Oregon Lien Law Summary

PUBLIC WORKS

(279C.100 et seq., 279A.010, 701.420 et seq., 742.061)

Construction, reconstruction or major renovation on real property by or for a public agency. Contracts for personal services as well as for the sale, purchase, lease, rental or other acquisition of personal property, services other than personal services, and minor alterations, repair and maintenance are now covered by bond laws as well. Privately owned property that is leased by a public agency is not covered. NOTE that on projects involving the Oregon University System, claimants do not have the right to a claim against retainage. [279A.010; 279C.800; 351.086]

Supplier of labor, materials or supplies to contractor or sub of any tier. Contractors must be licensed with the Oregon Construction Contractors’ Board to bring a claim. The rules for architects, engineers, and land surveyors are not discussed here; see 279C.110. [279C.100 et seq.; Cushman at §38.03[B][2]; 279C.600]

What is the lien against?

are now specific license endorsements that contractors, subcontractors and developers must have in order to bid or work on residential, small commercial and large commercial projects. Contractors and subcontractors must be licensed with the Construction Contractors’ Board to enforce a lien, and contractors must hire licensed contractors and subs that have the proper endorsement for the work they are hired to do. Note that developers may not perform any construction work on a property. NOTE that the definition of a contractor now also includes a person who purchases or owns property and constructs or arranges for the construction of one or more residential or small commercial structures with the intent of selling the structures, as well as a school district or community college district that has students build a structure in order to learn building techniques, and then sells the structure. To have lien rights, the contractor or subcontractor must be licensed or endorsed for the work performed. In addition, on a project exceeding $2,000 that is either a residential structure or a zero-lot-line dwelling, the original contractor must have a written contract with the owner, or the contractor will not have lien rights. [87.010; 87.037; 701.005; 701.055; 701.065; Cushman at §§38.01, 38.02[A]; G. Zanello & Son v. Portland Cent. Heating Co., 70 Or. 69, 139 P. 572 (1914)]

The improvement and land required for convenient use. [87.010, 87.015]

NOTE that a contractor or subcontractor’s lien is limited to their contract amount. [87.070; L.H. Morris Elec., Inc. v. Hyundai Semiconductor America, Inc.,125 P.3d 1, 203 Or.App. 54 (2005)]

There are provisions for bringing a claim against the contractor’s license surety bond, but these are not discussed here. [701.139 et seq.]

The contractor's or sub's payment bond 279C.380, 279C.600] Retainage may be withheld, but there are no provisions for subcontractors or suppliers to collect from it. But retainage is not required to be withheld on a project for the Oregon University System. [701.420-701.430, 279C.550, 279C.555; 351.086] A subcontractor or supplier may make a claim against the contract funds, except on projects involving the Oregon University System. [279C.515; 351.086] Before beginning work on a project, contractors and subcontractors are also required to post a public works bond in the amount of $30,000 with the Construction Contractors Board, to pay all claims ordered

Not applicable.

Not applicable.

How must preliminary notice be given?

Who must give final notice?

To whom is final notice given?

above. They are separate and in addition to the preliminary notices discussed here. See the Special contractual notices on residential projects section, above.

Notice of Right to Lien: (Residential AND Commercial) See Form A, attached. There is no requirement of a signature on this form. [87.023]

Information Notice to Owner: This form is to be prepared by CCB, and should be obtained from it. It must now include signature lines for the owner and the contractor. [87.093]

NOTE that on residential projects there are now several notices to be given with or in relation to the contract on residential projects, which are discussed immediately above. They are separate and in addition to the preliminary notices discussed here. See the Special contractual notices on residential projects section, above.

Notice of Right to Lien: (Residential AND Commercial) Personal delivery or by registered or certified mail, return receipt requested. [87.018]

Information Notice to Owner: Same as above, or via first class mail with a Cer- tificate of Mailing. [87.093]

All claimants must file claim of lien AND give notice that claim was filed. [87.035, 87.039]

All original subcontractors and subcontractors who intend to either suspend performance based on nonpayment, or terminate a contract based on suspended performance that has continued for at least 30 days. NOTE, however, that these provisions do not apply where the project is a low-rise (3 stories or less above grade) one- or two-family dwelling, where it is a public project, or where it involves low- income housing. [701.635]

1)Claim of lien: County recorder where improvement located. [87.035]

2)Notice that claim was filed: Owner, mortgagee, and anyone with a recorded security interest in the property. [87.039;

Not applicable.

All claimants. [279C.605]

BOND CLAIM: READ THIS ENTIRE PARAGRAPH. To the Contractor supplying the bond, to the subcontractor if applicable, and to the public body or state agency that LET the contract, which may not be the same

Cushman at §38.04[D]]

3) Claimants suspending performance or terminating contract:

-Original contractor: Owner. -Subcontractors: Original contractor and owner. [701.635]

as the agency where the work is being done. [279C.605]

CLAIM AGAINST CONTRACT FUNDS: No specific procedure, but if a contractor or first-tier subcontractor fails or refuses to promptly pay someone furnishing labor or materials on the project, then the officers of the public body may pay the claimant and charge the amount paid against the funds due or to become due to the contractor. In addition, if the contractor or first-tier sub fails or refuses to pay their labor or materials suppliers within 30 days after receiving payment from the contracting agency or the contractor, then, unless the payment is subject to a good faith dispute, they also owe the claimant interest, which is not waivable. Finally, if the contractor or first-tier subcontractor fails or refuses to promptly pay the claimant, unless the payment is subject to a good faith dispute, the claimant may file a complaint with the Construction Contractor’s Board. NOTE, HOWEVER, that no claim against the contract funds is allowed on a project for the Oregon University System. [279C.515; 351.086]

BOND CLAIM: For projects first advertised or, if not advertised, commencing on or before May 25, 2009, notice must be sent within 120 days after claimant last provided labor or materials (150 days for contributions to an employee benefit plan). For projects first advertised or, if not advertised, commencing on or after May 26, 2009, notice must be sent within 180 days after claimant last provided labor or materials (200 days for contributions to an employee benefit plan). [279C.605]

CLAIM AGAINST CONTRACT FUNDS: No specific date. The contractor is required to pay its subcontractors promptly after the contractor has been paid. Notice should not be given during that period. If the claimant is not paid within 30 days after the contractor (or subcontractor) has received payment for the claimant’s work or materials, then the contractor or first-tier subcontractor is obligated to pay interest. All of these deadlines assume that the

within 74 days after work ceases. There are statutory requirements for the notices of abandonment and nonabandonment that are not discussed here. [Cushman at §38.04[C][2]; 87.045]

NOTE ALSO that a mortgagee may demand a list of those materials or supplies including a statement of the amount due by reason of delivery thereof. Claimant must provide this information, using a method that establishes proof of delivery, within 15 business days of receipt of the demand, or its priority over prior mortgages and encumbrances will be deemed waived. Failure to provide other requested information could result in the loss of attorney’s fees and costs. See Special Notes, below. [87.025(4), 87.027]

Claim of lien by trust funds: Within 75 days after completion of construction. [87.035]

Notice that claim was filed: Mailed within 20 days of filing claim, and must include copy of claim of lien. [87.039]

Notice that claimant is suspending performance or terminating contract:

Original contractor: At least seven days before suspending performance or terminating the contract, unless a shorter period is specified in the contract.

Subcontractors: Where the notice is given because of nonpayment by the owner or because of suspended performance that has continued for at least 30 days, the notice must be given at least three days before suspending performance or terminating the contract, unless a shorter period is specified in the contract. Where the notice is given because either the original contractor has been paid but has not timely paid the sub, or the owner has refused to pay the original contractor for the sub’s work for reasons that are not the fault of or directly related to the sub’s work, then the sub needs to give at least seven days’ notice. [701.635]

Contents of final notice? Claim of lien (must be under oath): -Statement of demand, less credits and offsets (BUT NOTE that a contractor or subcontractor’s lien is ultimately limited to their contract amount.) [87.070; L.H.

nonpayment is not due to a good faith dispute. Note that the complaint to the CCB cannot be filed until more than 30 days have passed since the contractor was paid, and the claimant remains unpaid. Remember, no claim against the contract funds is allowed on a project for the Oregon University System [279C.515; 351.086]

BOND CLAIM: See Form B, attached. The notice is to be signed “by the person making the claim or giving the notice.” While the case law pertaining to earlier versions of the statute allows the claimant’s

attorney to sign, it is unclear whether the claimant’s attorney qualifies as the person “giving the notice”, thus it is recommended that the claimant sign the form for claims. [State ex rel. Town Concrete Pipe, Inc. v. Andersen, 264 Or. 565, 505 P.2d 1162 (1973); Cushman at §38.03[B][3]. 279C.605]

CLAIM AGAINST CONTRACT FUNDS: No specific provisions.

BOND CLAIM: Registered or certified mail or hand delivered. [279C.605]

CLAIM AGAINST CONTRACT FUNDS: No specific provision.

BOND CLAIM: Within two years after claimant last provided labor or materials.

[279C.610]

MUST wait 6 months from filing the proof of loss before foreclosing in order to recover attorney fees and costs from the surety. (See “Are attorney’s fees allowed” section, below.) If there is some other basis for a recovery of attorney’s fees from the claimant’s customer or the prime contractor, then the claimant need not wait 6 months to file suit against the customer or the prime contractor. [742.061]

CLAIM AGAINST CONTRACT FUNDS: No specific provision.

Not applicable.

Yes, BUT they are only allowed where the surety fails to pay within 6 months of re- ceiving the plaintiff’s proof of loss, AND where the plaintiff’s recovery exceeds the amount tendered by the surety. BOTH circumstances must occur for an award of fees. NOTE ALSO that attorney’s fees may be awarded to the surety where the claimant’s recovery is LESS than the amount tendered by the surety. [742.061; Cushman at §38.03[B][4]].

They are also allowed to the prevailing party where a general contractor brings an action against the public body to recover interest. [279C.570]

NOTE that prejudgment interest may be awarded on the amount recovered at trial.

(1)Orders resulting from claims by a person furnishing labor to a contractor or who is owed employee benefits by a contractor.

(2)Amounts due as a result of all other types of small or large commercial structure

[Konen Const. Co. v. U.S. Fid. & Guar. Co., 234 Or. 554, 380 P.2d 795 (1963), aff’d on other grounds, 240 Or. 295, 501 P.2d 48

(1965)]

NOTE ALSO that where a general or sub fails to pay their subs or suppliers within 30 days of receiving payment, they must pay interest, which may not be waived, in an amount up to 30% per annum. [279C.515]

Yes. [279C.600]

Labor and materials liens are preferred to all other liens. [279C.615]

No specific provision.

1) If contractor does not pay for labor, services or materials, and the public body neglected to require the contractor to post a bond, the state or public body and the officers authorizing the contract are liable for the labor, materials, etc. [279C.625]

2) All public contracts must contain a condition that the contractor and first tier subcontractor will pay their suppliers of materials or labor within 30 days of receiving their payment (except where there is a bona fide dispute), or else must pay the principal plus interest, and the unpaid party can file a complaint with the Construction Contractors Board. The interest amount cannot be waived. [279C.515]

3) Where a payment is paid late by the public

receiving demand. Claimant needs proof of service or certified or registered mail receipt. Failure to cooperate results in loss of attorney's fees and costs. In addition, a mortgagee may demand a list of those materials or supplies including a statement of the amount due by reason of delivery thereof. Claimant must provide this information within 15 business days of receipt of the demand, delivered using a method that provides proof of delivery, or its priority over prior mortgages and encumbrances will be deemed waived. [87.027, 87.025(4)]

3)There is a provision for retainage on private works jobs, but there is no provision for others to recover against it. [701.410]

4)There are now special rules and forms as to when the owner must pay the contractor its progress payments, when a job runs longer than 60 days. If the owner wishes to have a billing cycle other than every 30 days, or to be required to make the payments within more than 14 days after receiving the billings, then there are certain forms that must be used, which are not attached to this summary. Subs and suppliers are required to pay their subs and suppliers within 7 days after receiving payment. If they are not timely paid, interest at the rate of 1.5% per month may be charged. [701.625 – 701.640]

5)There are now continuing education requirements for all contractors and subcontractors licensed by the Construction Contractors Board. [701.126]

body, and not because of a bona fide dispute, interest is to be paid automatically. [279C.570]