HCS HB 912 & 1108 -- MECHANICS' LIENS

SPONSORS:   Witt (Treadway)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Judiciary
& Ethics by a vote of 14 to 0.

This substitute requires a subcontractor working on new
construction of residential property to obtain a signed consent
form from the owner before filing a mechanics' lien.  Current
law requires such consent forms only for repairs, improvements,
and additions to existing residential properties.  However, no
consent of owner is required for a subcontractor to file a lien
if (1) the property is destroyed by fire or natural disaster and
was not insured; (2) a bankruptcy petition is filed by a
builder, contractor, lender, title insurance company or escrow
company involved in the construction project; or (3) the builder
has not transferred title to a purchaser within 90 days of
substantial completion of all improvements.

The substitute creates extensive notice requirements for the
builder, contractors, and subcontractors to ensure timely
payment.  Forms for each of these required notices are set
forth.  "Disbursing agents," such as escrow companies, title
companies, and lenders, who disburse funds to a builder or
contractor to pay for construction work on residential property,
are prohibited from paying any builder or contractor when there
is an unpaid subcontractor who has provided all the proper
notices.  The disbursing agent must either pay the subcontractor
in full, or must make a provision for payment of the
subcontractor's claim.  The procedure for making "provision for
payment" is set forth.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that HB 912 is a step in the right
direction in reforming the mechanics' lien laws.  HB 1108 would
allow suppliers and subcontractors to actually use the lien laws
as they were originally designed.  Currently, the competition in
the construction field means some companies can't always secure
the necessary consent of the owner.  They risk losing customers
if they hold out for the paperwork.

Testifying for HB 912 were Representative Treadway; and
Missouri  Land Title Association.  Testifying for HB 1108 were
Representative Luetkenhaus; and Western Retail Implement and
Hardware Association.

OPPONENTS:  Those who oppose HB 912 say that the bill would make
it almost impossible for subcontractors to secure liens upon new
construction, because the owners of those homes are often not
yet known.  The security of mechanics liens facilitates the
willingness of suppliers and laborers to extend credit to
contractors.  Without lien rights, much of that credit would
disappear.  This would have a substantial negative impact on
commerce in the state.

Testifying against HB 912 were Missouri Merchants and
Manufacturers Association.

Richard Smreker, Research Analyst

HB 912 -- Mechanics' Liens

Sponsor:  Treadway

This bill requires a subcontractor working on new construction
of residential property to obtain a signed consent form from the
owner before filing a mechanics' lien.  Current law requires
such consent forms only for repairs, improvements, and additions
to existing residential properties.  Also, the bill changes the
definition of residential property so as to include buildings
containing single dwelling units owned as a condominium, a
cooperative housing association, or an independent living
facility for the elderly.