423-417-1202

How a Tennessee Senate Bill Could Seriously Alter Payments and Liens on Construction Projects Part 2

The mechanic’s lien is often the final and most reliable option for contractors, subcontractors, and suppliers attempting to secure payment on a construction project. Contractors in the Volunteer State must stay up-to-date on these laws, but doing so may soon become a challenge. In this series, Chattanooga construction lawyers at Cotney Construction Law are discussing a Senate bill that could change the landscape of Tennessee construction law.

Current Lien Laws in Tennessee

Currently, Tennessee requires general contractors that contract directly with the owner to submit a Notice to Owner prior to work commencing on a project. Subcontractors are not required to give a preliminary notice prior to work commencing; however, they are required to abide by an assortment of strict deadlines and other notices requirements if they wish to file a mechanic’s lien.

As of the writing of this article, 90 days is the magic number. Subcontractors must provide an owner with a Notice of Non-Payment within 90 days of the last day of the month that labor and materials were provided. Additional notices must be served for each month that labor or materials are provided and not paid for. While a general contractor has one year to file and enforce a mechanic’s lien, a subcontractor has only 90 days to file a lien and 90 days after that to enforce it. Material suppliers must also abide by the 90-day deadlines unless they supply directly to the owner, in which case the general contractor requirements apply to them.

What Senate Bill 324 Proposes

Many subcontractors feel that the 90-day deadlines do not allow enough time for a preliminary notice to be submitted and a lien to be filed and enforced. In its current form, this bill would extend these deadlines to 12 months after project completion, putting contractors and subcontractors on an equal footing. However, like general contractors, subcontractors would also be required to submit a Notice to Owner prior to work commencing on a project.

How This May Affect You

It’s crucial that contractors are compliant with Tennessee’s mechanic’s lien laws. Failure to meet pre-lien notice requirements is a misdemeanor in the State of Tennessee. Many out-of-state contractors can easily find themselves in legal hot water for simply being unfamiliar with local laws. Whether they are life-long residents or from a neighboring state, Tennessee contractors should consult a Chattanooga construction lawyer at Cotney Construction Law to ensure they are compliant with the Volunteer State’s exclusive and ever-changing mechanic’s lien laws.

Read part one for information on the possible changes coming to contingent payment clauses. To learn more on potential changes to Tennessee’s retainage laws, please read part three.

If you would like to speak with one of our Chattanooga construction lawyers, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.