§ 16.6 Notice
Library | Construction Law in Oregon (OSBar) (2019 Ed.) |
§ 16.6-1 In General
The Construction Lien Law requires a variety of notices. A potential lien claimant must provide some notices before recording a construction-lien claim; other notices must be provided after the recording of a lien claim. See § 16.6-3(a) to § 16.6-3(h) (notice of right to a lien), § 16.6-4 (information notice to owner), § 16.6-5 (notice of filing a claim of lien), § 16.6-6 (notice of intent to foreclose).
§ 16.6-2 Manner of Giving Notice
Generally, except as provided in ORS 87.093 (information notice to owner), the Construction Lien Law provides that all notices required under ORS 87.001 to 87.060 and ORS 87.075 to 87.093 must be in writing and delivered in person or by registered or certified mail. ORS 87.018(1).
The information notice to owner is an exception, and it may be delivered in person, or by registered or certified mail, or by first-class mail with a certificate of mailing. ORS 87.093(3).
Notices to mortgagees are also unique. Notices to mortgagees required under ORS 87.001 to 87.060 and ORS 87.075 to 87.093 must be delivered to a mortgagee only if the mortgagee's name and address appear in a mortgage of record or a trust deed of record as required by ORS 205.234(1)(b) or in the instrument that assigns a mortgage or trust deed as required under ORS 205.234(1)(g). ORS 87.018(2).
A lien debtor cannot, however, argue that a notice was not received by registered or certified mail if the notice is returned to the lien claimant marked unclaimed. State ex rel. Nilsen v. Hoff, 3 Or App 398, 400, 474 P2d 11 (1970).
§ 16.6-3 Notice of Right to a Lien
§ 16.6-3(a) Form and Delivery of Notice
The notice of right to a lien must be provided substantially in the form set forth in ORS 87.023. ORS 87.021(2). The notice of right to a lien must be in writing and delivered in person or sent by registered or certified mail. ORS 87.018. See § 16.6-3(b) (timing of notice).
§ 16.6-3(b) Timing of Notice
A person may give the notice of right to a lien (substantially in the form set forth in ORS 87.023) to the owner of the site at any time during the construction of the improvement, but the person's right to perfect a claim of lien is restricted to materials, equipment, services, and labor provided "after a date which is eight days, not including Saturdays, Sundays and other holidays as defined in ORS 187.010, before the notice is delivered or mailed." ORS 87.021(1).
A question that can arise concerns when the potential lien claimant should send the notice of right to a lien. Under ORS 87.021(1), the notice protects only lien rights that may be perfected. To be perfected, the lien rights must first have been created. Generally, lien rights arise when the potential lien claimant first begins providing labor, materials, equipment, or services to the improvement. See ORS 87.010. Although lien rights may relate back to the commencement of construction for priority purposes (ORS 87.025(7)), a specific claimant's rights do not arise until the claimant commences its own work. Under this analysis, delivering a notice of right to a lien before the potential claimant begins working may be too early.
Furthermore, it is possible to deliver the notice too late, if it is not delivered until after the construction is completed. In Sun Sols., Inc. v. Brandt, 300 Or 317, 321-23, 709 P2d 1079 (1985), the court held that although a notice of the right to a lien is given within the calendar day required by ORS 87.021(1), it must also be given "during the progress of the improvement" to be effective. Thus, although the notice in Sun Solutions, Inc. was timely from a calendar-day perspective, it was ineffective because the improvement was completed and paid for before the owner's receipt of the notice. Therefore, the notice was not given "during the progress of the improvement" as required by ORS 87.021(1). See Miller v. Ogden, 325 Or 248, 254, 935 P2d 1205 (1997) (the term construction "refers to an ongoing process, not to a completed project").
QUERY: The supreme court's analysis in Sun Sols., Inc., 300 Or at 323-24, suggests that the owner must pay the contractor to cease progress of the improvement. In addition, can the court's analysis be construed as extending only to consumer-owners and not commercial-owners?
NOTE: Sun Solutions, Inc., was decided under the 1981 version of ORS 87.021. The later amendments to the statute did not alter the "progress of the improvement" language.
The notice of right to a lien does not have to be given by any "person who performs labor upon a commercial improvement or provides labor and material for a commercial improvement or who rents equipment used in the construction of a commercial improvement." ORS 87.021(3)(b). For purposes of ORS 87.021(3)(b), commercial improvement is defined as "any structure or building not used or intended to be used as a residential building," and residential building is defined in part as "a building or structure that is or will be occupied by the owner as a residence." ORS 87.021(3)(b)(A)-(B).
Whether the structure in question is used as a primary residence or for vacation purposes may be an issue. The distinction between a residence (which a person can have more than one of) and a domicile (which a person can only have one of) is discussed in Best Drywall, Inc. v. Berry, 108 Md App 381, 672 A2d 116, 122-23 (1996) (a residence includes a single-family dwelling that is the owner's vacation home). See generally Yogman v. Parrott, 325 Or 358, 362, 937 P2d 1019 (1997) (discussing differences between residence and residential); Calapooia Pole Structures, Inc. v. Moulder, 128 Or App 190, 193-94, 875 P2d 495 (1994) (discussed in § 16.6-4).
§ 16.6-3(c) Materials Supplier
A materials supplier whose contract is with an owner is not required to send a notice of right to a lien to that owner. ORS 87.021(1). A materials supplier whose contract is with the owner's construction agent must provide a notice of right to a lien to the owner, whether the construction is of a commercial improvement or a residential building, provided that the materials supplier did not supply labor, too. ORS 87.021(1), (3)(a)-(b).
A notice of right to a lien should also be provided to a mortgagee to protect a materials supplier's lien priority over a mortgage or trust deed. ORS 87.025(3). There is generally no exception to this rule.
PRACTICE TIP: Because there can be more than one owner on any given property (see § 16.2-4 to § 16.2-4(b), § 16.5-3), a potential claimant should always give a notice of right to a lien unless (1) the claimant knows that he or she is contracting with either the only owner or all of the owners or (2) the claimant fits within an exception of ORS 87.021(3).
In Hickey v. Polachek, 63 Or App 784, 787-88, 666 P2d 294 (1983), the court held that a materials supplier must give notice only to mortgagees existing at the time that delivery commences and not to mortgagees whose interests are subsequently recorded.
QUERY: When should a materials supplier send the notice of right to a lien when the materials are delivered...
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