Print Friendly SENATE BILL NO. 1411 – Liens, residential property
SENATE BILL NO. 1411
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S1411.......................................by COMMERCE AND HUMAN RESOURCES
LIENS - RESIDENTIAL PROPERTY - Adds to existing law to govern application
of mechanics' and materialmen's liens to residential property by limiting
the time when liens apply and to provide for release of frivolous or
02/06 Senate intro - 1st rdg - to printing
02/09 Rpt prt - to Com/HuRes
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fourth Legislature Second Regular Session - 1998
IN THE SENATE
SENATE BILL NO. 1411
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO MECHANICS' AND MATERIALMEN'S LIENS; AMENDING CHAPTER 5, TITLE 45,
3 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 45-525, IDAHO CODE, TO PRO-
4 VIDE FOR AVOIDANCE OF DOUBLE PAYMENT FOR RESIDENTIAL REAL PROPERTY
5 IMPROVEMENTS, EXCEPT FOR HOURLY WORKER WAGES AND WHEN CERTAIN LIENS OR
6 NOTICES ARE FILED; AND AMENDING CHAPTER 5, TITLE 45, IDAHO CODE, BY THE
7 ADDITION OF A NEW SECTION 45-526, IDAHO CODE, TO PROVIDE PROCEDURES FOR
8 THE REDUCTION OR RELEASE OF FRIVOLOUS, EXCESSIVE OR INVALID LIENS.
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. That Chapter 5, Title 45, Idaho Code, be, and the same is
11 hereby amended by the addition thereto of a NEW SECTION , to be
12 known and designated as Section 45-525, Idaho Code, and to read as follows:
13 45-525. RESIDENTIAL PROPERTY -- LIEN CONDITIONS. (1) This section applies
14 only to residential real property occupied or to be occupied by the owner as
15 his primary or secondary residence. It applies to labor or services, including
16 professional services, performed upon or in connection with the property,
17 including improvements thereon, and to the furnishing of materials to be used
18 in the construction, alteration or repair of such property and improvements
19 thereon, all within the meaning of section 45-501, Idaho Code. The term
20 "owner's contractual obligations," as used in this section, means the amount
21 the owner or prior owner of real property has agreed to pay for the property
22 and any improvements thereon, or the amount the owner or prior owner has
23 agreed to pay for labor, service and materials performed or to be performed or
24 used or to be used in the construction, alteration or repair of the real prop-
25 erty or improvements thereon. Except as provided in subsections (2) and (3) of
26 this section, if the owner or prior owner has paid the owner's contractual
27 obligations, there shall be no lien rights against the real property under
28 this chapter, anything to the contrary in this chapter notwithstanding.
29 (2) The provisions of this section shall not apply to claims of lien for
30 unpaid hourly wages filed by workers for their work done in the construction,
31 alteration or repair of the real property or improvements thereon.
32 (3) The provisions of this section shall not preclude the enforcement of
33 a lien against the property by a claimant who, before the owner's contractual
34 obligations have been fully paid, (a) has timely filed and served a claim of
35 lien pursuant to section 45-507, Idaho Code, or (b) prior to or within twenty
36 (20) days after the date of commencement of his furnishing labor or services
37 to be performed upon or in connection with the property, or furnishing of
38 materials to or for the improvement of the property, has filed in the office
39 of the recorder of the county or counties wherein any part of the real prop-
40 erty is located, a notice substantially in the form specified in this subsec-
41 tion. The notice shall be in writing, subscribed and sworn or verified by oath
42 or acknowledged by the claimant or his agent or attorney before a notary pub-
43 lic or other duly authorized officer, stating that the claimant has furnished
1 or is about to furnish labor, services or materials to or for the improvement
2 of the property, describing the real property sufficiently for identification,
3 specifying the names and addresses of the claimant and the parties with whom
4 the claimant has contracted or is about to contract and stating the general
5 nature of the contract or arrangement with such parties. Provided however,
6 that the claimant referred to in this subsection (3) shall also timely file
7 and serve a claim of lien pursuant to section 45-507, Idaho Code.
8 (4) If the amount of the owner's contractual obligations has not been
9 fully paid and the remaining balance is not sufficient to satisfy all liens
10 filed, or potential liens referred to in subsections (2) and (3) of this sec-
11 tion, to be filed against the property, then, in such event, the unpaid bal-
12 ance of the owner's contractual obligations shall be paid to lien claimants in
13 the order of priority specified in section 45-512, Idaho Code.
14 SECTION 2. That Chapter 5, Title 45, Idaho Code, be, and the same is
15 hereby amended by the addition thereto of a NEW SECTION , to be
16 known and designated as Section 45-526, Idaho Code, and to read as follows:
17 45-526. PROCEDURES FOR RELEASE OR REDUCTION OF FRIVOLOUS, EXCESSIVE OR
18 INVALID CLAIMS OF LIEN. (1) The debtor or purported debtor or the claimant of
19 a lien claimed pursuant to section 45-501, Idaho Code, or a party in interest
20 in the real property described in the claim of lien, who believes the claim of
21 lien to be frivolous or asserted without reasonable cause, or that the amount
22 claimed is excessive, or that there is a defense to the enforcement of the
23 lien pursuant to section 45-525, Idaho Code, may apply by motion to the dis-
24 trict court in and for the county in which the real property or some part
25 thereof is located for an order directing the lien claimant to appear before
26 the court at a date and time certain, to show cause, if any he may have, why
27 the relief requested in the motion should not be granted. The motion shall set
28 forth the relief requested and the grounds therefor and shall be supported by
29 the affidavit or affidavits of the applicant or his agent or attorney contain-
30 ing a clear statement of the facts upon which the motion is based. The court
31 shall set the hearing date on the motion on an expedited basis, allowing time
32 to effect service upon the lien claimant at least ten (10) days before the
33 hearing date. The court shall conduct a hearing on the motion within twenty
34 (20) days after the date of issuance of the order or amendment thereto, or at
35 the earliest practicable later date.
36 (2) If the court issues an order for a hearing, the applicant shall cause
37 true copies of the order and any amendment thereto, the motion and the
38 affidavit(s) to be served upon the lien claimant at least ten (10) days prior
39 to the date of the specified hearing date. Proof of service shall be filed
40 promptly in the clerk's file of the proceeding.
41 (3) The order for a hearing shall include a statement to the effect that
42 if the lien claimant fails to appear at the time and place noticed, or if the
43 relief requested is granted following the hearing, the lien claim will be
44 released with prejudice, or modified, and that the lien claimant may be
45 ordered to pay the applicant's costs including reasonable attorney's fees.
46 (4) If, at the time the motion is filed, an action is not then pending
47 for foreclosure of the lien, the clerk shall collect the applicable fee for
48 filing a petition to release a common law or other lien, shall assign a new
49 case number to the motion, and shall file the motion and related papers in the
50 new case file.
51 If, at the time the motion is filed, an action for foreclosure of the lien
52 is pending in which the applicant is or is made a party, the applicant shall
53 pay the applicable filing fee, and the motion and related papers shall be
1 filed in the pending action.
2 (5) If, after a hearing on the motion, the court determines that:
3 (a) The claim of lien is frivolous or made without reasonable cause, the
4 court shall enter an order releasing the lien and awarding to the moving
5 applicant his costs including reasonable attorney's fees;
6 (b) The amount of the lien claimed is excessive, the court shall enter an
7 order reducing the lien to the amount deemed appropriate by the court and
8 awarding to the applicant his costs including reasonable attorney's fees;
9 (c) The applicant has a complete or partial defense to enforcement of the
10 lien pursuant to section 45-525, Idaho Code, the court shall enter an
11 order releasing or reducing the amount of the lien and awarding the appli-
12 cant his costs including reasonable attorney's fees;
13 (d) The applicant is denied any relief on his motion, the court shall
14 enter an order to that effect and, if the court determines that the motion
15 was frivolous or made without reasonable cause, the court may award to the
16 lien claimant his costs including reasonable attorney's fees.
17 (6) An order issued pursuant to this section shall not affect any other
18 rights or remedies of any party thereto, including a separate action for dam-
19 ages, unless the court shall expressly find and conclude the contrary, based
20 upon an adequate record.
STATEMENT OF PURPOSE
The purpose of this bill is to revise Chapter 5, Title 45, Idaho Code, relating to mechanics' and
The Idaho code provides a right to a lien for the benefit of persons furnishing labor services or
materials on a work of improvement. Such liens are most commonly referred to as mechanics' and
materialmen's liens or simply mechanic's liens. The claim of lien must be recorded in the recorders of
fice within 90 days of the date the contractor, subcontractor or supplier last furnished labor or materials
on a construction job.
Unlike virtually all other types of liens, the Idaho Code provides that a mechanic's lien enjoys a
priority which relates back to the date upon which the lien claimant commenced to furnish labor or
materials. This relation back in priority feature gives rise to the term "secret" lien because a prospective
buyer or prospective lender is not protected by search of the public records.
Section 45-525 protects certain residential home owners against having to pay twice for new
construction or alteration or repair of existing improvements. If, at the time the owner or purchaser pays
for the home or the alterations or repairs, there are no liens or notices of potential liens filed, his title will
be free from such liens except for future liens of workers for unpaid hourly wages. If some, but not all of
the owner's or purchaser's contractual obligations have been satisfied, any balance owing could be
allocated in accordance with the priorities provided by section 45-512, Idaho Code.
New section 45-526 establishes expedited court procedures for having frivolous or invalid liens
released., or excessive liens reduced, and provides for the award of costs including attorney fees in
such proceedings to the applicant or to the lien claimant depending on who prevails in the proceeding.
any balance owing could be allocated in accordance with the priorities
No additional fiscal impact to the state .
Contact: Vicki Patterson
Idaho Land Title Association
345-5200 or 343-6444
STATEMENT OF PURPOSE/FISCAL NOTE