In 2016, bad things happened to the lien rights of subcontractors and suppliers in Missouri because of a bad court decision. Then in 2019, American Subcontractors Association (ASA) and its industry partners made good things happen in the legislature with the passage of a favorable law to overcome the bad court decision. The problem started when the Supreme Court of Missouri unexpectedly ruled that a subcontractor had neither a bond claim nor a mechanic’s lien claim against the real estate owned by a county but leased by it to a private entity to be used by that entity as its corporate headquarters.
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Mechanic’s liens are without a doubt a subcontractor’s best collection tool when there are payment problems. The sources of its power are (1) the risk that the property will be sold to satisfy the lien, (2) the threat that the owner, in order to prevent foreclosure, may have to pay the subcontractor even if the owner has already paid the general contractor, and (3) the lien may trump the lender’s prior deed of trust.
The decision by the Supreme Court of Missouri in Brentwood Glass Company, Inc. v. Pal’s Glass Service, Inc., creates a crack in the seamless continuum of payment protection previously afforded to subcontractors on non-residential construction projects in Missouri. Subcontractors have for decades believed – with good cause – that regardless of whether the property on which they worked was privately-owned or owned by a governmental body, they are afforded statutory security for payments due them.
Subcontractors are accustomed to believing their payments are secured by either a mechanic’s lien or a payment bond, sometimes both. For example, when the public utility, AmerenUE, convinced the Missouri Court of Appeals that due to its quasi-governmental status, it should be immune from mechanic’s liens, the court went on to say that AmerenUE would be required to have its prime contractors post payment bonds for the protection of subcontractors.