HOW TO FILE A DELAWARE MECHANICS LIEN (Delaware Mechanics Lien and Notice Requirement Overview)
Mechanics liens are a crucial component of the construction payment ecosystem, and a powerful tool to make sure construction companies get paid what they deserve. However, the requirements surrounding mechanics liens and notices are complex and confusing. This guide sets out and simplifies the rules
Who Can File?Delaware law provides mechanics lien rights (Statement of Claim) to any party that supplies "labor or material, or both, to an amount exceeding $25 in or for the erection, alteration or repair of any structure." Liens may also be obtained for services or materials provided "in plumbing, gas fitting, paper hanging, paving, placing iron works and machinery of every kind in mills and factories, bridge building, the erection, construction and filling in of wharves, piers and docks and all improvements to land by drainage, dredging, filling in, irrigating and erecting banks and the services rendered and labor performed and materials furnished by architects."
If the mechanic's lien rights are based solely on improvement to land, and not a structure thereon, strict requirements apply. In order for such a lien to be valid, "there must be a contract in writing, signed by the owner... setting forth the names of all parties to the contract and containing a description by the metes and bounds of the land to be affected and by a statement of the general character of the work to be done, and of the total amount to be paid thereunder, and the amounts of the partial payments, together with the time when such payments shall be due and payable."
Rental equipment providers and suppliers to suppliers do not have mechanics lien rights in Delaware.
Finally, Delaware does not require a lien claimant to hold any particular license.
PRELIMINARY NOTICEDelaware is typically a non-notice state, and as such, there are no requirements to send any preliminary notices or to send any notices of intent to lien.
It may be good practice, however, to inform interested parties of your involvement on the project, in order to provide visibility and to prompt appropriate payment.
FILING A MECHANICS LIENIn Delaware, filing a lien is generally tied to the suit to enforce, and accordingly, requires a court filing to initiate the claim.
Contents of a Delaware Mechanics Lien
The complaint and/or statement of claim shall include:
1. The name of the plaintiff or claimant;
2. The name of the owner;
3. The name of the contractor and the name of the hiring party;
4. The amount claimed to be due.
5. The time when the doing of the labor or the furnishing of the materials was commenced;
6. The time when the doing of the labor or the furnishing of the material or the providing of the construction management services was finished.
a. For general contractors, the date of the completion of the structure, including a specification of the act or event upon which the contractor relies for such date, and
b. For all other parties, the date that labor was performed or materials were furnished, or a specification of such other act or event upon which such person relies for such date.
7. The location of the structure with sufficient description;
8. That the labor was done (or materials were furnished or services were provided) on the credit of the structure;
9. The amount of plaintiff's claim and that neither this amount nor any part thereof has been paid to plaintiff; and
10. The amount which plaintiff claims to be due him on each structure.
11. The time of recording of a first mortgage (or a conveyance in the nature of a first mortgage) upon such structure which is granted to secure an existing indebtedness or future advances provided at least 50% of the loan proceeds are used for the payment of labor or materials, or both, for such structure.
The complaint and/or statement of claim shall also be supported by the affidavit of the plaintiff-claimant that the facts therein are true and correct.
Delaware mechanics liens must be accompanied by an affidavit of the lien claimant stating that the information contained therein is true and correct. The affidavit must be verified, but not necessarily notarized. It is not sufficient for this purpose to claim that the information is true and correct "upon information and belief" or "to the best of knowledge."
If the amount is not fixed by the contract, a statement of the nature and kind of the labor done or materials furnished with a bill of particulars annexed, showing the kind and amount of labor done or materials furnished or construction management services must be provided. If the amount claimed to be due is fixed by the contract, then a copy of the contract, including all modifications or amendments, shall be attached.
Attorney's fees and consequential damages are not allowed as part of a lien claim in Delaware. However, if there is an agreement between the parties that attorney's fees can be recovered, they might be allowed.
DEADLINESDeadline to File
The deadline to file a Statement of Claim depends on whether the claimant has a direct contract with the owner of the property. A lien claimant who is in a direct contractual relationship with the owner or reputed owner of the property must file his Statement of Claim within 180 days after the completion of the structure. However, Delaware law notes that a Statement of Claim is filed timely if it is filed within 180 days of any of 9 separate dates outlined by 25 Del. C. ? 2711, some of which may not occur until well after the structure is completed.
For a lien claimant who has not contracted directly with the owner of the property, the Statement of Claim must be filed within 120 days of the date the lien claimant last supplied materials or performed labor. However, the Statement of Claim is deemed timely if it is filed within 120 days of the date final payment is due to the lien claimant (including all retainage), or within 120 days of the date final payment is made to the general contractor who contracted directly with the owner and the lien claimant.
Special care should be taken when a potential lien claimant contracts with the tenant of a property. Because that potential lien claimant has not contracted directly with the owner, the 120 day period applies.
Deadline to Enforce Lien
In Delaware, the action to enforce the lien is generally incorporated with the filing of the Statement of Claim itself.
Notice of RecordngDelaware law requires that notice must be sent when a Statement of Claim is filed. A lien claimant is required to send a Notice to Lien Holders to everyone who holds a lien on the property subject to the action, as well as to any tenants holding a leasehold interest. This notice must be sent by certified mail return receipt requested. Further, a lien claimant is required to furnish a Writ of Scire Facias. If the lien is on an occupied residence, a copy of the Writ must be left with a person residing in the residence. If the structure is not an occupied residence, the sheriff will affix a copy of the Writ to the door or other front part of the structure.
CONCLUSIONA mechanics lien can be a powerful tool to get paid on construction projects. But, the efficacy of the tool is dependent on the lien being valid. Following the necessary notice requirements and procedures from the beginning of the project, and following the lien filing rules in order to make sure the lien is valid greatly increase a lien's ability to result in payment.
A potential lien claimant should make sure to give careful attention to the requirements if filing themselves, utilize software products to manage lien rights as an intermediate step, or obtain assistance from attorneys if they need legal guidance or assistance.