By Kristena Hansen
Phoenix Business Journal
As the result of an Arizona Court of Appeals opinion on lawsuits against building owners, contractors — specifically subcontractors — better make sure their pre-lien documents are in order as they start work if they want legal protection for nonpayment under state law.
The recent opinion has made it nearly impossible for building owners to be held liable in certain battles for unpaid improvements made to tenant spaces, clarifying decades of nebulous views as to where the responsibility lies in such instances.
At the same time, the court’s recent opinion has bolstered some rights that contractors and subcontractors have used, especially during the recession, to get paid for work they have done on commercial properties.
“There’s been a question for a lot of years as to what exactly the owner’s liability is,” said Corey Larson, a member of the Real Property Section Executive Council for the State Bar of Arizona. “This goes farther than any case we’ve had so far to answer that question.”
While the opinion enhances some protections for building owners, it also reinforces other contractor rights under state law by tossing out various technicalities used in court to invalidate mechanics’ liens. It also bolsters contractors’ rights by giving them the ability to place a lien on entire properties rather than just a tenant space.
“As a result of this ruling, it’s certainly as important as ever that laborers adhere to the statutory requirements for serving property owners preliminary notices of their lien rights,” said Adam Trenk, an attorney at Rose Law Group PC in Scottsdale, who specializes in land use and zoning cases and has represented both building owners and the construction industry.
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