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ALABAMA
Tuesday, June 17, 2008
There are essentially two types of liens in Alabama: 1. The "unpaid balance" lien in which a contractor or person furnishing material may file a lien for the unpaid balance due the contractor by the owner; 2. the "full price" lien in favor of those in direct contact with the owner and -- in some cases -- materialmen.
The unpaid balance lien is only good if full payment has not been made to the prime contractor. When there is no unpaid balance due the contractor, no lien may be established. This lien also covers employees of the contractor or persons furnishing materials to him. The full price lien favors the supplier only if the supplier gave notice to the owner before furnishing materials.
All potential lienors, with the exception of an original contractor (a contractor with a direct contract with the owner who is exempted from the notice requirement), must fulfill three basic pre-requisite steps to perfecting a lien: 1. provide statutory notice to the owner; file a verified statement of lien in the probate office of the county where the improvement is located; and file suit to enforce the lien.
A full price lien requires written notice to the owner that "such certain, specified material will be furnished by (the supplier) to the contractor or subcontractor for use in the building or improvements on the land of the owner or proprietor at certain specified prices. While the statute does not specify how much notice is required to establish a full price lien, it is presumed that sufficient notice must be given to provide the owner reasonable opportunity to object in writing "before the material is used."
Even though the time may have passed to provide the advance notice of a full price lien, the potential lienor may provide the owner written notice to establish an unpaid balance lien. The only timing provision for such notice is that it be given before the filing of a verified statement of lien. Once the notice is given, any unpaid balance in the hands of the owner is held subject to such a lien.
When filing any lien, special attention should be paid to the property description. The statute specifically provides that, with regard to property located in a city or town, a "description by house number, name of street and name of city or town" is sufficient.
The verified statement of lien must be filed in the office of the judge of probate of the county where the subject property is located. When the property is located in more than one county, the statement must be filed in each county.
Laborers must file the statement within 30 days, original contractors must file within six months and every other claimant must file within four months after the last item of work or materials has been performed or furnished.
The third and final step is to file suit in the circuit court (or district court when the amount is $50 or less) of the county where the property is located. If the subject property is located in two or more counties, separate actions must be brought in each of the involved counties. Suit must be filed within six months from the time when the debt is contractually due and payable to the lienor.
If the lien claimant intends to establish a priority over another party interested in the property, such as a mortgagee, then that other person should be made a party to bind it to the judgment. The owner or proprietor of the subject property is a necessary party to the suit. Where the lien claimant seeks to establish an unpaid balance lien, the general contractor is a necessary party.