Wyoming’s mechanic’s lien laws are designed to protect individuals who provide labor or materials for the improvement of existing real property or new construction of real property. The intent is to provide a remedy to lien claimants in addition to other remedies afforded at law, such as breach of contract.
The effect of a mechanic’s lien is that an encumbrance is placed on the title of the improved property. The property, in turn, serves as security for the debt incurred for the improvements. The encumbrance remains on the property even if title is transferred to a new owner, unless the obligation is satisfied or the lien is otherwise removed. Recordation with the county recorder makes the lien public knowledge, placing potential purchasers and lenders on notice that there is a claim against the property that may be superior to any rights they might obtain. This knowledge restricts an owner’s ability to freely sell or mortgage the property.
Ultimately, a mechanic’s lien can be foreclosed, forcing the sale of the liened property, with the proceeds of the sale remitted to the lien claimant to pay the debt. Thus, a properly perfected mechanic’s lien can be a useful tool in collecting money due for unpaid construction services and materials. However, in order to reap the benefits of a mechanic’s lien, and because of the many competing interests surrounding a lien claim in the context of property ownership, lien claimants must substantially conform to all of the requirements of Wyoming’s mechanic’s lien laws.
- Does Wyoming law require any preliminary notice? Yes. General contractors must send a Preliminary Notice to the reputed owner or his agent prior to receiving payment from the owner, including advances. Subcontractors and materialmen must send a Preliminary Notice to the reputed owner or his agent within thirty (30) days after first providing services or materials to the project.
- Does Wyoming law impose other notice requirements beyond preliminary notice? Yes. Lien claimants must send a Notice of Intention to File Lien to the owner no later than twenty (20) days prior to filing a lien.
- What is the time frame for filing a claim of lien? A general contractor must file within one hundred fifty (150) days after the last day work was performed or materials were furnished under contract, or from the date the project is substantially complete, whichever is earlier. Subcontractors and materialmen must file within one hundred twenty (120) days after their last day of work. All lien claimants must send a copy of the Lien Statement to the reputed owner or his agent within five (5) days of filing.
- What is the deadline for filing suit to initiate a lien foreclosure action? An action to foreclose a lien must be filed within one hundred eighty (180) days after the Lien Statement is filed. The action must be filed in the same county where the subject property is located.
- Does Wyoming law provide a procedure for bonding or otherwise removing the claim of lien? Yes. The bond or other security approved by the court must be in an amount equal to one and one half (1 ½) times the amount of the lien.
- Who is and is not protected by Wyoming’s mechanic’s lien laws? Every general contractor, subcontractor and materialman performing any work or providing any materials has lien rights. To be lienable, however, the work or materials must have been performed/supplied under a contract. A materialman who supplies a materialman does not have mechanic’s lien rights.
- What costs or damages are allowed in a lien claim? A prevailing party in any action to foreclose a mechanic’s lien is entitled to recover all costs and expenses reasonably associated with the action, including but not limited to reasonable attorney fees.
Wyoming’s mechanic’s lien statutes apply to private property, only. In Wyoming, as with most states, mechanic’s liens are not allowed on public projects, i.e., projects owned by federal, state and local governments. Public contracts in excess of $7,500.00 require a general contractor, prior to commencement of work, to furnish the governmental entity overseeing the project with a bond to provide a payment mechanism and security for suppliers of labor and materials. If the contract is under $150,000.00, the governmental entity can approve a different form of guarantee. An action on a bond or other form or guarantee must be commenced within one (1) year after the date of first publication of notice of final payment of the contract.
The term “contractor” in Wyoming’s statutes refers to a prime or general contractor. A contractor is any person who is employed by and contracts with an owner to improve the owner’s property. Therefore, by definition, a contractor can also be an architect, professional engineer or surveyor. Moreover, a contract can be express or implied, or it can be sufficiently formed through the acceptance of performance.
A “subcontractor” is defined as someone performing work for a contractor or another subcontractor. A “materialman” is a person who furnishes material to an owner, contractor or subcontractor, but who does not perform work on a project.
Every contractor, subcontractor, or materialman performing work or furnishing materials for any building or improvement on real property has mechanic’s lien rights. Materialmen still have lien rights even if the materials they supply to a project are never used, provided the non-use is not due to the materialman’s fault or consent. A materialman who supplies to another materialman, however, does not enjoy mechanic’s lien rights.
“Furnishing” materials includes selling or renting items for the improvement. “Improvements” include demolition, erection, alteration or repair of any property for its permanent benefit, and includes any work performed or material furnished for the permanent change of any real property. This may also include any materials manufactured pursuant to a contract.
All potential lien claimants (contractors, subcontractors and materialmen) must send a Preliminary Notice to the owner in order to preserve their mechanic’s lien rights. Failure to send the notice vitiates a potential claimant’s lien rights. The notice informs the owner that the potential claimant is working on the project, and that a lien may be filed in the event payment is not made. Contractors must send the notice to the reputed owner or his designated agent prior to receiving any payment from the owner, including advances. Subcontractors and materialmen must send the notice to the reputed owner or his agent within thirty (30) days after first providing services or materials to the project. The notice must be in substantially the same format as that prescribed by statute. To ensure subcontractors and materialmen have the requisite information to effectuate the notice, contractors must provide their subcontractors and materialmen, at the time of contracting with them, the name and address of the record owner and the legal description of the project site.
All potential lien claimants must send to the record owner or his agent a Notice of Intention no later than twenty (20) days before filing a Lien Statement. Lien claimants must therefore allow themselves enough time to file the notice while still meeting the overall deadline for filing a mechanic’s lien (infra). The notice shall be in substantially the same format as that prescribed by statute, though case law holds that any notice that would put a reasonable person on notice is valid unless there is a showing of bad faith or the owner was misled. This notice requirement is waived, however, unless the issue is raised as a defense in the trial court.
To file a mechanic’s lien, a lien claimant (contractor, subcontractor, materialman) must file a Lien Statement. Contractors must file within one hundred fifty (150) days after the last day of work was performed or materials furnished under contract, or from the date the project is substantially complete, whichever is earlier. Subcontractors and materialmen must file within one hundred twenty (120) days after their last day of work. The statement must be in substantially the same format as that prescribed by statute. Failure to timely file a Lien Statement vitiates a claimant’s mechanic’s lien rights.
Disputes can arise (and have arisen) when substantial completion is achieved or a contract is complete so as to trigger the limitations period for filing a mechanic’s lien. Generally, if the work is a necessary part of the contract, implicitly or expressly, then such work is often considered work under the contract. This determination can be based on custom, usage and practice in the building industry. However, if the work is only minor, casual or occurs long after the job was completed, it is not considered work under the contract, and therefore will not extend a claimant’s lien filing period. Likewise, if a project is substantially complete and accepted by the owner, and a person then performs an omitted part of the contract against the will of the owner, such work will not extend the lien filing period. Moreover, lien rights are not extinguished if an owner abandons the project or renders completion of the project impossible.
Project owners can curtail problems associated with determining substantial completion by filing a Notice of Substantial Completion of the Project. This establishes an objective date for substantial completion. Owners file the notice with the county clerk in the county where the project is located. If a notice is recorded, the date of its recording is presumed to be the date of substantial completion of the project. Within five (5) days of recording the notice, an owner must send a copy of the recorded notice to all contractors, subcontractors and materialmen on the project, though time periods for filing mechanic’s liens are not affected if an owner fails to send the notice.
Lastly, parties to a contract can agree to extend the time period for filing a Lien Statement, but not to exceed twice the time within which the lien would otherwise have to be filed. The extension agreement must be acknowledged before a notary, signed by the owner, the contractor and any other party to the contract. It must also be filed with the county clerk in the county where the property is located.
A Lien Statement must be sworn to and acknowledged by the lien claimant before a notary. It must be filed with the county clerk in the county where the property is located, whereupon the lien claimant is required to pay a filing fee. The county clerk will then file the Lien Statement and index it by date, name of claimant, property owner and legal description.
Lien claimants may obtain a lien upon the building, improvements and upon the land of the owner on which the building or improvements are situated up to one (1) acre. If the improvements or building cover more than one acre, the lien extends to the additional land covered. If the land is in a city or town, the lien extends to the entire lot on which the building or improvement is located. Inclusion in the lien description of more land than may be involved or allowable does not make the lien ineffective, at least as to the land to which it may legitimately attach.
The Lien Statement must contain, as is appropriate under the circumstances, the following information:
- The name and address of the lien claimant;
- The amount claimed to be due and owing;
- The name and address of the record owner against whose property the lien is filed;
- An itemized list setting forth and describing materials delivered or work performed;
- The name of the person whom the lien claimant alleges is contractually responsible to pay the debt secured by the lien;
- The date when labor was last performed or services were last rendered or the date when the project was substantially completed;
- The legal description of the property subject to the lien; and
- A copy of the contract, if available, or a summary of the claimant’s contract together with a statement of where the contract, if written, can be obtained.
A lien claimant must, within thirty (30) days of filing a Lien Statement, send a Notice of Filing to the record owner of the property, informing the owner that a lien has been filed. Failure to send notice will not affect the validity of the lien. The notice shall be in substantially the same format as that prescribed by statute.
Lien claimants have one hundred eighty (180) days from the date of filing their Lien Statement to commence a court action to foreclose the lien. The action must be filed in a court in the county where the property is located. The holder of any prior perfected lien is entitled to notice in suits to foreclose a lien, but failure to give such notice will not render the proceeding invalid.
Any person enforcing a lien may have the building or improvement sold under execution. Also, if any party demonstrates that the land would be in the same or similar condition after removing an improvement as prior to the performance of the work, the court can authorize the removal of the improvement. In that event, the party foreclosing the lien may be entitled to the reasonable costs of removing the improvement or restoring the property to its original condition.
Lastly, in a mechanic’s lien foreclosure action, prevailing parties are entitled to recover all costs and expenses reasonably incurred in the litigation, including reasonable attorney fees.
Oftentimes construction services are performed on and materials are furnished to leasehold interests. In such instances, mechanic’s lien rights exist as in any other situation explained above, but only against the leasehold interest. Thus, lien claimants can either (1) foreclose their liens against a leasehold interest or (2) if they can demonstrate that the land would be in the same or similar condition after removing an improvement as prior to the performance of the work, the court can authorize the removal of the improvement. In the latter event, the party foreclosing the lien may be entitled to the reasonable costs of removing the improvement or restoring the property to its original condition.
Notwithstanding the distinction between ownership of a property’s fee title and that of a leasehold interest, lien claimants can have a claim against the property owner (and the leasehold interest), i.e., transcending the leasehold interest, if (1) the landlord has agreed to pay the costs of the improvement or (2) the improvements are specifically authorized by the landlord.
Contractors must, at their own expense, defend any court action to foreclose a mechanic’s lien brought by the contractors’ employees, subcontractors (and their employees) hired by the contractor or any suppliers of material. During any action brought by any such parties, the owner or his agent can withhold from the contractor the amount of money for which a lien is claimed. Also if judgment is rendered in favor of a lien claimant, the owner can deduct from any amount due the contractor the amount of the judgment and costs. If the owner has already paid the contractor in full, he can recover from the contractor any amount paid by the owner for which the contractor was originally liable.
When a debt secured by a mechanic’s lien is paid and satisfied, the lien claimant must file a Notice of Satisfaction of Lien with the county clerk in the county where the Lien Statement was filed. A claimant must then send a copy of the notice to the record owner of the property within thirty (30) days of when it was recorded. The notice shall be in substantially the same format as that prescribed by statute.
If a claimant fails to file the notice within thirty (30) days after having been paid, and after having received by certified or registered mail a request to file the notice, the claimant may be liable to the owner for actual damages plus damages of not less than one-tenth of one percent (.10%) of the original principal amount of the debt, not to exceed one hundred dollars ($100) per day.
All mechanic’s liens are on equal footing regardless of when the various Lien Statements are filed, meaning one mechanic’s lien is not superior to another. They all relate back to when construction first commenced on a project, which is the triggering point for determining mechanic’s lien priority. Thus, all mechanic’s liens enjoy priority over any encumbrances created after construction commences. Their priority, however, is not absolute; mechanic’s liens do not enjoy priority over encumbrances created before construction commences. Because mechanic’s liens are on equal footing, if property is sold pursuant to a lien foreclosure and the proceeds from the sale cannot satisfy all the liens, the proceeds are prorated among the various lien claimants based on the amount of their respective liens.
In terms of priority, Wyoming courts have concluded that cessation of work on a project will not create a new date on which construction began, and arguably, only an abandonment of the project may create a new date. Wyoming has seemingly attempted to codify what constitutes abandonment, declaring that work is considered to be performed under the same contract unless works ceases for more than one hundred eighty (180) days.
If an owner believes a lien was forged, or that a person claiming a lien knew at the time of filing that the lien was groundless or contained a material misstatement or false claim, the owner can file a petition with supporting affidavits in the district court where the lien was filed. The court may then order the lien claimant, ex parte, to appear before the court in six (6) to fifteen (15) days to show cause why sanctions should not be entered. If the claimant fails to appear before the court or the court determines that the lien was false or fraudulent, the claimant must pay to the owner $1,000.00 or actual damages, whichever is greater, plus the owner’s reasonable attorney fees. Moreover, any person found to have filed a forged or groundless lien with the intent to threaten, harass or intimidate a public official or employee is guilty of a misdemeanor punishable by a fine of not more than seven hundred fifty dollars ($750), imprisonment for six (6) months, or both. However, if the court finds that the lien is not fraudulent or false, the owner must pay the lien claimant’s attorney fees.
Any federal, state or local official or employee whose real or personal property is subject to a recorded claim of lien who believes the claim of lien is invalid may record an affidavit stating that the claim of lien has been filed against him in his individual capacity for the performance or nonperformance of actions in his capacity as a government official or employee. He shall provide notice to the lien claimant of the filed affidavit. If the lien claimant does not file a petition within twenty (20) days upon receiving notice of the affidavit then the lien shall be null and void and of no further force or effect. The burden is on the lien claimant to appear before the court at a time no earlier than six (6) nor later than fifteen (15) days following the date of service of the petition and show cause, if any, why relief should not be granted to the affiant. The lien claimant can be responsible for damages of one thousand dollars ($1,000.00) or actual damages, whichever is greater, and the costs incurred by the affiant, including reasonable attorneys’ fees if the lien is invalid. However if the lien is valid, the court shall issue an order so stating and shall award costs and reasonable attorneys’ fees to the lien claimant to be paid by the affiant.
Any mechanic’s lien can be satisfied by an owner, contractor or subcontractor by filing a corporate surety bond, letter of credit, cash or cash equivalent approved by the court in which the lien was filed in the amount of one and one-half (1 ½ ) times the amount of the lien. The alternate security can be filed at any time prior to a final court determination on the lien claim, and must be filed with the clerk of the court in the county where the lien was filed. The security guarantees that if the lien claimant is determined to be entitled to the lien, the claimant will be paid the amount of the judgment (lien) plus costs. A lien claimant whose lien has been transferred to an alternate security can then bring a claim against the security, but must do so in the same court where the security was deposited.
The remedies provided by Wyoming’s mechanic’s lien statutes are not exclusive. Lien claimants can pursue other claims for relief (e.g., breach of contract, unjust enrichment, etc.) while at the same time pursuing their lien claims. A mechanic’s lien, therefore, is one of many tools to be used for collection.
Preserving, perfecting, and enforcing mechanic’s liens can be tricky business. If you have questions or would like assistance with the mechanic’s lien process, please consult an experienced construction lawyer.