HCS HB 2058 -- MECHANIC'S LIENS AGAINST RESIDENTIAL REAL PROPERTY

SPONSOR:  Hobbs (Diehl)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Insurance
Policy by a vote of 11 to 0.

This substitute establishes procedures for asserting a mechanic's
lien against residential real property other than a mechanic's
lien for the repair, remodeling, or addition to owner-occupied
residential property of four units or less.  In its main
provisions, the substitute:

(1)  Requires a claimant seeking to retain the right to assert a
mechanic's lien against residential real property to record a
notice of rights with the recorder of deeds for each county in
which the property is located.  The notice will only apply to any
work, labor, or materials performed or used to, on, or for the
property in the future or in the immediately preceding 60 days
from the date of the recording.  Any claimant failing to record a
notice of rights will be deemed to waive and forfeit any right to
assert a mechanic's lien against the property but will retain
rights and remedies allowed by law to collect payment for any
work, labor, and materials;

(2)  Requires a notice of rights to comply with Section 59.310,
RSMo, and to be in a form as specified in the substitute;

(3)  Requires, prior to commencement of any construction, an
owner to record a notice of commencement identifying property on
which the construction or improvement is to be made.  The person
recording the notice must also post a copy of the notice in a
conspicuous place on the property.  Any notice containing
incorrect or incomplete information will make the owner liable
for any resulting damages.  If the owner fails to post or provide
the notice of commencement, no claimant will be obligated to
record or file a notice of rights;

(4)  Specifies that any notice of rights or renewal notice of
rights will be valid for only one year after recording unless the
claimant records a new notice of rights prior to the expiration.
If a claimant fails to file prior to the expiration date, the
claimant's lien rights will be extinguished.  Renewal notices of
rights will be substantially the same as the notice of rights.  A
renewal notice of rights affecting multiple lots must omit any
lot for which the claimant has executed an unconditional final
lien waiver;

(5)  Specifies that a claimant satisfies the just and true
account requirement in Section 429.080 by providing the following
information and documentation as part of the mechanic's lien
claim filed with the clerk of the circuit court:

(a)  A photocopy of the file-stamped notice of rights and any
renewals of notice of rights recorded by or identifying the
claimant;

(b)  The name and address of the person the claimant contracted
with to perform the work;

(c)  A copy of any contract, purchase order, or proposal and any
agreed change order or modification to the agreement;

(d)  A general description of the scope of work agreed to be
performed in the absence of any written agreement;

(e)  All invoices submitted by a claimant for work on the
property and any payments made, an accurate statement of account
showing all payments or credits against the amount due for work
performed, and the calculation for the amount claimed; and

(f)  The last date that work or labor was performed or any
materials or equipment provided;

(6)  Allows any person having interest in a residential real
property against which a mechanic's lien has been filed to
release the lien by depositing in the office of the circuit clerk
a sum of money in cash or certified check; an irrevocable letter
of credit issued by a federally or state chartered bank, savings
and loan association, or savings bank authorized to do business
in Missouri; or a surety bond and by recording the amount of the
deposit including the claimant's name and the amount being
released on the property;

(7)  Specifies that a deposit of substitute collateral and
release of a claimant's mechanic's lien will not modify any
aspect of the priority of the claimant's interest or obligations
regarding enforcement of a mechanic's lien nor will it relieve
any claimant of potential liability for slander of title or
otherwise due to the filing of a claimant's mechanic's lien;

(8)  Allows a claimant to waive his or her right to assert a
mechanic's lien by executing a partial or full waiver of
mechanic's lien rights, but this waiver will not be deemed to
waive or release a mechanic's lien rights in exchange for a
lesser payment unless the mechanic's lien waiver is an
unconditional, final mechanic's lien waiver in compliance with
these provisions;

(9)  Specifies that an unconditional, final mechanic's lien
waiver will only be valid if it is on a form as specified in the
substitute; and

(10)  Requires any claimant who has recorded a notice of rights
and who has been paid in full for the work performed to timely
execute an unconditional, final mechanic's lien waiver; to not
unreasonably withhold the waiver when circumstances require
prompt execution; and in no event fail to provide a waiver any
later than five calendar days after the claimant's receipt of a
written request to do so by any person or entity.  A claimant who
fails or refuses to timely execute an unconditional, final lien
waiver will be presumed liable for slander of title and for any
damages sustained as a result, together with a statutory penalty
of $500.

The provisions of the substitute will not apply to a residential
structure substantially completed prior to September 1, 2010.
Any notice of rights recorded on or prior to October 1, 2010,
will apply to all labor, material, services, or equipment
supplied or used at any time in the improvement to any
residential real property which was not substantially completed
prior to September 1, 2010, and the provisions regarding a notice
of rights recorded after the owner's conveyance of property to a
bona fide purchaser for value will only apply to a conveyance
occurring after October 1, 2010.

FISCAL NOTE:  No impact on state funds in FY 2011, FY 2012, and
FY 2013.

PROPONENTS:  Supporters say that the bill will help contractors
and subcontractors get paid and make getting a property title
much easier and cleaner.  This will help make closing on a new
home much quicker and cheaper, help to find any hidden liens, and
allow lenders and purchasers to see if there is any outstanding
debt on a new home.

Testifying for the bill were Representative Diehl; Missouri
Bankers Association; Missouri Land Title Association; David
Townsend, Agents National Title Insurance; Bruce Harris, Callaway
Bank of Fulton; James Bornaauser, Central Bank Company; Jeffery
Burger, Home Builders Association of Greater St. Louis; Missouri
Title Legislative Study Group, Incorporated; and Patrice Donehue,
Missouri Silver Haired Legislature.

OPPONENTS:  Those who oppose the bill say that it is a step in
the right direction but does not fix all of the problems with
mechanic's liens.  Filing these notices and paying the fees will
cut into profits.  If all subcontractors also have to file a
notice, this could get very expensive.

Testifying against the bill were Jim Compton, American
Subcontractors Association and Roofing and Siding Contractors
Alliance; Associated General Contractors of Missouri,
Incorporated; Richard Stockenberg, American Subcontractors
Association; and Site Improvement Association.

Others testifying on the bill say that it is intended to be for
the residential market and we are on the commercial market side
of this industry.  The definition of residential property needs
to be further clarified.

Testifying for the bill was Robert Poetker, Associated General
Contractors of St. Louis.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:12 pm