Arkansas, like most states, has passed statutes protecting contractors and subcontractors against people or businesses who would take advantage of their hard work or materials. These statutes, however, require very specific notices in order for the laws to apply to any given job. If the notices are provided at the right time and to the right persons, subcontractors who are not paid for the work or materials they have provided for a job can place a lien on the property they worked upon. That lien gives them superior rights to almost any other creditor in the world and can be the difference between eventually getting paid or having to write off another loss.
Arkansas law treats owners of residential property different from owners of business or commercial property. The law requires more notices to residential property owners because they are less likely to be aware of their rights.
For a contractor working on residential property, you must provide notice to the residential property owner, or his or her agent, before any work is performed or materials are provided that you will place a lien on the property if you are not paid. A contractor who does not provide this notice is subject to fines. If a general contractor provides this notice, it is effective for all subcontractors or materialmen who work on or provide materials to the property.
Very specific statutory language is required:
“IMPORTANT NOTICE TO OWNER
I UNDERSTAND THAT EACH CONTRACTOR, SUBCONTRACTOR, LABORER, SUPPLIER, ARCHITECT, ENGINEER, SURVEYOR, APPRAISER, LANDSCAPER, ABSTRACTOR, OR TITLE INSURANCE AGENT SUPPLYING LABOR, SERVICES, MATERIAL, OR FIXTURES IS ENTITLED TO A LIEN AGAINST THE PROPERTY IF NOT PAID IN FULL FOR THE LABOR, SERVICES, MATERIALS, OR FIXTURES USED TO IMPROVE, CONSTRUCT, OR INSURE OR EXAMINE TITLE TO THE PROPERTY EVEN THOUGH THE FULL CONTRACT PRICE MAY HAVE BEEN PAID TO THE CONTRACTOR. I REALIZE THAT THIS LIEN CAN BE ENFORCED BY THE SALE OF THE PROPERTY IF NECESSARY. I AM ALSO AWARE THAT PAYMENT MAY BE WITHHELD TO THE CONTRACTOR IN THE AMOUNT OF THE COST OF ANY SERVICES, FIXTURES, MATERIALS, OR LABOR NOT PAID FOR. I KNOW THAT IT IS ADVISABLE TO, AND I MAY, REQUIRE THE CONTRACTOR TO FURNISH TO ME A TRUE AND CORRECT FULL LIST OF ALL SUPPLIERS AND SERVICE PROVIDERS UNDER THE CONTRACT, AND I MAY CHECK WITH THEM TO DETERMINE IF ALL MATERIALS, LABOR, FIXTURES, AND SERVICES FURNISHED FOR THE PROPERTY HAVE BEEN PAID FOR. I MAY ALSO REQUIRE THE CONTRACTOR TO PRESENT LIEN WAIVERS BY ALL SUPPLIERS AND SERVICE PROVIDERS, STATING THAT THEY HAVE BEEN PAID IN FULL FOR SUPPLIES AND SERVICES PROVIDED UNDER THE CONTRACT, BEFORE I PAY THE CONTRACTOR IN FULL. IF A SUPPLIER OR OTHER SERVICE PROVIDER HAS NOT BEEN PAID, I MAY PAY THE SUPPLIER OR OTHER SERVICE PROVIDER AND CONTRACTOR WITH A CHECK MADE PAYABLE TO THEM JOINTLY.
ADDRESS OF PROPERTY _________________________
I HEREBY CERTIFY THAT THE SIGNATURE ABOVE IS THAT OF THE OWNER, REGISTERED AGENT OF THE OWNER, OR AUTHORIZED AGENT OF THE OWNER OF THE PROPERTY AT THE ADDRESS SET OUT ABOVE.
For a contractor on non-residential property, as is defined in Arkansas law, this notice is not required before work starts. However, if a contractor on non-residential property is going to claim a lien on property, he or she must provide notice of the intent to file a lien at least seventy-five (75) days after labor was supplied or materials were furnished. The notice must contain: (a) a general description of the labor, service, or materials furnished, and the amount due and unpaid; (b) the name and address of the person furnishing the labor, service, or materials; (c) the name of the person who contracted for purchase of the labor, service, or materials; (d) a description of the job site sufficient for identification; and (e) the following statement set out in boldface type and all capital letters:
“NOTICE TO PROPERTY OWNER
IF BILLS FOR LABOR, SERVICES, OR MATERIALS USED TO CONSTRUCT OR PROVIDE SERVICES FOR AN IMPROVEMENT TO REAL ESTATE ARE NOT PAID IN FULL, A CONSTRUCTION LIEN MAY BE PLACED AGAINST THE PROPERTY. THIS COULD RESULT IN THE LOSS, THROUGH FORECLOSURE PROCEEDINGS, OF ALL OR PART OF YOUR REAL ESTATE BEING IMPROVED. THIS MAY OCCUR EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL. YOU MAY WISH TO PROTECT YOURSELF AGAINST THIS CONSEQUENCE BY PAYING THE ABOVE NAMED PROVIDER OF LABOR, SERVICES, OR MATERIALS DIRECTLY, OR MAKING YOUR CHECK PAYABLE TO THE ABOVE NAMED PROVIDER AND CONTRACTOR JOINTLY.”
Even after all of these notices are provided, the contractor, regardless of whether it was residential or non-residential property, must still file the lien within 120 days of the labor being supplied or the materials furnished. And the contractor must serve a 10 day notice on the property owner before the lien is filed.
Title work is strongly recommended in order to know with certainty the legal owner of the property. Service of notice on the wrong owner is a strong defense for the true property owner in a proceeding brought by the contractor to enforce the lien.
All of these requirements are critical. Arkansas courts have stated that because these laws are contrary to the common law (i.e., the way the law was followed before the statute was written) that all requirements must be satisfied or the lien is void. This means that you must be very careful that every step of the law is followed or you may miss out on having a lien on the property.
If you do not have a lien, it may be more difficult to get your money later on, but there are still other ways to try. If you have provided labor or supplies on a construction project but have not been paid, you should act quickly and contact the attorneys at Owens, Mixon & Gramling to see if a lien is a possibility. Even if it isn’t, the attorneys at OMG Law Firm have decades of experience obtaining and collecting judgments. Call 1-870-336-6505 or email Lance at firstname.lastname@example.org