Oregon State Lien Law Summary

OWNER-OCCUPIED RESIDENTIAL REMODELS, RENOVATIONS, OR REPAIRS:

LICENSED OR REGISTERED (as appropriate) contractors and subcontractors; laborers; transporters or furnishers of materials; equipment rental; registered architect, etc., at least to owner, general, or “other person having charge of construction.” NOTE, HOWEVER, that a subcontractor, laborer, or supplier of materials or equipment will not have lien rights if the subcontractor or general contractor with whom the claimant is contracting is not licensed at the earlier of (a) the time they contract to do the work, or (b) the time they first deliver labor, materials or equipment to the site, unless payment is by cash or consumer credit. For additional considerations, review “All Projects” subsection that follows.

ALL PROJECTS:

LICENSED contractors and subcontractors; laborers; transporters or furnishers of materials; equipment rental; trustees of an employee benefit plan; registered architect, etc., at least to owner, general, or “other person having charge of construction”. This latter category can include a 1^st– or even 2^nd-tier sub, if the subcontractor has a significant enough control over or involvement in a portion of the project to be considered a “construction agent”. There is a risk in bringing such a claim. NOTE that the claimant must be licensed at the time the claimant bid or entered into the contract, AND continuously while performing the work on the project. Even a two-week lapse in licensing during a project will be enough to deny the claimant the right to bring a claim. [Pincetich v. Nolan, 285 P3d 759 (Or.App. 2012)] NOTE that suppliers to suppliers do not have lien rights, unless they are supplying materials to a contractor or other person having charge of the construction or preparation. If the supplier can show that its customer (another supplier) in fact had “the right to control the means, method and manner of accomplishing the result desired for the finished product, albeit pursuant to plans and specifications provided by the owner,” then the supplier to the supplier may have lien rights. [87.010, 87.005, 701.131; OR Legis 1SS 77 (2010); Nucor Corp. v. Mohr Const. Co., 763 P.2d 754, 755-756, 93 Or.App. 709, 712-713 (Or.App. 1988)]  NOTE ALSO that where a claimant accepts a trust deed from the owner to secure a debt that would otherwise be secured by a lien, the claimant forfeits his or her lien rights. [Evergreen Pacific, Inc. v. Cedar Brook Way, LLC, 251 Or.App. 194, 284 P.3d 509 (Or.App. 2012)] NOTE that there are now specific license endorsements that contractors, subcontractors and developers must have in order to bid or work on residential, small commercial and large commercial projects. Contractors and subcontractors must be licensed with the Construction Contractors’ Board to enforce a lien, and contractors must hire licensed contractors and subs that have the proper endorsement for the work they are hired to do. Note that developers may not perform any construction work on a property. NOTE that the definition of a contractor now also includes a person who purchases or owns property and constructs or arranges for the construction of one or more residential or small commercial structures with the intent of selling the structures, as well as a school district or community college district that has students build a structure in order to learn building techniques, and then sells the structure. To have lien rights, the contractor or subcontractor must be licensed or endorsed for the work performed. In addition, on a project exceeding $2,000 that is either a residential structure or a zero-lot-line dwelling, the original contractor must have a written contract with the owner, or the contractor will not have lien rights. NOTE that a joint venture or partnership that bids on a project is licensed if any partner or joint venturer whose name is in the business name of the entity has a current license and appropriate endorsement.  [87.010; 87.037; 701.005; 701.055; 701.065; 701.021; Schor at §§38.01, 38.02[A]; G. Zanello & Son v. Portland Cent. Heating Co., 70 Or. 69, 139 P. 572 (1914)]

Supplier of labor, materials, rental equipment or supplies to contractor or sub of any tier. Contractors must be licensed with the Oregon Construction Contractors’ Board to bring a claim. The rules for architects, engineers, and land surveyors are not discussed here; see 279C.110. [279C.100 et seq.; Schor at §38.03[B][2]; 279C.600]

The improvement and land required for convenient use. [87.010, 87.015]

NOTE that a contractor or subcontractor’s lien is limited to their contract amount. [87.070; L.H. Morris Elec., Inc. v. Hyundai Semiconductor America, Inc.,125 P.3d 1, 203 Or.App. 54 (2005)]

There are provisions for bringing a claim against the contractor’s license surety bond, but these are not discussed here. [701.139 et seq.]

Note that retainage of up to five percent (as of 1/1/14; until then there is no limit on the retainage where there is no bond) may be withheld, or a bond or security may be posted, but there are no provisions for subcontractors or suppliers to collect from it. [701.420-701.430]

SPECIAL CONTRACTUAL NOTICES ON RESIDENTIAL PROJECTS:

On residential and zero-lot-line dwellings, there are now several different requirements for contractual terms and other notices.

1) Standard Contractual terms are to be adopted by the Construction Contractors Board for use in all residential and zero-lot-line dwelling contracts. The terms are to be clear and use words of common understanding. [701.305]

2) A contractor may not perform work to construct, improve or repair a residential structure or zero-lot-line dwelling for an owner without a written contract if the contract price exceeds $2,000. If the contract price was initially less than that but during performance exceeds that amount, the contractor must mail or otherwise deliver a written contract to the owner not later than 5 days after the contractor knows or should reasonably know that the contract price will exceed $2,000. Failure to have a written contract does not, however, void the contract. [701.305]

3) A licensed contractor that contracts to construct a new residential structure or zero-lot-line dwelling, or to sell a new residential structure or zero-lot-line dwelling constructed by the contractor, must give to the property owner or original purchaser of the residence or dwelling a written offer of a warranty against defects in materials and workmanship. The purchaser or owner may accept or refuse the offer of warranty. If the contractor makes the written warranty offer before the owner and contractor have signed the written construction contract, and the owner refuses the warranty, the contractor may withdraw the offer to construct the residence or dwelling. (Note that this section does not apply to a manufactured dwelling.) [701.320]

4) For all new projects completed on or after July 1, 2008, a contractor is now also required to provide to the first purchaser or owner a recommended maintenance schedule. The information to be included in this form is to be determined by rules established by the CCB, according to guidelines included in the statute, which are not set out here but generally relate to moisture intrusion and water damage. [701.335]

5) The CCB will be creating a consumer notice form and a notice of procedure form for contractors to give owners and original purchasers, as well as rules determining when the notices are to be given, and the length of time the contractor must retain proof of delivery of the forms.   [701.330]

The contractor’s or sub’s payment bond. [279C.380, 279C.600] Retainage of up to five percent (as of 1/1/14; until then there is no limit on the retainage where there is no bond) may be withheld, or a bond or security may be substituted for retainage, but there are no provisions for subcontractors or suppliers to collect from it. But retainage is not required to be withheld on a project for the Oregon University System. [701.420-701.430, 279C.550, 279C.555, 279.560; 351.086] A subcontractor or supplier may make a claim against the contract funds, except on projects involving the Oregon University System. [279C.515; 351.086] Before beginning work on a project, contractors and subcontractors are also required to post a public works bond in the amount of $30,000 with the Construction Contractors Board, to pay all claims ordered by the Bureau of Labor and Industries to workers performing labor on public works projects.  If, however, the contract price is less than $100,000, or where the contractor or sub is a disadvantaged, minority, women or emerging small business enterprise, they may elect not to file a public works bond, in which case any claim for wages would be brought against the contractor’s or subcontractor’s payment bond. [279C.800; 279C.870; 279.836] The public agency or official may be liable if the required payment bond is not provided. [279C.625]

RESIDENTIAL: (i.e., owner-occupied building with four or fewer units):

See the special contractual notices section, above. There are now several notices to be given with or in relation to the contract on residential projects, which are discussed immediately above. They are separate and in addition to the preliminary notices discussed here.

There are two notices that may be required:

1) No­tice of Right to a Lien is required of all claimants except those fur­nishing at an owner’s re­quest (i.e., it is required of anyone who is furnishing to someone other than the owner). [87.021] If, how­ever, you do not con­tract with all of the owners, or if there is a mortgagee, even though you contract directly with an owner, you must still send a notice to the other own­ers and to the mortgag­ee. NOTE ALSO that all claimants, except those performing only labor, must send notice to the mortgage lender and anyone with a security interest in the property, in order to retain priority over those potential claimants as to their claim for materials. In the event the claimant only seeks to claim for his or her labor, then no notice is required. If the notice is not given, then the claimant may bring a claim for his or her labor, as long as the labor and materials portions of the claims are segregated. It is strongly recommended that all claimants give the Notice of Right to Lien to the owner, mortgage lender, and anyone with a security interest in the property, in order to protect their entire claim. [87.021(3)(b­), 87.025; Schor at §38.04[B][2]] This will max­imize lien rights and ensure that the claimant takes priori­ty over any mortgage.

2) The other notice is required to be sent by any contrac­tor em­ployed by the owner on a residential pro­ject where the contract is (or becomes) greater than $2,000. (It is also re­quired to be given to a purchaser of property where the residence is sold to the purchaser within 75 days of completion of the contract.) This is called the In­for­ma­tion No­tice to Own­er. Failure to give this notice where it is required forfeits the orig­inal contractor’s lien rights. Note, however, that it need not be given where the owner is also a licensed contractor. [87.­093]

COMMERCIAL:

Claimants who supply only materials or specially fabricated materials to a project AND who do not contract directly with the owner are required to provide preliminary notice to the owner. In addition, architects, engineers, etc., who provide services to someone other than the owner apparently need to provide the notice as well. If the claimant supplies materials or specially fabricated materials to the owner, no notice is necessary. If a claimant specially fabricates the materials and also installs them on a project, they need not give preliminary notice. If a claimant supplies labor AND materials to a project, they need not give preliminary notice to the owner. NOTE, HOWEVER, that all claimants, except those performing only labor, must send notice to the mortgage lender and anyone with a security interest in the property, in order to retain priority over those potential claimants as to their claim for materials. In the event they only seek to claim for their labor, then no notice is required. If no notice is given, then the claimant may bring a claim for their labor, as long as the labor and materials portions of the claims are segregated. It is strongly recommended that all claimants give the Notice of Right to Lien to the owner, mortgage lender, and anyone with a security interest in the property, in order to protect their entire claim. [87.021(3)(b­), 87.025; Schor at §38.04[B][2]] This will max­imize lien rights and ensure that the claimant takes priori­ty over any mortgage.

A preliminary notice is not required, however general contracts and first-tier subcontracts are now required to have clauses obligating general contractors and subs to use a standard form to apply for payment. The contracts and subcontracts are also required to notify the contracting parties of the entitlement to interest if the contractor or subcontractor does not timely pay its subs. [279C.580].

NOTE that on residential projects there are now several notices to be given with or in relation to the contract on residential projects, which are discussed immediately above. They are separate and in addition to the preliminary notices discussed here. See the Special contractual notices on residential projects section, above.

NOTICE OF RIGHT TO LIEN:

(Residential AND Commercial) Owner, mortgagee (where mortgage is recorded), and anyone with a recorded security interest in the property. Those supplying only materials are actually the only ones REQUIRED to notify the owner, but it is recommended that everyone give the owner notice anyway. Every claimant is required to give the notice to the mortgage lender and the holders of recorded security interests, where the claimant seeks to protect his or her claim for the materials portion of their claim. Also strongly recommend giving notice to general contractor as well. [87.021, 87.025; Schor at §38.04[B][3]]

INFORMATION NOTICE TO OWNER:

To the Owner or agent of the owner (other than an original contractor), and to the first purchaser of the property constructed by the contrac­tor and sold before or within 75 days after com­pletion of construction. Note, however, that where the owner is a licensed con­tractor, this notice need not be given. [87.093]

Not applicable.

NOTE that on residential projects there are now several notices to be given with or in relation to the contract on residential projects, which are discussed immediately above. They are separate and in addition to the preliminary notices discussed here. See the Special contractual notices on residential projects section, above.

NOTICE OF RIGHT TO LIEN:

(Residential AND Commercial) During the progress of the improvement, and must be received within 8 business days of first supplying to pro­ject. If received later, re­lates back 8 business days. [87.021]

INFORMATION NOTICE TO OWNER:

The Notice must be delivered at the time of sign­ing the con­struction or improvement contract with the owner. [87.093(2)]. If the con­tract is initially for less than $2,000, but during the course of performance ex­ceeds that amount, the no­tice must be delivered within 5 days after the contractor knows or reasonably should know that the price will exceed $2,000. [87.093(4)]

RESPONSE TO DEMAND BY OWNER OR MORGAGEE:

An owner or mortgagee may demand a list of those materials or supplies including a statement of the amount due by reason of delivery thereof. Claimant must deliver this information, using a method that establishes proof of delivery, within 15 business days of receipt of the demand, or its priority over prior mortgages and encumbrances will be deemed waived.   Failure to provide other requested information could result in the loss of attorney’s fees and costs.  See Special Notes, below. [87.025(4), 87.027]

Not applicable.

NOTE that on residential projects there are now several notices to be given with or in relation to the contract on residential projects, which are discussed immediately above. They are separate and in addition to the preliminary notices discussed here. See the Special contractual notices on residential projects section, above.

NOTICE OF RIGHT TO LIEN:

(Residential AND Commercial) Please contact Levy von Beck and Associates for form information. There is no requirement of a signature on this form. [87.023]

INFORMATION NOTICE TO OWNER:

This form is to be prepared by CCB, and should be obtained from it. It must now include signature lines for the owner and the contractor. [87.093]

Not applicable.

NOTE that on residential projects there are now several notices to be given with or in relation to the contract on residential projects, which are discussed immediately above. They are separate and in addition to the preliminary notices discussed here. See the Special contractual notices on residential projects section, above.

NOTICE OF RIGHT TO LIEN:

(Residential AND Commercial) Personal delivery or by registered or certified mail, return receipt requested. The consequences of the recipient refusing delivery is not clear, therefore it is strongly recommended to make sure it was actually received. [87.018]

INFORMATION NOTICE TO OWNER:

Same as above, or via first class mail with a Cer­tificate of Mailing. The consequences of the recipient refusing delivery is not clear, therefore it is strongly recommended to make sure it was actually received. [87.093]

Not applicable.

An interim notice is not required.

An interim notice is not required.

All claimants must file claim of lien AND give notice that claim was filed. [87.035, 87.039]

All original subcontractors and subcontractors who intend to either suspend performance based on nonpayment, or terminate a contract based on suspended performance that has continued for at least one month.   NOTE, however, that these provisions do not apply where the project is a low-rise (3 stories or less above grade) one- or two-family dwelling, where it is a public project, or where it involves low-income housing. [701.635]

All claimants. [279C.605]

1) Claim of lien: County recorder where improvement located. [87.035]

2) Notice that claim was filed: Owner, mortgagee, and anyone with a recorded security interest in the property. [87.039; Schor at §38.04[D]]

3) Claimants suspending performance or terminating contract:

-Original contractor: Owner.

-Subcontractors: Original contractor and owner. [701.635]

BOND CLAIM:

To the Contractor supplying the bond, to the subcontractor if applicable, and to “the contracting agency,” the public body or state agency that LET the contract, which may not be the same as the agency where the work is being done. [279C.605]

CLAIM AGAINST CONTRACT FUNDS:

No specific procedure, but if a contractor or first-tier subcontractor fails or refuses to promptly pay someone furnishing labor or materials on the project, then the officers of the public body may pay the claimant and charge the amount paid against the funds due or to become due to the contractor. In addition, if the contractor or first-tier sub fails or refuses to pay their labor or materials suppliers within 30 days after receiving payment from the contracting agency or the contractor, then, unless the payment is subject to a good faith dispute, they also owe the claimant 9% per annum interest, which is not waivable. Finally, if the contractor or first-tier subcontractor fails or refuses to promptly pay the claimant, unless the payment is subject to a good faith dispute, the claimant may file a complaint with the Construction Contractor’s Board. NOTE, HOWEVER, that no claim against the contract funds is allowed on a project for the Oregon University System. [279C.515; 279C.580, 351.086]

CLAIM OF LIEN BY SUPPLIERS OF LABOR, MATERIALS, OR RENTAL EQUIPMENT:

Filed within the earliest of 75 days after claimant last provided labor, mate­rials, etc. or 75 days af­ter com­pletion of construc­tion.   NOTE, HOWEVER, that if the notice is filed before construction is complete or before the last delivery (whichever is appropriate), then the notice is premature and therefore INVALID. Do not assume that a claim can be filed later where the 75^th day falls on a Saturday, Sunday or legal holiday. Also, NOTE that if there are separate contracts on one parcel of property, each contract has its own deadline. NOTE ALSO that an improvement is deemed complete when it is substantially completed, when a completion notice has been posted and recorded, or when it has been abandoned. Abandonment occurs when work has ceased for 75 days, or a notice of abandonment is posted and recorded by the owner or mortgagee. )] Note that if work ceases but the owner or mortgagee intends to resume construction and does not want abandonment to occur, they may post a notice of nonabandonment, within 74 days after work ceases.   There are statutory requirements for the notices of abandonment and nonabandonment that are not discussed here. [Schor at §38.04[C][2]; 87.035, 87.045] NOTE ALSO that punch list, remedial or corrective work, or “trifling” amounts of work will not extend deadline for filing suit, nor do post-project tasks, such as repairs, removal of equipment, and final inspections. If, however, the work performed is critical to the project and the claimant’s contractual obligations, work that is only a small portion of the total project may extend the filing deadline. [Farrell v. Lacey, 507 P.2d 31 (1973); Pro Excavating, Inc. v. Ziebart, 939 P.2d 1187 (1997)] NOTE ALSO that an owner or mortgagee may demand a list of those materials or supplies including a statement of the amount due by reason of delivery thereof. Claimant must provide this information, using a method that establishes proof of delivery, within 15 business days of receipt of the demand, or its priority over prior mortgages and encumbrances will be deemed waived.   Failure to provide other requested information could result in the loss of attorney’s fees and costs. See Special Notes, below. [87.025(4), 87.027]

CLAIM OF LIEN BY TRUST FUNDS:

Filed within 75 days after completion of construction. [87.035]

NOTICE THAT CLAIM WAS FILED:

Mailed within 20 days of filing claim, and must include copy of claim of lien. [87.­039]

Notice that claimant is suspending performance or terminating contract:

Original contractor: Notice must be received at least seven days before suspending performance or terminating the contract, unless a shorter period is specified in the contract. (The contract cannot require a longer period.)

Subcontractors: Where the notice is given because of nonpayment by the owner or because of suspended performance that has continued for at least one month, the notice must be received at least three days before suspending performance or terminating the contract, unless a shorter period is specified in the contract. (The contract cannot require a longer period.) Where the notice is given because either the original contractor has been paid but has not timely paid the sub, or the owner has refused to pay the original contractor for the sub’s work for reasons that are not the fault of or directly related to the sub’s work, then the sub needs to be sure its notice is received at least seven days’ in before suspending or terminating.   [701.635]

BOND CLAIM:

Notice must be sent within 180 days after claim­ant last provided labor or materials (200 days for con­tributions to an employee benefit plan). The statute is not clear and suggests that timely mailing is enough, but recommend ensuring timely receipt, to be safe. [279C.605]

CLAIM AGAINST CONTRACT FUNDS:

No specific date. The contractor is required to pay its subcontractors promptly after the contractor has been paid. Notice should not be given during that period. If the claimant is not paid within 30 days after the contractor (or subcontractor) has received payment for the claimant’s work or materials, then the contractor or first-tier subcontractor is obligated to pay interest. All of these deadlines assume that the nonpayment is not due to a good faith dispute. Note that the complaint to the CCB cannot be filed until more than 30 days have passed since the contractor was paid, and the claimant remains unpaid.  Remember, no claim against the contract funds is allowed on a project for the Oregon University System [279C.515; 351.086]

CLAIM OF LIEN:

Filed.   [87.035]

NOTICE THAT CLAIM WAS FILED:

Personal service or by certified or registered mail. The consequences of the recipient refusing delivery is not clear, therefore it is strongly recommended to make sure it was actually received. [87.018]

NOTICE THAT CLAIMANT IS SUSPENDING PERFORMANCE OR TERMINATING CONTRACT:

Personal service or certified mail, return receipt requested, or other means that provides written third party verification of delivery. Receipt of the actual notice is apparently required; merely mailing it is insufficient. [701.635]

BOND CLAIM:

Registered or certified mail or hand delivered. The consequences of the recipient refusing delivery is not clear, therefore it is strongly recommended to make sure it was actually received. [279C.605]

CLAIM AGAINST CONTRACT FUNDS:

No specific provision.

CLAIM OF LIEN (must be under oath):

-Statement of demand, less credits and offsets (BUT NOTE that a contractor or subcontractor’s lien is ultimately limited to their contract amount, or possibly to the lesser of the subcontract price and the reasonable value of the labor and materials furnished.) [87.070; L.H. Morris Elec., Inc. v. Hyundai Semiconductor America, Inc.,125 P.3d 1, 203 Or.App. 54 (2005); A-C Const., Inc. v. Bakke Corp., 956 P.2d 219, 153 Or.App. 41, review denied 971 P.2d 409, 327 Or. 553(1998)]

-Owner/reputed owner’s name, if known;

-Name of person who employed claimant or to whom claimant furnished materials or rented equip­ment, or to whom the benefits are owed;

-Description of liened property sufficient for identification, including address, if known;

-Where interest is claimed pursuant to the underlying contract, or any statutory interest claimed, it should be set out in the lien; and

-Must be verified by the claimant or some other person having knowledge of the facts. Per Schor and case law, the claimant’s attorney may sign the lien claim if he or she has sufficient knowledge to do so, but then they may be subject to examination as a fact witness. [87.035; Teeny v. Haertl Constructors, Inc., 111 Or.App. 543, 826 P.2d 1029, (1992); review allowed, 313 Or. 627, 835 P.2d 916; review denied, 313 Or. 628, 835 P.2d 917; reversed in part ,314 Or. 688, 842 P.2d 788. Schor at §38.04[C] [3} & [4]]

NOTICE THAT CLAIM WAS FILED:

Written statement that claim was filed, with copy of claim attached. [87.039]

NOTICE THAT CLAIMANT IS SUSPENDING PERFORMANCE OR TERMINATING CONTRACT:

None specified; presumably the notice should include notice that the claimant is suspending performance for nonpayment, or terminating the contract based on suspended performance that has continued for at least 30 days. The notice should also presumably identify the project, the claimant, and the claimant’s customer, at a minimum. [701.635]

BOND CLAIM:

Please contact Levy von Beck and Associates for form information. The notice is to be signed “by the person making the claim or giving the notice.” Per case law, the claimant’s attorney may sign on the claimant’s behalf. [State ex rel. Town Concrete Pipe, Inc. v. Andersen, 264 Or. 565, 505 P.2d 1162 (1973); Schor at §38.03[B][3]; 279C.605]

CLAIM AGAINST CONTRACT FUNDS:

No specific provisions.

Within 120 days after filing (but time may be extended 120 days at a time for up to two years after filing if there is an extended pay­ment plan ar­ranged be­tween the parties and its terms are stated in lien itself).   [87.055] BUT NOTE PREREQUI­SITES, BELOW.

NOTE ALSO that where suit is filed and the owner files a claim against the contractor’s bond (with the Construction Contractors Board) the foreclosure suit may be stayed, if certain requirements are met. Note also that per case law, a lien claimant not properly served with a Notice of Filing Bond or Deposit does not have the right to foreclose its lien on the bond. A Notice of Pendency of an Action should also be filed. [87.058; OR Legis.630 Sec. 56; Tualatin Valley Builders Supply, Inc. v. TMT Homes of Oregon, Inc., 179 Or. App. 575, 41 P.3d 429 (2002); Schor at §38.04[F][2]] NOTE that a claimant who prevails on a quantum meruit claim will be able to recover against the bond. [State v. Ross Bros. & Co., Inc., 342 P.3d 1026 (Ct.App.Or. 2015)]

NOTE that there is now a requirement that, where a judgment is entered against a contractor, ordering a contractor to pay damages arising from a breach of contract or negligent or improper work on construction of a residential structure, and the contractor does not pay the judgment amount within 30 days after the judgment is recorded, the contractor must deliver a copy of the judgment to the CCB within 45 days after recording of the judgment. [701.109]

NOTE that there are special provisions where a lien release bond is filed, which are not set out here.

BOND CLAIM:

Within two years after claimant last provided labor, materials, or equipment. [279C.610]

MUST wait 6 months from fil­ing the proof of loss before for­e­closing in order to recover attorney fees and costs from the surety. (See “Are attorney’s fees allowed” section, below.) If there is some other basis for a recovery of attorney’s fees from the claimant’s customer or the prime contractor, then the claimant need not wait 6 months to file suit against the customer or the prime contractor. [742.061]

CLAIM AGAINST CONTRACT FUNDS:

No specific provision.