Wednesday, April 28, 2010

Rules for Vermont Mechanics Liens

Liens filed on private property or on funds relating to a public project are known as Mechanic’s Liens. In Vermont, when a construction lien is filed with regard to work performed on privately owned property, it attaches to and encumbers the fee simple ownership of property.

Contractors, as well as subcontractors, sub-subcontractors and suppliers who have a contract with a general contractor or a subcontractor can file a Vermont mechanics lien.

Unlike other states, Vermont does not have a system requiring claimants to file a pre-lien notice prior to actually filing a lien.  The absence of this step does make it easier to file a mechanics lien claim in compliance with the law.

With regard Vermont Mechanics’ liens, if the property on which the mechanics lien is to be filed is on private property, the lien must be filed within 180 days of the last date the lienor provided materials, labor or services to the Project.

You must have a contract to file a Vermont construction lien.  However, the contract need not be in writing; oral contracts are sufficient if you have sufficient documentation to show the existence of an agreement or that you performed the work for which you are liening.

Filing a mechanics lien can help you get payment.  On a private project, the mechanics’ lien places an encumbrance on the property that makes it difficult to resell or re-finance the property without first removing the lien.

Another way to obtain payment is to file a Stop Notice.  A Stop Notice is a notification that has the ability to enhance the effectiveness of a mechanic’s lien. A Stop Notice, or a notice to withhold funds, is sent to the company that is financing or funding the construction funds for a project. Once that company receives the Stop Notice, that company has notice that it should withhold sufficient money to satisfy the stop notice claim. The purpose of the Stop Notice is to provide the lender, financiers or funders of the construction project notice that there is money owed to a contractor, subcontractor or supplier so that an inquiry can be made as to why that money is not being paid.

On public projects, mechanics liens are generally not permitted.  However, on most public projects, State law requires that the general contractor post a payment bond at the beginning of the Project.  Bond claims can only be filed on a project where the owner, contractor or subcontractor has obtained a payment bond to ensure that every contractor receives payment for the work performed on the Project.  The payment bonds issued by sureties for construction projects have specific timing requirements, but most require claimants to submit claims against the bond within sixty to ninety days from the claimants’ last date of work.  Bond claims are as or more effective than a lien claim because the payment bond acts as a guarantee that payment will be made for work properly completed.

For more information on filing a Vermont Construction Lien, a Vermont Mechanics Lien, a Vermont Stop Notice, a Vermont Bond Claim, or a Vermont pre-lien notice, please visit http://www.lienitnow.com/connecticut-faq.asp.

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