The Construction Advantage – Issue 18

Bonding Off A Lien In ME – It’s Time For A New Statute

With the recovering economy, there is certainly more construction work going on, and that tends to lead to more fights over people getting paid, and many times, the recording of mechanics liens on projects. Parties can agree to “bond off” a lien, meaning that they agree to use a surety bond as substitute security for the security that a mechanics lien provides. This is very commonly done in ME. However, when a litigant will not agree to do it voluntarily, resort must be had to an antiquated ME statute that hasn’t yet been updated to square with the speed of today’s commerce.

The statute, 10 M.R.S.A. 3263, is entitled “Petition for Release.” It requires an owner who has a mechanics lien against its property to petition the court in the county in which the lien is placed, listing the name of the lienor, the county in which the action is pending, the fact that a lien is being claimed, and that the owner desires to be released from the lien. The court then issues a notice calling for a hearing to be held no earlier than 10 days after the notice, and that notice is served on the lienor or its counsel. At the hearing, the court can order that a surety bond in the appropriate amount can be substituted for the mechanics lien, assuming that the bond indicates that payment on the bond will occur within 30 days after final judgment in the case. The clerk of the court then provides the petitioner (the owner) with an attested copy of the petition and order for substitution, and then the owner records the petition and order in the registry. The order operates to vacate the mechanics lien.

There are several problems with this statute. First, it is time consuming, which can be problematic if a real estate closing is right around the corner. Second, the owner must file the petition, but, in the construction industry, owners usually look to general contractors to take care of subcontractor and supplier mechanics lien claims. Third, it requires action by the courts, which are already overburdened and understaffed. Fourth, there are usually fights over the language of the bond, or the amount, and these do not get resolved until the hearing, which then requires the owner to go back and amend or redo the bond it already has. Finally, the statute technically requires that the lienor have filed a complaint in court, but they may be at the stage when they only have had to record the lien certificate in court, and the owner cannot force the mechanics lienor to file the lawsuit before it has to do so.

This statute hasn’t been amended since 1981, and certainly doesn’t reflect the realities and speed of today’s marketplace and commerce. There are several alternatives, including the system in Massachusetts that simply requires the recording of a bond that matches the language provided by the Massachusetts statute. The statute decrees that upon recording of the bond, the lien is dissolved by operation of law. The lienor gets adequate substitute security, and the owner is freed of the encumbrance on its property. Whether this alternative is adopted or another is chosen, it’s time for ME to update its antiquated “bond off” statute, for the sake of the construction industry and its participants.

How to Comply with Affordable Care Act’s Employer Mandate
by Steve Gerlach

With Affordable Care Act compliance and reporting deadlines looming, construction firms may find themselves in a quandary over how the ACA may apply to them and what their exposure might be.   With over 20,000 pages of regulations and other guidance, the ACA is enormously complex and the stakes for businesses can be very high.  In addition, a construction firm is often organized differently from many other businesses, relying on seasonal and part-time employees to supplement the year-round workforce during busy periods, and also relying on staffing companies to fill in the gaps.  These differences can lead to a higher exposure to ACA penalties for construction firms, and create additional administrative burdens to comply with the law. 

I recently wrote an article for MEbiz detailing some of the issues companies might run into when dealing with the ACA. Click here to read the full article. The ACA can be a real trap for some employers; especially those like construction firms whose workforce fluctuates throughout the year. Don’t be caught off guard!