter v. County Properties, LLC, 832 N.E.2d 574 (2005).]

CLAIM AGAINST CONTRACT FUNDS:

No specific time frame. [32-28-3-10, 32-28-3-9]

TITLE 4 PROJECTS:

More than 30 days after fil­ing the statement with the division and delivering a copy of the claim to the contractor, but less than one year after final settlement with the contractor. [4-13.6-7-10, Schor at §15.02[D]]

TITLE 5 PROJECTS and ALL LOCAL PROJECTS:

For a bond claim, more than 30 days after filing the statement and delivering the copy to the contractor, but less than 60 days after final completion and acceptance of the public work. [5-16-5-2, 36-1-12-13.1]

TRANSPORTATION PROJECTS:

BOND:

More than 60 days after furnishing statement, but less than 18 months after final acceptance. HOWEVER, if claimant receives a notice from the department instructing it to sue within 90 days of receiving that notice, then claimant must comply with that notice. [8-23-9-11, 8-23-9-34]

RETAINAGE:

Within 90 days after receiving notice that the contractor rejected the claimant’s claim, or notice that the department requires it to sue within 90 days of that notice. (The department sends a copy of the claimant’s notice to the contractor, and the contractor must notify the department within 20 days of receiving the claim whether it accepts or rejects the claim. The department will then notify the claimant.) [8-23-9-30, 8-23-9-29, 8-23-9-34]