Thursday, May 20, 2010

Hawaii Mechanics Lien Procedures

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

As for who can file a Hawaii mechanics lien claim, contractors, as well as subcontractors, design professionals, sub-subcontractors and material suppliers can file a Hawaii mechanics lien.

In most states, prior to filing a mechanics lien, preliminary or "pre-lien" notices are required.  However, Hawaii does not require that pre-lien notices be provided prior to filing a Hawaii mechanics lien.

That does not mean that Hawaii's mechanics lien filing process is easier than other states.  There are certain time limitations that apply to the filing of a Hawaii construction lien, and the claimant must attend a hearing to establish the mechanics lien claim.  In Hawaii, the filing of a formal Application for a Lien and Notice of Lien must be filed within forty five days after the date of completion of the improvement. A hearing is held not less than three nor more than ten days after service of the Application and Notice. At the hearing, the court will determine whether probable cause exists to permit a Hawaii Mechanics Lien to attach. Note that Lienitnow.com does not attend the hearing, but only files the Application and Notice. You will need to attend the hearing to validate your Hawaii mechanics lien claim.

Keep in mind that Hawaii does require that, in order to file a Hawaii Mechanics Lien, the lien claimant must have a contract.  However, Hawaii does not require written contracts in order to file a Hawaii Mechanics Lien. Oral contracts are sufficient.

Filing a mechanics lien claim is a great way to protect your accounts receivables because on a private project, the Hawaii mechanics’ lien places an encumbrance on the property that makes it difficult to resell or re-finance the property without first removing the mechanics lien.  On a public project, the Hawaii mechanics lien freezes the money owed to you so that the public entity cannot distribute it to the person that is not paying the lien claimant.

In addition to Hawaii mechanics lien claims, LienItNow.com also provides other methods for collecting money that is owed on a construction project.  These other services include the provision of Stop Notices and Bond Claims.

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.

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 Hawaii Construction Lien, a Hawaii Mechanics Lien, a Hawaii Stop Notice, a Hawaii Bond Claim, or a Hawaii pre-lien notice, please visit http://www.lienitnow.com/Hawaii-faq.asp.

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