Oregon’s law regarding construction liens is expressly written to protect the owner and mortgagees of property by insuring that they are adequately informed of the existence and status of liens through a series of notice requirements. Oregon has the most extensive notice requirements in the Pacific Northwest. These notices are required at various stages of construction; therefore, we recommend that the individual charged with tackling the relevant time periods maintain a check list to assist him or her in keeping the relevant dates and notice periods under control. This document is intended only as an outline of the construction lien notice procedure. Should you decide to undertake more aggressive efforts aimed at enforcing your company’s construction lien rights, we would be pleased to assist the individual charged with this effort on behalf of your company to establish in house procedures.
Information Notice to Owner.
The Information Notice to Owner is a means of warning owners about the lien law, and it only applies to residential property. This notice attempts to describe the Oregon Lien Law in clear, nontechnical language.
This notice must be delivered to the owner of a property for which your company has agreed to install any products at the time it enter a contract to do so if:
The property is residential property; and
The total value of the labor, products, materials and other services will be more than $1,000.
Property is considered residential property even if there is no home on the land if it is zoned as residential property. If your company is required to deliver this notice, but fails to do so, it may not claim any lien under Oregon law for any performance provided under that contract.
Notice of Right to Lien.
The Notice of a Right to Lien must be delivered to the owner of property for which your company has agreed to install any products if it is employed by a contractor or agent of the owner and not by the owner himself. An exception to this requirement is applicable if your company is installing equipment on property that is intended to be used as commercial property. In such a case, a Notice of Right to Lien need not be delivered. Remember, Oregon law does not require the delivery of a notice of the right to a lien when it is the owner of the property who requests work.
When your company is required to deliver this notice, it need only insure that the notice is handed to the actual owner of the property, however, it is always better to send a copy via registered or certified mail so that proof exists that the notice was delivered. When required, this notice must be delivered to the owner before the work is completed. The notice may be delivered at any time during the course of the improvement, but will only protect the right to perfect a lien for materials, equipment, labor and services provided after eight business days prior to the date the notice is delivered or mailed. For this reason, it is best to deliver the notice within eight days after work has commenced.
After receiving the Notice of Right to Lien, the owner has a right to demand a list of materials supplied by your company and a description of the services supplied by the company or a statement of the basis of the contract to perform any work on the owners property. If your company receives such a demand, it must replY to the owner within 15 business days of its receipt of that demand.
If your company is providing materials or services for a commercial improvement and fails to deliver the Notice of Right to Lien when required, or if there is no reply to a demand for information following the notice, your company will not lose its right to a construction fee, but will be penalized by the forfeiture of the right to recover attorney fees and costs. If your company is providing materials or services for a residential building and fails to deliver the Notice of Right to Lien when required, it will not be able to perfect the lien. Therefore, we strongly recommend that this notice be delivered even if you feel the company will be paid promptly under a contract, to protect it in the event the property owner does not pay.
Claim of Lien
If the work required under a contract has been completed, but your company has not been paid in full, it may file a Claim of Lien (provided it delivered an Information Notice to Owner, if one was required) and record it at the Lane County Records Office (or the records office in the county where the property is located). Your company must file a claim of lien within 75 days of the date the work is complete.
Notice of Filing a Claim of Lien.
Within 20 days after a Claim of Lien has been filed, you must mail a notice to the owner and all mortgagees over that piece of land to inform them that the claim has been filed. If you are unable to determine the identities of all the owners and all the mortgagees of a given property, our office will be able to assist you in the matter.
A copy of the Claim of Lien must be attached to each Notice of Filing a Claim of Lien. It is recommended that this notice be sent by registered or certified mail. If you fail to file this Notice of Filing a Claim of Lien, the lien will still be valid, however, your company will not be entitled to any costs, disbursements, or attorney fees that will be otherwise available to it in reclaiming monies owed to it under a given contract. Once a Claim of Lien has beEn filed, your company has only 120 days to enforce its rights through a foreclosure action or the lien will be automatically discharged.
Notice of Intent to Foreclose.
Oregon law requires your company to deliver a Notice of Intent to Foreclose to all the record owners of the property and all record mortgagees a minimum of 10 days prior to a foreclosure action. A foreclosure action must be filed within 120 days of the date a Claim of Lien is filed or your company will lose its right to do so. Therefore, the Notice of Intent to Foreclose must be delivered no later that 109 days following the date that a Claim of Lien is filed. The purpose of this notice is to give the owner the opportunity to avoid the foreclosure of his property by paying the lien and to give the mortgagee the opportunity to take whatever steps are possible to protect its security.
This notice also should be sent via registered or certified mail. The notice must clearly state that your company intends to commence a lawsuit to foreclose its lien. Your company will lose its right to obtain the costs and attorney fees it incurs in collecting the debt from the property owner if it does not closely follow the notice procedure.
After receiving a Notice of Intent to Foreclose, an owner is entitled to demand a list of materials and supplies or a statement of the contractual basis of his obligation that is to be the subject of the suit. Your company must respond to any such demand within 5 days of its receipt of the demand.
Small Claims Proceeding.
If the total cost of the services, products, and materials provided under a given contract is less than $2,500, your company can attempt to recover the value of its services, products and materials by going through the Small claims process.
Lawsuit for Breach of Contract.
In any event, we recommend that you ensure that any person or entity for which your company chooses to provide services or sell products enters a written agreement containing a description of the services and materials to be supplied, the purchase price and payment terms, and a provision for the recovery of attorney fees and costs in the event your company is forced to commence any collection proceedings. Oregon contract law is far less technically complex than the Oregon construction lien law and your company will be able to recover attorney fees under such a contract (and interest charges, if included in the agreement), even if it would be prohibited from doing so under Oregon construction lien law, due to a failure to comply with a given notice requirement.
It is easy to see why so many construction liens fail, based on one technicality or another. However, if you carefully follow these guidelines and utilize the standard forms for notices to be delivered, you will be able to protect your company’s rights in most situations. If you have any questions any step along the way, please do not hesitate to contact our offices for adviCe on how your company should proceed.