For contractors and subcontractors, late payments can be an all-too-familiar part of the construction industry. Many assume the best of intentions—maybe the check is still in the mail? Maybe there was an emergency around-the-clock project? When it eventually becomes clear there is a problem, many will still try to work it out themselves. But all the while, the deadlines for establishing liens on the project rapidly approach.
Mechanics' liens allow contractors, subcontractors, suppliers, and other construction professionals to lien on a construction project for which they have not been paid. Mechanics' liens function synonymously with materialmen's liens (which are for suppliers of building materials or equipment) and may also simply be called "construction liens" depending on the state.
Every state has different mechanics' lien statutes, and in a city like Memphis where the metropolitan area extends over three states, it can be a confusing maze of deadlines and time windows. Missing a filing deadline by one day can mean the extinguishment of any lien rights. Similarly, commercial owners with properties in multiple states are often left wondering whether it was Arkansas or Mississippi that requires a pre-work notice of lien rights from the contractors (hint: it's neither for commercial projects).
This series discusses some of the different deadlines and filings for mechanics' liens. It is important to note that many of the statutes have specific requirements for the content of the notices and how they are filed or served. Each state has nuanced differences, but all require strict conformity with the statutes to create enforceable liens.
Arkansas's Lien Laws
Contractors
If you are a contractor on a residential project, you must give the owner a Notice of Lien Rights prior to beginning work. If you fail to deliver the pre-work Notice, you cannot bring any claims on the project—not even traditional breach-of-contract claims or quantum meruit. Ark. Code Ann. § 18-44-115(a)(4). You can incorporate this Notice of Lien Rights into your standard contract, but the statute requires very specific language and typeface. Ark. Code Ann. § 18-44-115(a)(7).
For commercial projects, you do not need to deliver a Notice of Lien Rights prior to beginning work.
Following a project, you have 120 days from the final day you furnished labor or materials to file your lien. Ark. Code Ann. § 18-44-117. But first, you must serve a Notice of Intent to File Lien Claim, and you must serve this at least 10 days before filing the lien. Ark. Code Ann. § 18-44-114(a). Once you have served the notice and given the owner 10 days to pay, you can then file the lien with the clerk of the circuit court. Ark. Code Ann. § 18-44-117. All of this must be within the 120-day window. Id.
Once the lien is filed, you then must commence the lawsuit to enforce the lien within 15 months of filing, or the lien expires. Ark. Code Ann. § 18-44-119.
Unlike other states, Arkansas does not use the normal system of attachment and perfection in determining lien priority; instead, all mechanics' and materialmen's liens on a project share equal priority with each other and are dated as of the first day of construction. Ark. Code Ann. § 18-44-110.
Subcontractors
If you are a subcontractor on a residential project, you must give the owner a Notice of Lien Rights prior to beginning work. If you fail to deliver the pre-work Notice, you cannot bring any claims on the project—not even traditional breach-of-contract claims or quantum meruit. Ark. Code Ann. § 18-44-115(a)(4). But if another subcontractor gives the Notice, then your lien rights on any labor or material provided after that notice are saved. Unlike with general contractors, you cannot merely incorporate the Notice of Lien Rights into your standard contract because your contract is not with the owner. The Notice of Lien Rights must be delivered to the owner.
For commercial projects, you do not need to deliver a Notice of Lien Rights prior to beginning work. Ark. Code Ann. § 18-44-115(b)(3). Instead, for commercial projects, you must deliver a Notice of Nonpayment to the owner within 75 days after you finish supplying labor or materials. Ark. Code Ann. § 18-44-115(b)(5)(A).
Next, for both residential and commercial projects, you must serve an additional notice on the owner, a Notice of Intent to File Lien Claim. Ark. Code Ann. § 18-44-114(a). Once you have served this notice and given the owner 10 days to pay, you can then file the lien with the clerk of the circuit court. Ark. Code Ann. § 18-44-117. All of this must be within 120 days from the final day you furnished labor or materials. Id.
Once the lien is filed, you then must commence the lawsuit to enforce the lien within 15 months of filing, or the lien expires. Ark. Code Ann. § 18-44-119.
Unlike other states, Arkansas does not use the normal system of attachment and perfection in determining lien priority; instead, all mechanics' and materialmen's liens on a project share equal priority with each other and are dated as of the first day of construction. Ark. Code Ann. § 18-44-110.
Owner
As an owner, Arkansas' statutes tend to favor you with all the notice requirements. But in Arkansas, there are no real actions you can affirmatively take to cut down the time window for liens.
Instead, the main question will be whether the lienors provided you with all the proper notices within the corresponding time frames.
Originally published May 13, 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
