§ 16.7 Filing a Claim of Lien—perfection

LibraryConstruction Law in Oregon (OSBar) (2019 Ed.)
§ 16.7 FILING A CLAIM OF LIEN—PERFECTION

§ 16.7-1 Statutory Provision

Construction liens are created under ORS 87.010 when the claimant begins to provide labor, equipment, material, or services, and the lien is perfected by compliance with ORS 87.035. See ORS 87.025(7). The perfection of the lien, by filing a claim of lien, relates to the date of commencement of the improvement as defined in ORS 87.005(1). ORS 87.025(7). This separation of creation and perfection acknowledges the permissibility of perfecting a lien after the filing of a bankruptcy petition pursuant to 11 USC section 362(b)(3) and 11 USC section 546(b) (exception to automatic-stay provisions). But see In re N. Side Lumber Co., 59 BR 917 (Bankr D Or 1986), aff'd, 83 BR 735 (BAP 9th Cir 1987), aff'd, 865 F2d 264 (9th Cir 1988), aff'd sub nom. Indus. Indem. Co. v. Seattle-First Nat'l Bank, 865 F2d 264 (9th Cir 1988) (a postpetition lien for unpaid workers' compensation premiums was invalid).

§ 16.7-2 When to File

§ 16.7-2(a) In General

A person claiming a construction lien created under ORS 87.010(1) or (2) for providing labor, renting equipment, or furnishing materials must file a claim of lien within 75 days after ceasing to provide labor, equipment, or materials or 75 days after construction is completed, whichever is earlier. ORS 87.035(1). See § 16.7-2(b) (determining when work ceases), § 16.7-2(c) (determining when completion of construction occurs). Persons claiming liens pursuant to ORS 87.010(4)-(6) must file their claims not later than 75 days after the construction is completed. ORS 87.035(1).

CAVEAT: Because ORS 174.120 and ORCP 10 (which set forth rules on how to count days) apply only to the computation of time in procedural statutes and rules, they are generally not controlling for lien purposes. In Tyree v. Tyree, 116 Or App 317, 840 P2d 1378 (1992), rev den, 315 Or 644 (1993), the court ruled that neither ORS 174.120 nor ORCP 10 extends the time period for a person to give a tort-claim notice under ORS 30.275(2)(a). "The requirement that notice be given timely is a substantive condition precedent to recovery under the Oregon Tort Claims Act that, if not satisfied, deprives a plaintiff of the right to make a claim." Tyree, 116 Or App at 320. Similarly, ORS 87.035, like other construction-lien statutes, is a substantive statute. Lemire v. McCollum, 246 Or 418, 426, 425 P2d 755 (1967) (construction liens were unknown at common law and are purely statutory; thus a lien claimant must show clear compliance with the statutory conditions to use such a lien). A trial court has held that the procedural method of counting days did not apply to ORS 87.035. Rick Franklin Corporation v. Hansen, Linn Cnty Cir Ct Case No 930413 (Lewis, J., Apr 12, 1994, letter opinion) (citation not verified by publisher).

PRACTICE TIP: Courts and other government offices (such as recorders) may be closed on weekdays (particularly Fridays) for furlough days due to budget reasons. The lawyer should calendar his or her files so that liens are recorded and lawsuits are filed early enough to meet the statutory deadlines. Although presiding judges may grant procedural extensions for many purposes, the lawyer should not rely on such extensions as being a safe harbor in regard to the statutory deadlines of ORS chapter 87.

§ 16.7-2(b) Determining when Work Ceases

A person has "ceased to provide" labor, rent equipment, or furnish materials under ORS 87.035 when the contract is substantially complete. See Consol. Elec. Distributors, Inc. v. Jepson Elec. Contracting, Inc., 272 Or 384, 387, 537 P2d 83 (1975) (discussing delay, unnecessary delay, and occupancy in determining substantial completion). The doctrine of substantial completion prevents a person from postponing the statutory deadline for filing a lien claim by the performance of so-called trifling matters or by repairing his or her own substandard work. Fox & Co. v. Roman Catholic Bishop of the Diocese of Baker City, 107 Or 557, 560-61, 215 P 178 (1923) (distinguishing "mere replacement of defective materials" from "work upon the original contract of a character which would prolong the time for filing a lien for materials furnished to the contractor to enable him to carry out his original contract"). But see Nw. Ironworks, Inc. v. Rippling River Dev. Corp., 71 Or App 144, 148, 691 P2d 111 (1984), rev den, 298 Or 597 (1985) (the notice statute, ORS 87.021, "does not exclude plaintiff's labor that merely corrected errors").

The following cases have discussed what constitutes a trifling matter:

• Consol. Elec. Distributors, Inc., 272 Or at 387 (a delay in providing nonstandard light fixtures was not trivial)
• Dallas Lumber & Supply Co. v. Phillips, 249 Or 58, 60, 436 P2d 739 (1968) ("the cost of the remaining work to be done [to finish the construction of a house], about $15, demonstrates that the work was trivial")
• Mercer Steel Co. v. Park Constr. Co., 242 Or 596, 599, 411 P2d 262 (1966) (the permanent wiring of a stove, oven, dishwasher, water heater, and furnace, previously operable only by extension cord, was not trivial)
• Christenson v. Behrens, 231 Or 458, 467, 372 P2d 494 (1962) (the placement of covers on electrical panels was trivial, but the installation of exhaust fans was not)
• E.&W. Lumber Co. v. Williams, 129 Or 1, 5, 276 P 257 (1929) (a house was not substantially complete when the contract still called for another coat of paint and brickwork requiring approximately 100 bricks)
• Schade v. Alton, 61 Or 187, 189, 121 P 898 (1912) (uncovering a sewer pipe for city inspection was trivial).

• Coffey v. Smith, 52 Or 538, 545, 97 P 1079 (1908) (installing iron hooks to support pipes in a basement and altering a ventilation pipe were trivial)
• Central Coast Elec., Inc. v. Mendell, 66 Or App 42, 45, 672 P2d 1224 (1983) (30 minutes of work performed under warranty to replace a defective heater was trivial)

When an owner requests work that was not contemplated in the initial contract with a supplier, the date of ceasing work is determined with reference to the substantial completion of the requested additional work. Bethlehem Constr., Inc. v. Portland Gen. Elec. Co., 298 Or App 348, 352, ____P3d____(2019); Farrell v. Lacey, 264 Or 505, 511-12, 507 P2d 31 (1973). Conversely, when an owner requests work under the assertion that the initial contract requires that work, the owner may be estopped to assert that the initial contract was substantially completed or ceased by the time of the request. That is, the additional work is a continuation of the original work under the same contract. Shea v. Graves, 142 Or 503, 512, 19 P2d 406 (1933), overruled by Anderson v. Chambliss, 199 Or 400, 262 P2d 298 (1953).

Another factor indicating that a contract is substantially completed is that an owner has paid the contractor in reliance on the contractor's work being completed. Schade, 61 Or at 189. In addition, whether a supplier has removed his or her tools from the construction site is a relevant inquiry. Dallas Lumber & Supply Co., 249 Or at 60. But whether a governmental inspector has approved the supplier's efforts may not be a relevant inquiry. Coffey, 52 Or at 545 (inspectors evaluate quality, not completion, of work).

PRACTICE TIP: The lawyer should consider whether an owner's request for extra work is a change order to the original contract or a separate, independent contract. How it is categorized will determine whether the time period to file a construction lien is commenced. See § 16.8-3 (blanket liens) for a discussion of the relationship between construction-lien claims and multiple contracts.

In Emmert Indus. Corp. v. Sanders, 131 Or App 113, 883 P2d 1304 (1994), rev den, 320 Or 587 (1995), the court held that a construction lien recorded four years after the contractor stopped work was untimely. The fact that the contractor left steel supports and cribbing to support the house when work stopped did not mean that the contractor continued to furnish or rent equipment. Also, a provision of the contract that required the defendant to pay $10 for each day that she defaulted on the contract did not constitute a rental agreement, but was more like a provision for liquidated damages. The charges commenced only after the defendant defaulted, the charges were not dependent on the defendant's use or possession of the equipment, and the contractual provision did not mention the word rental. Emmert Indus. Corp., 131 Or App at 118-19. See Pro Excavating, Inc. v. Ziebart, 148 Or App 436, 939 P2d 1187 (1997) (discussed in § 16.7-2(c)).

The determination of ceased work may differ for bond claims...

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