Perspectives

Sometimes all you need to navigate the legal landscape is a little information. Our blogs and articles touch on a wide spectrum of legal matters that can pop up in both business and everyday life, and we hope they’ll shed a little light wherever you happen to need it.

2021 State Law Updates to Mechanic’s Lien & Payment Bond Claims

Several states have enacted new legislative changes over the last couple of years to private mechanic’s lien claims and public bond claims-and it’s vital to your business that you stay up-to-date on these changes.

The attorneys at WFJ have compiled a summary of some of the recent changes that apply to commercial or government construction projects, and updated opinion letters for each individual state. Keep reading for a summary of these legislative changes.

Missouri

Statutory amendments passed in 2019 expanded the coverage for bond claims on public projects.  Similar to other states, the claimant is entitled to assert a bond claim if the claimant has a contract with the general contractor or with a subcontractor of the general contractor.  As a result of these amendments, if the contract was entered into after August 28, 2019, a claimant is now entitled to assert a bond claim if the claimant has a contract with a sub-subcontractor or a material supplier.

However, the 2019 amendments added a notice requirement for material suppliers.  If the claimant is a material supplier, and has a contract with a sub-subcontractor or another material supplier, the claimant must serve a final bond claim notice on the general contractor within 90 days of the claimant’s last date of providing material.  The claimant is not required to serve a final bond claim notice on any party if the claimant is providing material and labor, regardless if their contract is with the general contractor, subcontractor, or sub-subcontractor.

Tennessee

Tennessee passed an amendment in 2020 to their lien statute which changed the requirements for serving a preliminary notice on a private commercial project.  As a result, if a contract for a private project is entered on or after July 1, 2020, and the claimant has a contract direct with the owner, the claimant is not required to serve a “Notice to Owner.”  Previously, if the contract was entered before July 1, 2020, and the claimant had a contract directly with the owner, the claimant was required to serve the “Notice to Owner” on the owner before the first date the claimant furnished labor or material.

Arkansas

The State of Arkansas passed amendments in April 2021, which made significant changes to its public and private bond claim statutes. The amendments affect the rules for serving a final bond claim, the deadline for filing a bond, and claims for rental equipment on public projects.

Starting in April 2021, if the claimant’s contract is with the subcontractor, the claimant must serve the final bond notice on the general contractor and surety within 90 days of the claimant’s last date.  This new rule applies to both private and public projects.  Previously, a claimant was not required to serve any notice to assert a claim against the payment bond for either private or public bond claims.

Beginning in April 2021, the lawsuit deadline for payment bonds, for both private and public projects, is now one (1) year from: (1) the date of final payment under the construction contract, or (2) the date the general contractor stops work on the construction project, whichever date is earlier. We recommend, however, that claimants follow the conservative lawsuit deadline of one (1) year after the “last date” the claimant furnished labor or material because the new statutory requirements may be difficult to track.

Finally, starting in April 2021, rental equipment is now covered under the payment bond for a public project. The prior Arkansas statutes did not clarify whether a claimant could assert a claim against the payment bond on a public project for rental equipment.

Georgia

The State of Georgia has adopted new “Lien and Bond Waiver” forms which go into effect on January 2, 2021. In addition to the change in the waiver forms, the new law clarifies that waivers signed after January 1, 2021, do not waive contract rights but only lien and bond rights after the prescribed period of withdrawal. Before the passage of the new law, the statute was not clear whether all contract rights and remedies were waived when a prospective claimant waived their lien or bond rights.

Texas

Texas recently passed a bill which made significant changes to the rules and procedures for mechanic’s lien and bond claims.  The changes apply to all new construction contracts entered on or after January 1, 2022.  The prior mechanic’s lien and bond laws will continue to apply for prime contracts executed prior to January 1, 2022.

New preliminary notice requirements will go into effect on January 1, 2022.  If the claimant has a contract with a subcontractor, the claimant is no longer required to serve a “2nd month notice” on the general contractor.  The claimant must still serve the “3rd month notice”, as previously required, if the claimant’s contract is with the general contractor or subcontractor. Additionally, the form required for the “3rd month notice” has been modified.

The new Texas bill will change the lien foreclosure deadline.  Starting January 1, 2022, the lien foreclosure deadline will be one (1) year from the last day a claimant may file the lien (the previous deadline was two (2) years).  However, the lien foreclosure deadline can be extended for an additional year under a written, recorded agreement with the owner.

The notice requirements will change for “specially manufactured materials” when the new bill goes into effect on January 1, 2022.  Under the new law, the claimant will no longer be required to serve any additional notices for “specially manufactured materials.” Instead, the claimant’s lien claim for “specially manufactured materials” will now be covered by the “3rd month notice.”

The preliminary notice form for retainage will contain new requirements starting on January 1, 2022.  The modified form will require the claimant to provide a description of the project and to list the total retainage unpaid.

Starting January 1, 2022, if a payment bond has been recorded on a private project, claimants will be required to serve the preliminary notices to the original contractor and the surety.  Previously, if a payment bond was recorded on a private project, claimants were required to serve the preliminary notices to only the original contractor.

The deadline to file a mechanic’s lien claim for retainage will be extended starting on January 1, 2022, and it will give claimants almost two additional months to file a retainage claim.  The new retainage deadline will now be the 15th day of the third month that the project is completed, terminated, or abandoned.  The previous deadline required claimants to file a retainage claim within 30 days after the date the project was completed, terminated, or abandoned (this deadline still applies to contracts entered before January 1, 2022).

Good news for claimants is that beginning on January 1, 2022, an owner will no longer be able to shorten the deadline for filing a lien.  Prior to the new law, the owner could file an affidavit of completion, or notify subcontractors that the general contractor has been terminated or abandoned the project, which shortened the deadline for filing the mechanic’s lien to 30 days.  A claimant, under the new law, must file a lien no later than the 15th day of the 4th calendar month after the month when the project is completed, settled, or abandoned.

Texas further amended their lien statutes by removing the requirement that statutory lien waiver and release forms be notarized.  Starting on January 1, 2022, statutory lien waiver and release forms will no longer have to be notarized.

 

You can request individual opinion letters by contacting us at info@wfjlawfirm.com.

5 New MN State Laws We Think You Should Know About

Unless you spend your day refreshing the Minnesota State Legislation website, you may have missed some of the new laws that have been passed so far in 2021. Don’t worry, it’s our job to pay attention- and we are happy to report back to you!

 

  1. Insurers Cannot Discriminate Against Those with Prescriptions that Interfere with Opiates

Prescription for opiate antagonist: When determining whether to issue, renew, cancel, or modify a policy of life insurance, an insurer may not make an underwriting determination based solely on information revealing that a proposed insured has a prescription for an opiate antagonist.

 

2.  Statutory Deadlines Suspended During Peacetime Emergency

An act relating to civil actions; suspending the expiring of statutory deadlines imposed upon judicial proceedings during a peacetime emergency; Deadlines governing proceedings in district and appellate courts suspended during peacetime emergency. Deadlines imposed by statues governing proceedings in the district and appellate courts, including any statute of limitations or other time periods prescribed by the statute shall not expire from the beginning of the peacetime emergency declared on March 13, 2020 in governor’s executive order 20-01 through April 15, 2021. Nothing in this statute prevents a court from holding a hearing, requiring and appearance, or issuing an order during the peacetime emergency if the judge determines that individual circumstances relevant to public safety, personal safety, or other emergency matters require action in a specific case. This section is effective the day following final enactment and applies to all deadlines that had not expired as of March 13, 2020 and that would have expired during the period starting March 13, 2020 and ending April 15, 2021.

 

3. Department of Corrections to Provide Resources to Those Recently Released

An act relating to corrections; requiring that certain information, assistance, services and medications be provided to inmates upon release from prison; providing identification cards for released inmates, requiring a homelessness mitigation plan and annual reporting on information related to homelessness.

“Beginning July 1, the Department of corrections will have to provide health and other information to people leaving the prison system. The idea is to help ease their re-entry into the community. People leaving prison must also receive a month’s supply of their medication and a prescription for two months of refills. The department must help them apply for MinnesotaCare or Medical assistance if the person wants it. The department must also provide a range of information such whether the person can vote and whether they owe court-ordered payments or fines.

 

4. Frontline Workers Who Contract Covid-19 Able to Claim Worker’s Compensation Through 2021

First responders, health care workers and child care providers who serve those groups will be able to claim worker’s compensation if they contract COVID-19 through 2021 thanks to an extension of the policy passed in April. It first took effect las year and established the presumption that the people on the front lines who developed a COVID infection were exposed to it in the workplace unless their employer could prove others.

 

5. New Law Sets Energy-Saving Goals

This law, three years in the making, “will strengthen Minnesota’s energy conservation programs, reduce greenhouse as emissions and create jobs across the state, “according to a May press release from the governor’s office. The law sets energy-saving goals and requires documentation of progress toward those goals. It took effect when Walz signed it May 25.

 

Want to see all the laws passed so far this year? Visit Minnesota State Legislation’s website to read the full list of statutes.

 

Have questions? Our attorneys are always available to work with you on your legal needs.

What You Need To Know: MN’s Emergency Executive Order for Commercial Collections

On May 4th, 2020, an Emergency Executive Order was signed into effect, placing suspensions on a number of collection activities related consumer debtors. The Order suspended “service of a garnishment summons on a consumer debtor or consumer garnishee.”* The order also suspended obtaining “information about a consumer debtor’s assets, liabilities, and personal earnings.”

On January 7th, 2021, Executive Order 21-02 amended Order 20-50 to add levies to the suspended activities as well. Up to that point, only garnishments and formal demands for disclosure of financial information had been suspended. The updates in Order 21-02 added a significant limitation on the suspension of garnishments and levies by adding language limiting the suspension of judgments entered on or after May 4th, 2020 and language allowing for wage garnishments and levies on judgments entered prior to May 4th, 2020. Previously, the suspension was on all judgments old and new.

On May 6th, 2021, the MN Governor issued Executive Order 21-21. This order provides a “sunset” provision on Orders 20-50 and 21-02. Movement on this Order relies on the determination by the Commissioner of Minnesota Department of Health to confirm that seventy percent (70%) of people sixteen years of age and older have received at least one dose of COVID-19 vaccine.

Effective two business days after that confirmation, or on Wednesday, June 30th, 2021 at 11:59 pm, whichever occurs first, Executive Orders 20-50 and 21-02 (as well as others) will be rescinded. Meaning, on July 1, 2021, or perhaps earlier, the suspension of garnishments, levies and demands for disclosure related to consumer debtors will no longer be in effect.

If you have questions about whether you may be effected by any of these changes, please reach out to one of our Commercial Collections attorneys.

 

*”for the purpose of this Executive Order, the terms ‘consumer debt’ and ‘consumer garnishee’ have the definition of ‘debtor’ and ‘garnishee’ as used in Minnesota Statutes section 571-712, subdivision 2(b) 2(c), when applied to debtors and garnishees who are natural persons and whose debt originated from the purchase of goods or services purchased primarily for a personal, family, or household purpose, and not for a commercial, agricultural, or business purpose.

Executive Order 20-50

Executive Order 21-02

Executive Order 21-21

Boating Under the Influence – What You Should Know

We all know drunk driving has become a major problem throughout the United States but what about drunk boating? With our bright sunny days and beautiful lakes, boats are an attractive place to spend many days in the summer in both Minnesota and Wisconsin.

Most states, like Minnesota and Wisconsin, have boating laws but just how big is the problem? According to The U.S. Coast Guard 2018 Recreational Boating Statistics released June 2, 2020, there were 633 boating fatalities nationwide in 2018, with alcohol leading the known contributing factor in fatal boating accidents, accounting for 100 deaths or 19% of fatalities.

These laws are enforced but citations can be avoided if you have the right information. Please see below for a list of most commonly asked questions about boating under the influence.

1. Can I have alcohol on my boat?
Yes, open container laws do not apply to boats, meaning you are able to have an open container of alcohol on it. You are also able to openly consume it, as long as you are 21 or older.

2. Do Police enforce laws against boat operators drinking? If so, how?
Police do enforce these laws. These laws are most commonly enforced by safety checkpoints. Like roadside DWI checkpoints, police are able to set up BWI checkpoints as well. Law enforcement can stop, inspect, and test boaters for sobriety in the same manner they do in roadside checks on state highways. Those often include preliminary breath and field sobriety tests. Some states do not even require probable cause to do so.

3. What are the consequences?
The consequences of a BWI are like those of a DWI. Along with likely losing your boating license, you could also have a criminal record, lose your driver’s license, and pay hundreds or thousands of dollars in fines to the court if convicted. These convictions can further affect your boat and car insurance rates, making you a more high risk driver if you are charged or convicted of a crime involving alcohol. If you are a commercial driver, the consequences could be devastating.

4. How can I avoid these charges?
First and foremost, avoid alcohol while operating your boat. You can further avoid these charges by knowing the areas boating laws, making sure everyone on your boat wear their life vests while following other safety rules, and by taking courses on safe boating.

If you have specific questions or wish to speak to an attorney regarding your case or any of the information above, please reach out to one of our experienced attorneys for a free case analysis.

Posted by WFJ | July 15, 2020

DO YOU HAVE CUSTODY RIGHTS? A FATHER’S GUIDE TO CUSTODY AND PARENTING TIME

Most people may be surprised to learn that a father has no legal rights to custody or parenting time with his child if he was not married to the child’s mother at the time of the child’s birth. In Minnesota, if a child is born to an unwed mother, the mother is the sole legal and physical custodian of the child. A father has to bring a legal action to obtain rights to custody and parenting time, even in cases where paternity is uncontested.

At the hospital, many unwed fathers sign a Recognition of Parentage (ROP) form along with the Birth Certificate. The ROP is different than an application for a birth certificate. The form must be completed by both parties and signed in the presence of a notary public. Then the form is filed with the Minnesota Department of Health. The legal effect of the form is to provide the father with a paternity presumption determination akin to that of a judgment or court order. If the ROP is on file with the state, the father may commence an action to determine legal custody, physical custody, and parenting time with the minor child or children. If a ROP has not been signed and filed with the state, then the father must first bring a paternity action to declare the existence of a parent-child relationship before any rights of custody or parenting time can be determined.

If a father is named on the child’s birth certificate but a Recognition of Parentage has not been completed by the parties, the birth certificate provides the father with a presumption of paternity but is not legally conclusive, nor legally binding like a ROP.

To put it another way, if a father does not sign the birth certificate, the mother or the County may file a paternity action to determine if the father is the biological father and therefore responsible to pay child support.  If a father signed the birth certificate and ROP, then the mother or County can merely apply for child support and begin those proceedings.  However, just because a father is responsible to pay child support does not mean that he has a right to custody or parenting time.  The only way for an unmarried father to gain custody and parenting time rights is to file for a Petition to Establish Custody and Parenting Time (or Paternity action if you are not on the ROP).  If the mother agrees that the father should have custody and parenting time, there is a Joint Petition to Establish Custody and Parenting Time that the parties can file with the Court.  If the mother does not agree, then the father can file a Petition with the Court and begin proceedings to establish custody.

If you’re a father struggling to obtain rights to your child, please do not hesitate to call one of our experienced attorneys to help you through the process.

Posted July 9, 2020

Common Myths about the Security Deposit

Security Deposits in the residential setting are often misunderstood. Tenants sometimes leave before the lease term is up, pinning the landlord with unpaid bills and property damage. On the other hand, landlords sometimes incorrectly use the deposit to improve or upgrade their property.

In Minnesota, statute 504B.178 contains the most guidance on the appropriate use of the deposit. It expressly states that a landlord may keep portions of the deposit to account for unpaid rent or fees. In addition, the legislature has adopted an “ordinary wear and tear” standard, which states that a landlord may use the deposit to repair any damage that is beyond such ordinary wear and tear. However, “ordinary wear and tear” has been ill-defined, and over the years has been open to interpretation. This has led to many myths and misconceptions. Here are some of the most common:

As a landlord, I can keep the tenant’s security deposit to update my property.
False. It is inappropriate to use a deposit to pay for anything other than repairs beyond ordinary wear and tear. A common example is replacement of flooring. The landlord may charge the tenant for damage that was directly caused by the tenant, such as pet damage or scratches. However, all flooring needs care or replacement from time to time. If the kitchen linoleum has simply seen too many years, the landlord must pay for the cost of replacement. Unless otherwise agreed to, updating or upgrading a property is always the responsibility of the landlord.

A landlord can’t use a security deposit to cover cleaning costs.
False. A landlord can use a deposit to cover the cost of cleaning an unusually dirty home. Most leases require the tenant to do a thorough cleaning prior to move-out. If the tenant fails to clean adequately, and the landlord is forced to arrange for cleaning, that cost may be deducted from the deposit.

A landlord can’t deduct utility bills from a tenant’s security deposit.
False. A landlord may deduct any unpaid bills, including rent, late fees, or key replacement fees, from the security deposit.

As a tenant, I can use my security deposit as my last month’s rent.
False. The purpose of the security deposit is to insure the landlord against property damage caused by the tenant. If the deposit is spent on the tenant’s last rental payment, there is often nothing left to cover the cost of repairs. Unless expressly written in the lease or otherwise agreed, a security deposit may not be used to pay the last month’s rent.

The security deposit is the only way the landlord get the tenant to pay for repairs.
False. If the deposit is inadequate to cover the cost of any repairs to the property, and if the damage was directly caused by the tenant, the landlord has a right to bill the tenant for the additional costs. If necessary, the landlord can sue the tenant in conciliation court to recover the costs of the repair.

It’s important to remember that whether the landlord intends to keep the deposit or not, the landlord must notify the tenant in writing or return the deposit within 21 days after the end of the tenancy.

Whether a landlord can keep a security deposit always depends on the individual circumstances. To learn more about how the law affects your unique situation, contact our team.

Written by WFJ | Posted April 2, 2020

Chapter 11 Bankruptcy: Small Business Reorganization Act – A Welcome Relief to Small Business Owners.

Small businesses are a pillar of the American economy. In 2005, Congress enacted Bankruptcy Abuse Prevention and Consumer Protection Act to allow small business owners easier options for reorganization.

After almost 15 years, Congress realized small business debtors were the least likely to have a successful reorganization while still having a high number of small business failures.

On August 23, 2019, Congress passed the Small Business Reorganization Act (SBRA). The SBRA is a Chapter 11 reorganization bankruptcy under the new subchapter, Subchapter V.

The SBRA has new requirements as to which individuals or entities will qualify under Subchapter V, as well as new procedures. These features were added to allow small business to avoid some of the burdensome costs and time typically associated with a Chapter 11 bankruptcy.

The highlights of the SBRA are as follows:

  1. Debt limit has a baseline of total debt at $2,725,625;
  2. Elimination of the absolute-priority rule for creditors;
  3. Appointment of a trustee, similar to those appointed in Chapter 12 and Chapter 13 of the Bankruptcy Code; and
  4. Less strenuous disclosure statements and more debtor-friendly rules governing the plan requirements.

The complexity of filing bankruptcy for small businesses owners and small business debtors may be lessened by these new changes, the option to file under Subchapter V will keep many businesses operating.

The changes brought forth by the SBRA are exciting and a welcoming change to the law. There are many factors for small business owners to consider before filing of a reorganization bankruptcy. As always, it is best to consult with your LegalShield provider firm for a more detailed analysis.

Posted on April 14, 2020

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