If you are in the construction industry, you are probably familiar with payment bond claims and liens and the importance of them in making sure you and your construction or design firm get paid. Missing a deadline for filing a lien or payment bond claim can have severe consequences for your firm. It is important to have a clear understanding of the deadlines that control when you need to file a lien or payment bond claim by – that’s why we’re discussing it here today.
Lien filing deadlines are controlled by statute, either federal or state, and will specify the deadline applicable. Payment bond claim deadlines on public projects are also controlled by either federal or state statute. Generally, lien filing and payment bond claim deadlines are based on when labor or materials were last provided to a project. What is less clear at times is the date on which labor or materials were last provided and whether those dates can be extended based on various circumstances.
Warranty and repair work
After work is completed, many times additional work will be completed under the warranty or as a repair. The question then is which completion date is considered the time that labor and materials were last provided – the initial completion date, or the date of completion or the warranty or repair? In general, courts have held that repairs and warranty work do not extend the deadline to file a lien or to assert a payment bond claim. This rule comes from the concept that industry-wide, there is a practice of providing long warranty periods and if warranty and repair work extended the deadline, it would defeat the purpose of having a deadline in the first place. There are, of course, exceptions to this rule. Ideally, you should file your lien or payment bond claim early, but if you have filed it late and are concerned about whether you missed the appropriate deadline, contact us as soon as possible. Or better yet, let us assist you with preparing your claim as we will evaluate this issue as part of preparing it.
Minor punch-list work
In the construction industry, it is typical for a project to be substantially completed, but have minor punch-list items completed over a longer period of time. This can muddy the waters on when the actual completion date is for purposes of filing a lien or payment bond claim. In general, minor punch-list items do not extend the deadline to file a lien or payment bond claim. That then leaves the question or what is considered minor and what is considered significant? In general, if the project is substantially complete or operational, additional items that do not “prohibit the project for serving its intended purpose” will be considered minor. However, if the additional items are necessary and prevent the property from serving its intended purpose, they will likely be considered significant enough to extend the deadline. The general idea? Once the project is substantially complete and the project is able to serve its intended purpose, the clock starts running for the deadline to file a lien or payment bond claim.
When to file
As you can probably tell, determining when the clock starts running for the deadline to file a lien or payment bond claim can be nuanced and difficult to pin down. There are numerous other preliminary deadlines that occur earlier in the project that can also impact the validity of a lien or payment bond claim. It’s best practice to file a lien or payment bond claim as soon as practically possible to preserve your rights and protect your firm.
It’s also important to note that the specifics of lien and payment bond claim deadlines vary by state. Because of this and the nature of the nuances applied in determining the deadline, it’s important to seek counsel if you encounter any issues. If you anticipate an issue with filing a lien or payment bond claim or missing a deadline, contact us today.