Nevada Mechanics Lien Validity Checklist

The following checklist is to be utilized to assist in determining the validity and enforceability of mechanic’s lien claims. In many instances, discovery will first be required to determine whether a particular lien claimant has or has not complied with the various items on the checklist. To the degree that a lien claimant has not complied with one or more of the items on the checklist, this may disqualify the mechanic’s lien claimant’s lien claim, or affect the claimant’s lien foreclosure suit, depending on how substantially the claimant otherwise complied with the statute, and the other facts at issue as to any particular case.

NOTE: This checklist deals primarily with lien validity and related issues, and not in any detail with priority issues. Priority issues will be addressed in a separate memo and checklist, to be posted later.

It is hoped that this checklist may be helpful in allowing contractors, subcontractors, and material suppliers a reference to follow as they perfect their liens. It should also be helpful to owners in defending against lien claims. However, this checklist (or any one item contained thereon) is not necessarily definitive or dispositive in determining the validity of a lien in any given case and a number of factors may be reviewed by a Court as part of that determination. Also, the existence or nonexistence of a properly perfected lien does not necessarily prevent a claimant from collecting through other means from owners or higher tiered contractors who owe the claimant money. Individual consultation with an attorney is important in every case.

NAME OF LIEN CLAIMANT: ________________________________________________________________

PRINCIPAL AMOUNT OF LIEN CLAIM: $_____________________________________________________

PARTY TO WHOM LIEN CLAIMANT PROVIDED SERVICES WITH PRIVITY OF CONTRACT: __________________________________________________________________________________________

PORTION OF PROJECT AT WHICH WORK WAS PERFORMED (i.e., Hotel & Casino, Tenant Build-Out, Parking Garage, etc.): __________________________________________________________________________________________

            Issue Yes No Need Discovery N/A Attorney Notes
1.  Did the lien claimant provide the type of services or materials which create a lien under NRS 108.222 or NRS 108.223 (as opposed to services which were merely tangential, or materials which were merely trade fixtures, easily removable without material injury to the building)?          
2.  Is the lien claimant licensed, if performing work for which a license is required? NRS 108.222(2)          
3.  If the lien claimant is a foreign corporation doing regular business in the State, has it been properly qualified and registered with the Nevada Secretary of State’s office, such that it is not prohibited from filing a lawsuit, including a lien foreclosure suit?  NRS 80.010- 80.040, NRS 80.210          
4.  Does the lien claim relate to tenant improvements/ tenant build-outs?          
4A.  If yes (the lien claim does relate to tenant improvements), then did the owner of the property record a notice of non-responsibility within 3 days after obtaining knowledge of the construction, alteration, or repair, disqualifying the lien as against the owner’s interest? NRS 108.234  (Note:  A lessor who records within 3 days of the execution of the lease is deemed to have provided timely notice as to that construction known to lessor at the time the lease was executed.  If recorded later, the owner/lessor would presumably have the difficult burden of proving, without any presumption in his favor, that the date when he obtained knowledge of the construction, alteration, or repair was less than 3 days before he recorded.  Where the lease clearly contemplates the construction of improvements, and the notice was recorded more than 3 days after the lease was signed, this would likely be difficult.)          
5.  If the lien claimant is a subcontractor (as opposed to a prime contractor with direct privity of contract with the property owner), who provided more than only labor, did the claimant serve a written pre-lien notice by registered or certified mail or personal service on the owner, reputed owner, or person whose name appears on the building permit as the owner, within 31 days of the first date the subcontractor or materialman provided labor or furnished materials to the project site?  NRS 108.245          
6.  If a required pre-lien notice was served, did the pre-lien notice adequately meet the requirements of the statute by setting forth (i) the nature of the materials or labor performed, (ii) the name of the prime contractor or subcontractor to whom the services or materials were furnished, (iii) the name and address of the project, (iv) the date the subcontractor or supplier first provided materials or services to the project, (v) the date the preliminary notice was executed (and (vi) an optional request to be served with any notice of completion)? NRS 108.245          
7.  In addition to serving the owner with a required pre-lien notice, did the subcontractor timely and properly serve a copy of the pre-lien written notice on the prime contractor? NRS 108.245          
8.  If the lien claimant did not provide required notice, is the lien claimant alleging that the owner had actual notice of the lien claimant’s involvement in the project, such that preliminary notice should allegedly not be required?  See, Annotations to NRS 108.245.          
9.  Absent the recording of a “notice of completion” by the owner, did the lien claimant record his notice of claim of mechanic’s lien within 90 days after the later of the completion of the work of improvement, the last delivery of material by the lien claimant, or the last performance of labor by the lien claimant? NRS 108.226(1). (Notes: 1. If the construction project consisted of constructing more than one separate building, for example, a structure with separate parking garages, or a multi-building complex or a hotel and casino, and if each building is constructed pursuant to a separate contract, each building is deemed to be a separate work of improvement upon the completion of which the period for recording a mechanic’s lien thereon begins to run. 2. The completion of the work of improvement occurs upon the following events:  (a) the occupation or use of a building, improvement, or structure by the owner, his agent, or his representative accompanied by cessation of labor thereon; (b) the acceptance by the owner, his agent, or his representative of the building, improvement, or structure; (c) the cessation from labor for 30 days upon any building, improvement, or structure or upon the alteration, addition to, or repair thereof. NRS 108.226(3). Thus, the fact that a claimant has gone back to the property to do some punch list work or warranty items does not necessarily extend the time for recording a mechanic’s lien if substantial completion occurred prior thereto.)          
10.  Did the owner record a “notice of completion” under NRS 108.228, and did the owner provide a copy of the notice of completion to any general contractor lien claimant with whom the owner contracted directly for the work of improvement, or to any person who, before the notice was recorded, submitted a request to the owner to receive the notice (including subcontractors who requested such a copy with their preliminary lien notices)?          
10A.  If so (if a notice of completion was recorded and, if required, served upon this lien claimant), then did the lien claimant record his notice of claim of mechanic’s lien within 40 days after the recording of the notice of completion?  (Note:  The 40 days run 40 days after the recording of the notice of completion, not 40 days after the date on which completion is alleged to have occurred within the notice.)  NRS 108.226(2)          
11.  Does the recorded notice of claim of lien contain a statement of the demand after deducting all just credits and offsets?  NRS 108.226(5)          
12.  Does the recorded notice of claim of lien contain the name of the owner or reputed owner of the property, if known?  NRS 108.226(5)          
13.  Does the recorded notice of claim of lien contain the name of the person by whom the lien claimant was employed or to whom he furnished the material? NRS 108.226(5)          
14.  Does the recorded notice of claim of lien contain a brief and concise statement of the terms, time given, and conditions of the contract?  NRS 108.226(5)          
15.  Does the recorded notice of claim of lien contain a description of the property to be charged with the lien sufficient to identify the property (i.e., address or apn #)?  NRS 108.226(5)          
16.  Has the notice of claim of lien been properly verified under NRS 108.226(6)?  (Notes: 1. Many pre-purchased lien forms do not contain a proper verification, such that many liens can be effectively challenged on this basis.  2. A properly verified lien will generally have two signatures, one signature under the statement of lien information, and a second signature beneath a verification paragraph in which the mechanic’s lien claimant or the person signing on his behalf attests, under oath and penalty of perjury, to the truthfulness and validity of the information contained in the lien. A lien claim which is only signed once is likely to not be verified properly.  3. In addition, if the jurat of the notary only indicates an acknowledgment as to who signed the documents, but does not indicate that the signer has “sworn” to the validity of the information contained, the notice of claim of lien may be invalid.)          
17.  Has the notice of claim of lien been served upon the record owner of the property within 30 days after it was recorded under NRS 108.227, by delivering a copy to the record owner personally, or by leaving a copy with some person of suitable age and discretion at the owner’s place of residence or his usual place of business and also mailing a copy addressed to the record owner at his place of residence or place of business, or if such place of residence or business cannot be ascertained or a person of suitable age or discretion cannot be found there, by affixing a copy in a conspicuous place on the property, and delivering a copy to a person there residing if they can be found, and by mailing a copy addressed to the record owner at the place where the property is situated?  NRS 108.227.  Does the lien claimant have any record of having performed this task?          
18.  Are the contents of the notice of claim of lien (i.e., the name of the owner, the description of the property, the amount of the lien) factually correct?          
19.  Was any challenge to this lien asserted under NRS 108.2275?          
20.  Did the lien claimant wait at least 30 days after recording his notice of claim of lien, before filing a lien foreclosure action?  NRS 108.244          
21.  Did the lien claimant file his lien foreclosure action within 6 months of recording his notice of claim of lien?  NRS 108.233          
22.  Was Fleet National Bank named as a defendant in any lien foreclosure action filed by this claimant?          
23.  Did the lien claimant record a Lis Pendens in conjunction with the filing of his lien claim?  NRS 108.239(2)(a)          
24.  Did the lien claimant properly file and publish a general Notice to other Lien Claimants and serve such a Notice upon known Lien Claimants of Record to file their Statement of Facts Constituting Lien Claim?  (Or, if the lien claimant was the recipient of such a Notice, did the lien claimant timely file, within ten (10) days of the last date of publication, a Statement of Facts within the action in regard to which such Notices were served and published?)  NRS 108.239(2) and (3)          
25.  If the owner filed an intervening bankruptcy before a lien foreclosure action was pending, such that a bankruptcy stay was in effect 6 months after recordation of the lien, preventing the lien claimant from filing a lien foreclosure action, did the lien claimant, in lieu of filing his foreclosure action, provide timely notice to the possessor of the property (i.e., the debtor or trustee) of his intent to continue to assert his lien rights, within the 6 month time frame, under Bankruptcy Code §546(b)(2)?  If not, then the lien claim may be subject to dismissal by the Bankruptcy Court.  See, Baldwin Builders v. Gould, 232 B.R. 406 (9th Cir. BAP 1999).  (Note:  This is a developing area of the law.  The statute is ambiguous and the case law in some disharmony as to whether notice must be written or can be oral, to whom notice is required, and whether filing a standard creditor’s notice of claim in the Bankruptcy Court would be considered §546 notice.  A review of recent case law, cases distinguishing Baldwin, and the facts of the particular lien claim would be needed before filing any motions to disqualify liens under this section.  To the degree similar facts are at issue, Baldwin appears to be good law as of this writing for our purposes, as it is from the Ninth Circuit and reviews the California mechanic’s lien statute, which is in some ways similar to Nevada’s.)          
26.  Has the lien been bonded around, and released?  NRS 108.2413-108.2425          

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on construction related litigation, including lien law and construction defect law.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship.