a:\newslw.96 [4]Alan Lee MitchellStephen De'ak212001-12-28T22:11:00Z2006-07-01T22:30:00Z2006-07-01T22:30:00Z112937374 6117865011.8026 Scott Hookland LLPConsider . . .VOL. 11, ISSUE 1 January, 2002Law OfficesFURRER & SCOTT LLC9185 SW BURNHAM ST. POST OFFICE BOX 23414TIGARD, OR 97223 TIGARD, OR 97281(503) 620-4540 -- (800) 334-8986 -- FAX: (503) 620-4315www.furrer-scott.comNEW LIEN NOTICE REQUIREMENTS?As noted in our October, 2001 newsletter, the 2001 Oregon Legislature passed HB 3842. One aspect of this bill is that it creates potential changes to the requirements for giving the Oregon Notice of Right to a Lien (“NORTAL”).Currently, potential lien claimants who have a contract with an owner of the property (called “original contractors”) are not obligated to give a NORTAL in order to maintain their construction lien rights. This law applies whether the project is residential or commercial. (But see the next article about other notice requirements on residential projects.)Current law also provides that these original contractors who do not give a NORTAL to the mortgagees may not have priority over a construction lender for the materials portion of any lien claim.The new law is, if nothing else, ambiguous about how it impacts potential lien claimants. According to some who worked with the bill while it was in the Legislature, the intent was to require subcontractors who are dealing with the developer of new homes to give a NORTAL. Whether or not the final bill accomplishes its intended purpose, the wording of the statute was changed.The new law is ambiguous because it changes the NORTAL obligations if an owner is an “original contractor.” Yet, as noted above, an “original contractor” is defined as “a contractor who has a contractual relationship with the owner.” ORS 87.005(7).Confused? So are a lot of people; read on.Previously, the law stated that a NORTAL need not be given when the work was “furnished at the request of the owner.” Now, the law states that a NORTAL need not be given when the work is “furnished at the request of an owner who is not the original contractor.” This new law is effective as of January 1, 2002.While the new law inserted the words “original contractor” into the NORTAL statute, it did not change the statutory definition of the term “original contractor.” Thus, the new law now reads, in effect, that a NORTAL need not be given when the work is provided at the request of an owner who is not a contractor that has a contract with the owner. In other words, an owner who has a contract with himself ….Yes, confusing at best—if not outright ridiculous. The Oregon courts may search for a legislative interpretation other than the Legislature intended this result.At this time, interested parties are working with the Oregon Legislature to “fix” this problem. We will keep you updated as to any changes that are made.In conclusion, when you add the HB 3842 language to the existing NORTAL requirement that the material portion of a lien claim does not have priority over construction lenders unless the claimant sent a NORTAL, the “bottom line” is that all potential lien claimants, including original contractors and those working on commercial projects, should consider sending a NORTAL on every project. (As discussed below, existing law also requires that “original contractors” may be obligated to timely provide an Information Notice to Owners. Thus, these contractors may now want to send both notices when they begin a project.)INFORMATION NOTICE TO OWNERSConsider this scenario: A contractor goes to his attorney to file a construction lien claim. The contractor states that he was working directly for a homeowner and gave the “pre-lien” notice. Is the contractor able to file a lien claim?The answer depends on what the contractor means by the “pre-lien” notice. Many contractors focus so strongly on the Notice of Right to a Lien (discussed in the prior article) that they forget about the Information Notice to Owner (“INTO”).ORS 87.093 requires that all original contractors on residential projects must give the INTO at the time the owner signs the construction contract if the total contract price is over $1,000. If the project is originally less than $1,000 but exceeds that amount during the course of construction, then the contractor must give an INTO within five days of knowing the contract price will exceed $1,000.In addition, if the contractor builds a new residence, then he must give the INTO to any purchaser who buys the house within 75 days immediately following construction.If a contractor fails to timely give an INTO when otherwise required to do so, then the contractor’s right to ever file a lien on this project is lost. (There is no “relation back” period like there is with the NORTAL.) Further, the CCB can suspend the contractor’s license or impose a civil penalty of up to $5,000.Contractors must use the exact form provided by the CCB when giving this notice. If the owner is also a licensed contractor, then there is no need to give this notice.These notices are mandatory as noted above. Failing to give one (or failing to give one at exactly the right time) has such potentially serious consequences that all contractors should learn to avoid this failure.NOTICES OF NON-RESPONSIBILITYIf you do work for a tenant on a commercial project, can you file a lien that attaches to the landlord’s interest? Generally the answer is yes. However, if the landlord timely and properly posts a Notice of Non-Responsibility, then the lien may not reach the landlord’s interest in the property.Oregon law presumes that an owner has knowledge of work being performed on his property at the request of the tenant. If the owner properly posts a Notice of Non-Responsibility, however, a construction lien will not reach his interest in the property. Instead, the lien will attach only to the tenant’s interest in the property.In order to be effective, a Notice of Non-Responsibility must: (1) Be posted within three days of the owner obtaining knowledge of the construction; and (2) Be posted in “some conspicuous place” at the project.For potential lien claimants, there are two points to consider. First, you may want to send a Notice of Right to a Lien to all owners even if you are not required to do so. Sending this notice will set a date on which the owner obtained knowledge of the construction and will start the 3-day “clock” running.Second, potential lien claimants should train their personnel to keep their eyes open to see if any Notice of Non-Responsibility is posted on a project. It may even help to take a time dated photograph of any Notices of Non-Responsibility as soon as they are posted. If you send a Notice of Right to a Lien, you may want your personnel to make note in their daily log whether a Notice of Non-Responsibility is posted within three days of the owner’s receipt of the Notice of Right to a Lien.These notices can play an important part in negotiations after a lien is filed. Thus, having your workers make notes about whether or not a Notice of Non-Responsibility is posted can be valuable.FIRM NEWS:HOURLY RATES: For files opened after January 15, 2002, the following hourly rates apply: Michael J. Scott, $205; Douglas R. Hookland, $195; Thomas J. Murphy, $185; Alan L. Mitchell, $155; Douglas L. Gallagher, $145; Aaron L. Blankenship, $135. Files opened prior to January 15, 2002 will be billed at the rates previously established by the firm.NEW SEMINAR. The lawyers of the firm will present an all-day seminar entitled “Oregon Construction Lien and Bond Law” on April 11, 2002. This seminar will include updates on the changes to Oregon law arising out of the 2001 Legislature. If you would like a brochure about this seminar, please contact Shari M. Persen at Scott Hookland LLP.CONGRATULATIONS to Aaron Blankenship and his new wife, Kim. They were married on December 7, 2001.CONGRATULATIONS to Doug and Becky Gallagher, who welcomed their first baby, Virginia, on November 30.RANDOM THOUGHTS:“The illegal we do immediately. The unconstitutional takes a little longer.” Henry Kissinger.This newsletter is published quarterly by the law firm of Scott Hookland LLP for the benefit of its clients and friends and is intended to inform them about legal matters of interest. While this information is meant to be current, we do not promise or guarantee that the information is correct, complete or up-to-date. This information is not intended to and should not be considered to provide legal advice or create an attorney-client relationship. No action should be undertaken in reliance hereon without professional legal counsel. Alan L. Mitchell, EditorSCOTT  HOOKLAND LLPL A W Y E R SMailing Address: Post Office Box 23414, Tigard, Oregon 97281  Street Address: 9185 SW Burnham, Tigard, Oregon 97223Telephone: 503-620-4540  Facsimile: 503-620-4315 www.scott-hookland.com