Miss. Code § 85-7-405

Current through the 2024 Regular Session

Section 85-7-405 - Creation and declaration of lien; requisite statement and notice; payment action; amendment of claim of lien; priority of liens

(1) To make good a lien created in Section 85-7-403(1), it must be created and declared in accordance with the following provisions, and on failure of any of them the lien shall not be effective or enforceable:

(a) A substantial compliance by the party claiming the lien with the party's contract, subcontract or purchase order for work performed or labor, services or material provided in the building, repairing, or improving of real estate; for architectural services furnished; for registered land surveying or registered professional engineering services furnished or performed; or for materials or machinery furnished;

(b) The filing for record of the claim of lien in the office of the clerk of the chancery court of the county where the property is located within ninety (90) days after the claimant's last work performed, labor, services or materials provided, the furnishing of architectural services, or the furnishing or performing of surveying or engineering services. The lien shall include a statement regarding its expiration pursuant to Section 85-7-421(1) and a notice to the owner of the property on which a claim of lien is filed that the owner has the right to contest the lien; the absence of the statement or notice shall invalidate the lien. The claim shall be in substance as follows:

"A.B., a mechanic, contractor, subcontractor, materialman, machinist, manufacturer, registered architect, registered forester, registered land surveyor, registered professional engineer, or other person (as the case may be) claims a lien in the amount of (specify the amount claimed) on the building, structure, house, factory, mill, machinery, or railroad (as the case may be) and the premises or real estate on which it is erected or built, of C.D. (describing the houses, premises, real estate, or railroad), for satisfaction of a claim which became due on (specify the date the claim was due, which is the same as the last date the labor, services or materials were supplied to the premises) for work performed or labor, services provided (or whatever the claim may be).

THIS CLAIM OF LIEN EXPIRES AND IS VOID ONE HUNDRED EIGHTY (180) DAYS FROM THE DATE OF FILING OF THE CLAIM OF LIEN IF A PAYMENT ACTION IS NOT FILED BY THE CLAIMANT WITHIN THAT TIME PERIOD.

NOTICE TO OWNER OF PROPERTY: You have the right to contest this claim of lien pursuant to Mississippi law."

No later than two (2) business days after the claim of lien is filed of record, the lien claimant shall send a true and accurate copy of the claim of lien by registered or certified mail or statutory overnight delivery to the owner of the property or, if the owner's address cannot be found, the contractor, as the agent of the owner; if the property owner is an entity on file with the Secretary of State's office, sending a copy of the claim of lien to the entity's address or the registered agent's address shall satisfy this requirement. If the lien claimant is not the contractor, he shall also send a copy of the claim of lien within two (2) business days by registered or certified mail or statutory overnight delivery to the contractor or to the contractor's registered agent.

(c)

(i) A payment action for the recovery of the amount of the lien claimant's claim against the party he contracted with shall be commenced in county, circuit or chancery court within one hundred eighty (180) days from the date of filing for record of the lien claimant's claim of lien. A lis pendens notice shall be filed with the commencement of the action with a copy to the owner and contractor;

(ii) The payment action shall be commenced by summons and complaint. The defendants shall be summoned, as in other actions at law, to appear and defend the action; and in case any necessary party defendant shall be a nonresident of or absent from the state, or cannot be found, he may be made a party by publication, as in cases of nonresident or absent defendants in chancery, requiring him to appear on a day to be therein named; and in default of appearance, the same proceedings shall be had as if the defendant had been duly summoned and made default;

(iii) Nothing in this paragraph (c) shall prejudice the parties' contractual rights to arbitration, as applicable;

(d)

(i) The commencement of a payment action under paragraph (c) is not required if the owner has not made payment to the contractor and the lien claimant cannot secure a final judgment against the party with whom the lien claimant contracted because:

1. The party has been adjudicated a bankrupt;

2. If an individual, the party is deceased; or

3. Payment is not due to the lien claimant under the applicable contract agreement until after payment is received by the party with whom the lien claimant contracted.

(ii) If paragraph (d) (i) of this section applies, the person or persons furnishing labor, services or materials may enforce the lien directly against the property in a lien action against the owner if it is filed within the required time for filing a payment action, with the judgment rendered in the proceeding to be limited to a judgment in rem against the property improved and to impose no personal liability upon the owner of the property. A lis pendens notice shall be filed with the commencement of this lien action with a copy to the owner and the contractor.

(iii) Nothing in this paragraph (d) shall impact or negate the rights and defenses available pursuant to Section 85-7-413 or 85-7-419.

(e) A claim of lien may be amended at any time to increase or reduce the amount claimed, and the amended claim of lien shall relate back to the date of filing for record of the original claim of lien. An amended claim of lien filed for record pursuant to this subsection shall be sent to the owner of the property in the same manner as required for a claim of lien in subsection (1)(b) of this section and shall be in substance as follows:

"That certain claim of lien filed by A.B. against property of C.D. on (date) and recorded at book (book#), page (page#) in the lien index of (name of county) County is hereby amended by increasing/reducing (cross out one) the amount of the claim of lien to (specify reduced amount claimed). The remaining terms of the original claim of lien are hereby incorporated by reference into this amended claim of lien. This amended claim of lien relates back to the date that the original claim of lien was filed for record."

(2)

(a) The liens specified in Section 85-7-403 ("construction liens") shall be inferior to liens for taxes, but construction liens shall be superior in priority to all other liens except as specified in subsection (2)(b) and (c).

(b) Except as provided in subsection (2)(c), a construction lien shall have priority over all other liens, deeds of trust, mortgages or encumbrances filed after the date and time of the filing of the notice of lien in the office of the chancery clerk of the county in which the land is located. All liens, deeds of trust, mortgages and encumbrances filed before the date and time of the filing of the notice of construction lien shall have priority over the construction lien, whether the work secured by the lien was performed before or after the filing of the lien, deed of trust, mortgage or other encumbrance. This priority will extend to amendments or restatements and assignments of the lien, deed of trust, mortgage and other encumbrance. The priorities in this subsection are determined by the date and time of filing and without regard to the actual knowledge of the parties of unrecorded liens. Enforcement of a construction lien shall not affect any prior deeds of trust or other liens, and a purchaser, in connection with the enforcement of a construction lien, shall take the property subject to any prior liens, deeds of trust, mortgages or encumbrances of which the purchaser has actual or constructive notice on the date of the purchase. Foreclosure of any prior deeds of trust or other liens shall terminate and extinguish the subordinate construction lien or other interest as to the land and the buildings and improvements thereon, whether or not at the time of the foreclosure the construction lien or interest has been perfected in accordance with the provisions of this article, and the subordinate lienholder shall have the rights in any excess proceeds received by the foreclosing lienholder as provided by law.

(c) A deed of trust, mortgage, assignment of leases and rents, fixture filing or other security agreement affecting real property is a construction mortgage to the extent it secures a loan or loans for the purpose of financing the repair or construction of an improvement on the real property, which may include the acquisition cost of the real property. A construction lien is subordinate to a construction mortgage if the construction mortgage is filed in the land records before a notice of a claim of lien is filed pursuant to Section 85-7-405 and the lender, secured party, mortgagee, beneficiary or holder of the construction mortgage obtained either:

(i) an affidavit or sworn statement from the owner to the effect that no work has been performed on, or materials delivered to, the real property; or

(ii) an affidavit or sworn statement from the contractor, or owner if there is no contractor, as provided in Section 85-7-413(1) (b) regarding payment for work, materials or services provided. A construction mortgage has this priority for all loan advances secured thereby regardless of whether the advances are made before or after the filing of a notice of a construction lien, and this priority will extend to amendments, restatements and refinancings of the construction mortgage.

(3)

(a) Following compliance with the requirements of subsection (1) of this section, in any proceeding against the owner to enforce a lien created by Section 85-7-403 against the property, the party having a direct contractual relationship with the lien claimant shall not be a necessary party, but may be made a party. The design professional, contractor or subcontractor, or all of them, may intervene in the proceedings at any time before judgment for the purpose of resisting the establishment of the lien or of asserting against the lien claimant any claim of the contractor or subcontractor growing out of or related to the contract, subcontract or purchase order upon which the asserted lien is based.

(b) Any party to an action against the owner to enforce a lien against the property, by appropriate plea, may put in issue the fact of indebtedness or the existence of the lien, or both, and may interpose any other defense or join any counterclaim applicable to the action; and if the court by its finding, or the jury by their verdict, as the case may be, ascertain that the plaintiff has a lien as claimed, judgment shall be entered for the amount secured thereby, plus interest and costs, against the party liable for the same.

(c) The court, in its discretion, may award reasonable costs, interest and attorney's fees to the prevailing party in an action against the owner to enforce a lien against the property.

(d) All liens arising under Section 85-7-403 shall have an equal priority, and be first paid out of the proceeds of the sale of the property, or money collected from the owner; and if the proceeds and money are insufficient to satisfy the liens in full, the proceeds and money shall be distributed pro rata among the claimants thereof or as otherwise ordered by the court.

(4) In no event shall the aggregate amount of liens created by Section 85-7-403 exceed the contract price as determined by the terms of the contract or other agreement between the owner and contractor for the improvements made or services performed.

(5)

(a) If payments have been made in reliance upon either lien waivers issued by lien claimants pursuant to Section 85-7-413(1) (a) or sworn written statements of the contractor pursuant to Section 85-7-413(1) (b), the aggregate amount of liens created by Section 85-7-403 in favor of subcontractors and materialmen who are not in privity of contract with the owner shall not exceed the unpaid balance of the contract price under the terms of the contract or agreement between the owner and the contractor at the time the first notice of lien is filed pursuant to this section.

(b) If payments have been made in reliance upon either lien waivers issued by lien claimants pursuant to Section 85-7-413(1) (a) or sworn written statements of the contractor pursuant to Section 85-7-413(1) (b), the aggregate amount of liens created by Section 85-7-403 in favor of design professionals who are not in privity of contract with the owner shall not exceed the unpaid balance of the contract price under the terms of the contract or agreement between the owner and the design professional who is in privity of contract with the owner at the time the first notice of lien is filed pursuant to this section.

Miss. Code § 85-7-405

Added by Laws, 2014, ch. 487, SB 2622, 3, eff. 4/11/2014.