If you are somehow related to construction and you have a specialization in dealing with government contracts then you must have probably heard about the miller act. We will discuss the miller act vs. the little miller act, both versions which can make an impact on your work.
Also, read for The Building Blocks of Modular Construction: Contractual & Lien Considerations What is the Miller Act? The miller act is a protector of construction parties from the first and second-tier who are looking to recover the outstanding debts. In the miller act, the commanding contractor will have to obtain the two surety bonds; one of them is a payment bond and the other is the performance bond. Under the performance bond, the satisfactory completion of the project is agreed on a duly sign contract. Now under the payment bond, all the suppliers and sub contractors are assured of their due payment. This miller act was passed in the year 1935. States over the years though started to bring upon the changes. All those state-wise changes were known as the little miller acts. The Miller Act vs. the Little Miller Act Under the miller act, contractors are expected to secure payment bonds for contracts that are more than $100,000. For other protection of payments, a contract between $30k to $100k is provided. If the payment is not made to suppliers or sub contractors, they can straightaway sue the contractor in district US court. Under the little miller act, there are different statutes under different states. They all have their own set of rules and guidelines. So it comes down to the fact that if the construction project is being implemented under the federal government, the miller guidelines are followed and if the project is state-sponsored, the little miller act is put in place. Little Miller Act Differences among States It is very clear that the little miller act will vary from state to state and one is advised to study the specific guidelines laid by the state under the act before the project is commenced. Also, one should make sure that the entire legal obligations under the act are rightfully met. Things to look upon are-
How to File Little Miller Act Bond Claims One should have a clear understanding of the eligibility to file the bond claim. Few states allow only the construction parties of a first and second tier to file the claim. Hiring an attorney will be much more advisable as he will have all the experience to share in construction disputes. We at the National Lien and Bond Claim System will be happy to help you in such cases. We also have a great team to deal with cases related to a lien in Texas and Florida. We would be glad to help you in every way. Also, read for
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Suppose if you recently shifted to your new property but understand that the property still doesn’t entirely belong to you. This is exactly what a lien claim does. It could be defined as rightful security that a creditor holds against a property. In simple words if a borrower who has taken money from an entity (such as a bank) and kept his property as collateral fails to make the payment, a lien on a house will come into play, according to the lien, the lender will have the full rights to seize the property and put it for sale to recover the debts.
Also read for The Building Blocks Of Modular Construction: Contractual and Lien Considerations Liens are pretty common, the lien laws can sometimes create a lot of issues while selling or buying a property. It is always advised that a homeowner should closely understand how the lien will work on purchase or sale and what all impact will it bring over your property claims. One should also closely understand that how a lien can be removed. What is a lien and how does it work? Putting a lien on a property is a security claim put forward by the lenders to make sure that their financial interests are secured. As soon as the debts on the property are fully paid the lien is lifted. You are under several obligations until the lien on a property is active. Being an owner you are still restricted and can’t do much with your property until the debt is not fully paid and the lien remains active. So suppose if you have a plan to sell the property, you technically can’t do that because the lender has got a legal stake in the property under the lien agreement. All these reasons justify why a title company has to perform several searches to know the seller’s right over the property and if there Is any pending lien issue that has to be resolved. According to data released by the American land title association, more than 25 percent of these searches reveal the pending lien issues. Therefore it is always recommended to take help from a title company to understand the property status before closing down on it. Paying off the debt remains one of the easiest ways to ward off the lien and then one can file the documents in accordance in the county’s recorder office. There are also times when a lien is shown on a property as an error and therefore the seller and the buyer must resolve this issue before coming upon the sale agreements. Types of liens: voluntary and involuntary There are a few types of liens that have different impacts and repercussions on your financial wellbeing and the property. They can mainly be divided into 2 categories which are namely recognized as voluntary lien and involuntary lien. Often, you have a choice to choose your lien. One such example could be a voluntary lien in form of a mortgage. This happens when you have agreed to a financing agreement with a lender (say a bank) or any other institution under a lien and now you can finally purchase a house. It is until the debt is not fully repaid the lien remains active and the creditor has all the right to take over the property if the debt is not fully recovered. In another scenario, the creditor has the right to put a lien on a house without even your approval. This could happen when you have borrowed from a financing institution and when you are unable to pay, the institution could reach the state agency or a county and can place lien filing to initiate the process of recovering debts. Let’s discuss a few common types of liens. Tax lien This kind of lien on your property is generally initiated by the government in specific cases. Suppose if are not in a position to pay your property tax or income tax or the pending business tax, then a government agency has got the full rights to take action against you. The first warning would be served in form of a written notice and even after that you are not able to take the necessary action towards paying the taxes, the government would be bound to put a lien on your assets. General judgment lien This is the case when a lender takes the matter of debt to the court and the judgment of the case comes in his favor. During the judgment, the creditor might be given the right to place a lien and ensure that the remaining payment could be recovered through assets. After the decision the creditor will have the full rights to claim on your property, it will be followed by a complete seizure and sale of the property if you are not able to come up with a satisfactory plan of paying the debt. Mechanics lien This kind of lien is also known as the construction lien. This is generally placed by a contractor who has to be paid for construction or renovation work he has done and is still to be paid. It is up to the state laws to recognize when the lien expires. There are also times when contractors forget the removal of lien and which in turn complicates the property sale when being investigated under the title search. Difference between a good lien and a bad lien There is a very fine line between a good lien and a bad lien. If there is a proper financial agreement between the two parties over the sum lent over property and a lender subsequently places a lien on a property, then it should be taken a mutually accepted lien which is providing a sense of security to the lender and is wrong to take it negatively. The idea is to make sure that the rights of the lender are protected and there would probably be no issue with any party involved until the borrower is making the regular payments and debt is being recovered smoothly and within the mentioned time frame. In contrast, the involuntary lien is a different case. It is enforced by the lender when the borrower is not making the payments and because of the escalating tension due to non recovery of the debt, the lender decides to take a legal road to file a lien and seize the property to recover debts or to find a lawful solution for the debts to be recovered according to a proper plan. Lien can sometimes put a very negative impact on your creditworthiness because liens can easily be found in public records. The past non payments of debt would never go down well with the lender and he might end up denying you a loan. One should understand it as a matter of fact that lien affects the title and make it difficult for you to sell or finance your property. Tax liens are sometimes put on sale by the municipal organizations in form of auctions to recover the money. If someone ends up buying the tax lien, he may have the right to foreclose the property and set you free. How to get rid of a lien If you are wondering that what the easiest way to remove a lien remains, it will of course be to pay off the debt you owe to the lenders. Foreclosing a property remains a long and tedious way, so the lenders usually wish to avoid it and in case prefer to chart out a solution for the payment plan. Many people might wonder but it is also theoretically possible to sell your property without settling the existing debts. If a seller can convince that the total cost of resolving the lien is adjusted in the selling cost of the property, then it could give the seller a much-needed escape. The owner therefore can pay off the debt through the amount received on the sale of property and the new owners also won’t have to worry about any issue related to a lien on a property. It is to be understood that if the buyer ends up buying a property with a clouded title, and which has an existing lien case, it will now be the responsibility of the new owner to deal with the case and the seller will be free of any case. There are also times when the buyer could not figure out that there is an existing lien case on the property; in that case, he could reach out to the title insurance company. It Is the responsibility of the title companies to search to find out the defects and update it to the buyer accordingly. So in such a case, one can easily claim full ownership without any hassle of the lien on the new owner's head. It will be the responsibility of the title insurance company to fight out the case and resolve the lien issue on that property. Liens do not always bring bad news, but it is our responsibility to understand the term in-depth and be aware of our rights. We at the national lien and bond claim system will be happy to help in any case of lien in Florida. We have a team of experts who are working for the same cause for a lot of years, so we understand your concerns pretty quickly and come up with solutions that are good for all. Also read for Questions about the Impact of Sloan v. Liberty Mutual Reference Url: https://bit.ly/3rnoA2i It’s not long ago when a very interesting decision was handed on enforcement of pay if paid provision by appeals of the third circuit court in Pennsylvania. It was between liberty mutual insurance company v Sloan and company. It was found that liberty mutual insurance Company does not need to pay the payment bond claim to the Sloan, a subcontractor. It was because there was a pay if paid provision in the subcontract which was finalized between the Sloan and shoemaker, the contractor who secured the bond. After an intense hearing proceeded between the contractor lawyers, the court concluded with a decision that shoemaker does not have to pay Sloan in full payment because they were also not paid in full by the owners of the project. This was also because the shoemaker was not liable to get fully paid under the contract, so the court claimed that surety on the bond claim could not be liable. A lot of things are pretty much clear about the pay if paid provision and other liquidating agreements after the Sloan case. But the changing lien laws in the region definitely question the lasting impact such a case and its conclusion could bring along. Regions public policy in favor of subcontractor’s right to secure payment As far as the Sloan case is concerned, the agreement contract between the two parties, the Sloan and the shoemaker claimed that the right to file a mechanic lien is waived by the Sloan. The Sloan on the contrary did put up an argument against it; they claimed that on the Sloan bond claim if there was any surety to rely on as stated about the pay if paid provision in the contract, now this would be very much different from the policy of the region of right to secure payment, favoring the subcontractors. There was an amendment in the lien law spelling out this policy. There is a section 1401(b) in the lien law which makes it invalid to forward lien waivers and unenforceable, but only valid when they are provided in place of the payment after subcontractors have completed their work. It could also be valid in the case when the guaranteed payment bond is issued by the contractor for the labor and also for the material. This provision serves a very important purpose of providing an alternate avenue to the subcontractors in order to recover the payment in place of waiver for lien rights. A subcontractor if once receives the security bond protection is more than willing to give up the liens protection. In the case of Sloan, the pay if paid provision takes away the protection. Though what’s important in the whole case stands with the fact that the lien law did not stand effective when Sloan made an entry in the subcontract. Also Read: The Building Blocks Of Modular Construction: Contractual And Lien Considerations Surety’s ability to rely on pay-if-paid provision may be contrary to public policy There was a footnote released by the court stating that the ruling which was given in favor of surety did not deny any of the public policy as it was very clear that the Sloan have entered the contract way long before the important lien law was enforced and came in affect. The Sloan never relied on this policy and was quick to accept what was arguably a tradeoff between a surety bond and mechanic’s lien. But two very important questions were put forward in the footnote
What’s next?
The decision on Sloan has done almost nothing in order to prevent the subcontractors, who ended up waiving their lien rights after the lien law amendment, to argue that surety reliance on pay if paid provision has been against the public policy. The subcontractors have a valid reason to make an argument that the amendment of the lien law was to ensure that all those contractors who were expected to waive their lien rights will get the protection in the payment bond. When the surety has relied on the pay if paid provision in order to deny payment for the bond claims, has kept the purpose on surety bond at a very fine line. And thus has denied the very purpose of the lien law amendment. The contractor lawyers argue that after the Sloan decision the sureties will rely on them and other in line principles from the surety law which states that the liability of surety will only be triggered after the maturity of the principal debt. There also stands an argument for the sureties that the bonds are being provided in order to benefit and protect the obligee which is usually the owner and not the contractor. Therefore the reliance stated by the subcontractors on the bonds is misplaced. The decision on the Sloan has been important without any doubt as the dealing of the inline cases is concerned but is also much clear that the impact it will have will certainly be limited and subject to arguments and changes. A lot of tough questions likely remain unanswered. It will be upon other courts to answer these vital questions and make a much clear understanding of this vital topic. For 15 Minutes free consultation, call us at 800.432.7799 or mail us at [email protected]. Visit Us at www.mechanicslien.com Original URL: https://bit.ly/3FpsLyd |
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