NEW HAMPSHIRE MECHANIC S LIEN LAW 2017 Go to: New Hampshire Mechanic s Lien Forms More Info: www.nationallienlaw.com Section Contents Pre-lien Notice(s) Name of Notice Who Must Use This Notice When How to Serve Verified or notarized? Section Contents New Hampshire Mechanic s Lien Who is Entitled to a Lien? When to File/Record Where to File/Record How to Serve Amount of Lien Property Subject to the Lien Furnishing Information Verified or Notarized Priorities Lien Release Bond Miscellaneous Issues Page 1 of 10
Section Contents Lawsuit to Foreclose Lien Introduction When Where to File Arbitration Need a Lawyer? General Notes Be Careful: The courts consider a mechanic s lien to be a privilege and not a right. You receive its benefits only if you strictly adhere to the state law requirements. Bottom line: miss a deadline by one day and you have lost it. Unlike other areas of the law where you can argue equities, find technical exceptions, and lawful excuses, there is no forgiveness here. In this case, knowledge is not only power, it=s a necessity. In this state you will be writing down dates for at least three documents: a) Notice of Intent to Lien; b) Statement of Account; and c) Filing a Petition or lawsuit to establish a New Hampshire Lien. Write down all the deadlines in your calendar. Use a highlighter or red pen. If you have a staff, use a fail safe system by doubling up and putting it in their calendar also. This reminds you twice. The first calendar entry should be two weeks before the due date as a preliminary reminder. On the second calendar entry, do a white lie to yourself. Put the due date as one week before it is actually due as insurance in case you get busy or need legal advice. Time is money. You will waste a lot of valuable time running around and doing it at the last moment, as opposed to doing it early. PRELIEN NOTICE New Hampshire requires a Notice be sent out before the mechanic s lien is filed/recorded. For simplicity, this notice will be referred to as a Prelien Notice. The basic information on this Notice is as follows: Page 2 of 10
Name of Notice: Who Must Use this Notice: When: Notice That Lien May be Claimed. All contractors, subcontractors, laborers, persons performing professional design services (as defined below under the mechanic s lien section), and material/equipment suppliers who do not have a direct contract with the owner or the owner=s agent. For example, a general contractor with a direct verbal or written contract with the owner who acts as the prime is not required to give the Notice. See Time Deadlines table. There is no set time limit as to when the pre-lien notice must be served. Accordingly, the notice may be given either before starting your work or after. It can even be served upon completion. However, it is highly recommended that it be served early in the job, and ideally, at the time you enter into your contract. The reason is that you will get a lien only for the unpaid amounts owed by the owner to the general contractor at the time your prelien is served on the owner. If the owner has already paid the general contractor, there is no money left and your lien will be ineffective. How to Serve: The New Hampshire statutes do not tell us how the prelien notice is to be served. It only states that the owner is to be furnished a copy. With analogy from other states, it is recommended the owner be served by Certified Mail, Return Receipt Requested. After service of the notice, subs and suppliers are also entitled, every 30 days, to provide an owner an updated accounting of the amounts owed. It is suggested you attach the outstanding invoices, or whatever accounting sheet you have in your office, that explains exactly what is owed. Although this is optional, it is recommended that you do so every 30 days. If you do not, your New Hampshire mechanic s lien is limited to the last amount stated to the owner. Verified or Notarized?: A verified notice simply means you sign it and are representing the contents are true and accurate. A notarized notice is signed in front of a Notary Public or other official. The notice need not be notarized or verified. Claimant only has to sign the notice. Page 3 of 10
NEW HAMPSHIRE MECHANICS LIENS Who is Entitled to a Lien: A mechanic s lien is primarily for general contractors, subcontractors, laborers, as well as material/equipment suppliers. To be entitled to a lien, the claimant must at least have a contract with a subcontractor. In other words, liens are allowed for general contractors, subcontractors, and material or equipment or material suppliers who have a contract with the owner, general, or subcontractor. Liens are not allowed if the equipment/material supplier has a contract directly with another supplier, as opposed to a subcontractor. This also means there are no liens for a subsub-subcontractor or lower tier sub. Effective January 1, 2013, under Section 447:2, a lien may now be claimed for performing professional design services. Virtually every state in the union has for many years allowed liens for such design professionals New Hampshire is getting into the game rather late. This includes: a licensed architect, licensed landscape architect, licensed engineer, permitted septic designer, certified wetland scientist, certified soil scientist, or licensed land surveyor. However, the services must directly relate to the improvement of real property. This would be easy to prove if the work is used or consumed into the construction project itself, such as the furnishing of some kind of labor or materials. For example, if you are a soil scientist performing drilling and testing services to the site. It would also clearly apply if prepared drawings were used by contractors who implemented them through actual and visible construction. However, it might be different if 1) the project never gets off the ground, 2) were used as a general feasibility study, 3) were not intended for a specific project, or 3) were not used after another design professional prepared their own drawings. Although a person may have a lien in New Hampshire with an oral contract, it is highly recommended that you express your understanding in writing. Although not specifically mentioned in the statute, it appears that equipment lessors will be entitled to a lien, assuming they at least have a contract with the subcontractor. Page 4 of 10
When to File/ Record: See Time Deadlines table. How To Record Your Lien: Most states have a two-step process. The first step is to file a mechanic s lien. The second step is to file the lawsuit to foreclose the lien. And in almost all states, the first step can be done without the court s permission you simply go to the court or clerk s office and file the lien yourself. Not so in New Hampshire. From the very beginning, the court takes over the responsibility of deciding whether a lien can be recorded. Thus, a lien will only attach if you secure a court order. You do this by filing a Petition for Ex Parte Attachment to Secure Mechanic s Lien in the clerk s office. Your petition will be granted automatically in the beginning stages without having to give notice to the owner or other parties. The petition must also recite that if you are not a general contractor, you have given the Notice of Attempt to Lien to the owner. In most cases it is recommended that you use an attorney when filing a lawsuit or petition in court. However, because the first step is so simple to perform, a sample petition is in the process of being prepared for this web site. But, it is better practice to get an attorney and it is highly recommended that you use one if the action is contested by the other parties. After you file the petition, the judge takes a look at your papers and hopefully will sign an order allowing you to record your lien. The lien becomes valid upon 1) recording with the Registry of Deeds in the county in which the project is located, and 2) filing the petition, order, and separate writ of attachment. This recording must be done within 120 days after the completion of the project or the last day on which labor or materials was furnished by anyone to the project. This means you should submit your petition well in advance of that 120-day period in case the court is busy reviewing and signing other orders. Once you secure the order and have done the recording, you should immediately contact a process server (see the Yellow Pages) or a marshal/sheriff who serves civil process in your county. They will serve the papers on the owner. Page 5 of 10
It is then the owner s turn. The owner has the right to request a hearing which is usually scheduled within two weeks to contest the lien. This is either done on (1) procedural grounds; or (2) attacking the amount of the lien. The objection on procedural grounds usually has to do with claiming the writ of attachment was recorded late, that the language in the writ of attachment is not sufficient, or, if you are a subcontractor or supplier, that you did not send out a Notice of Intent to Lien. This will also be the owner s opportunity to claim the New Hampshire lien is excessive, usually based upon claims of defects, costs to repair or complete, or other damages for breach of contract. Because things move so fast in these proceedings, you should have your documents and witnesses ready at the time you file the petition. It is recommended that you have an attorney present at that hearing. Amount of Lien: Primarily for unpaid labor, material, and equipment supplied. Profit and overhead is allowed if part of the agreed-upon contract amount. It is unsettled in New Hampshire if there can be a lien for such items as interest, finance charges, attorney s fees, and court costs. Many courts disallow these items if properly challenged. However, the law is not certain at this point, and it would not hurt to include them. Some claimants also request breach of contract damages (indirect or consequential damages), including such items as extended overhead, delay damages, lost profits, and the like. Entitlement to these is also unsettled, although by analogy from other states, these types of damages are not allowed since they have nothing to do with the improvements to the property. Subcontractors and suppliers may also have their liens reduced by the damages suffered by the owner because of the general contractor. If the owner has to hire someone else to complete the job, the owner will use this as a defense against your lien. Remember, the amount a sub or supplier is entitled to receive is based on the balance due from the owner to the general contractor on the date of service of the Notice of Intent to LIen. The sooner you serve your Notice the better. If the owner has paid the general contractor everything on the contract as of that Page 6 of 10
date, you will have nothing left to lien in New Hampshire. Property Subject to the Lien: Furnishing Information: Verified or Notarized?: Priorities: A mechanic s lien in New Hampshire applies only to private projects. No lien is allowed in public projects against government property. Upon request, the general should furnish others with information about the owner so the required notices and lien can be filled out properly. A verified notice simply means you sign it and are representing the contents are true and accurate. A notarized notice is signed in front of a Notary Public or other official. A verified notice is all that is required in this state. The petition in court must be verified and notarized. A construction mortgage will have priority over a mechanic s lien only if it was recorded before commencement of the work. If recorded after, the mechanic s lien takes priority when the property is sold through the lien foreclosure. In theory, there are situations in which the mechanic s lien takes priority over a construction mortgage, but don t bank on it. The New Hampshire statute allows the construction lender to have priority as long as certain requirements are met, and most lenders are well aware of them and insure they are complied with. As between lien claimants, everyone shares equally regardless of who files first. If there is not enough proceeds upon foreclosure to pay for all the lien claimants, they share on a pro rata basis, based upon the amounts of their liens in relation to the overall proceeds on sale. The rule is different if there is more than one contract on the same work of improvement. Assume there is a separate contract for grading and excavation, followed by the recording of a lien before work is commenced under a separate contract to build a structure. In that case, the previous lien under the separate contract will take priority. There are further exceptions, but you should seek competent legal advice to determine their nature and extent. Lien Release Page 7 of 10
Bond: Theoretically, it is possible to release a mechanic s lien by depositing money or taking-out a surety bond. However, cases are conflicting in New Hampshire and it is uncertain at this point whether this can be done. Miscellaneous Issues: Subdivisions: Definition of Completion: Homestead: Waiver of Your Lien?: If you have a single contract and have performed services to a number of subdivision lots, the question is when the 120 days start running to file your lien. It has been held that it starts from the date the last lot was completed, even though the work completed on the other lots was more than 120 days. Because the lien must be filed within 120 days of completion of the project, the definition of completion is crucial. It has been held that call-back or warranty work (coming back and fixing what you have already done) does not extend the time period. To be safe, file your lien early so you are not caught in this problem. A New Hampshire mechanic s lien is not subject to the New Hampshire s $30,000 homestead exemption for residential homeowners ($60,000 for joint owners). In other words, your lien is not defeated by the homestead. It is an open question as to whether a no lien contract will be enforced in New Hampshire. This refers to contracts or other separate documents which waive a contractor s lien rights. To be safe, watch what you sign. Need a Lawyer? In this country, every individual has the statutory right to represent themselves. This means they can prepare all necessary papers, appear at hearings, and actually try the case. In so doing, the court considers you to be acting either in pro se or pro per. Before making this decision, consider the following factors: Page 8 of 10
1. You are a professional and thoroughly know the ins and outs of not only the construction industry but of the project itself. The best lawyer on his or her best day will probably not know more than 50% of what you know. 2. How is your public speaking abilities? If you are uncomfortable speaking to a group, you will even more uncomfortable in court or arbitration. You could be the sharpest wit in town but may not be able to present your arguments. Remember, appearing uncomfortable is perceived as having deficiencies in your case. People usually think that if you are not comfortable about your own facts, then they must not be that strong. 3. If the other side has a lawyer, you might want to think twice about representing yourself. You will certainly know the facts quite well, but you may be blindsided by legal technicalities. 4. You may also want to think twice if this is a really nasty and emotional case. In other words, if the other side is going for blood. Having a lawyer can shelter you from this emotional trauma. No matter how strong you are, lawsuits are taxing not only on your time, but on your physical and emotional energies. 5. If you have a good case in which you have complied with technicalities and performed good work, you are essentially engaging in a collection action. These actions are typically very simple because there are few defenses or defects alleged by the other side. It makes it easier for you to represent yourself because it is more a question of when and how much they will pay as opposed to whether you will win at all. 6. If you have a binding arbitration provision, you may consider representing yourself. These proceedings are much more informal and the arbitrator tends to give you more leeway. There are also fewer rules and not they are usually not quite as strict. 7. You could consider representing yourself but get advice along the way from a lawyer. It is much cheaper that way. On the other hand, the lawyer cannot watch over Page 9 of 10
every move and you might slip up. Many times lawyers can also help you with preparing the forms, simply putting your name on the pleading. You can also bring in your lawyer at the end to actually try the case. 8. Judges and courts do not give legal advice. They only help you with what forms to use. However, clerks can be invaluable in steering you in the right direction as far as where to file, time limitations, the nature of the form or pleading, etc. But, remember when it comes right down to the ultimate advice, they cannot help you. 9. Judges usually treat you the same as an attorney which means they expect strict compliance with the rules. Although some judges give you more slack, don t count on it. 10. The biggest dilemma is whether you should hire an attorney for a smaller case, typically in the $5,000 to $10,000 range. You have to watch this because you may eat up that amount in attorney s fees. You never make money on lawsuits, only lawyers do. Try to settle for the best price you can get and move on. Prepared by: Thank you for your business. Page 10 of 10