3 Things to Know if Supplying Rental Equipment to a Construction Project
Although great strides have been made within the last several years, there are still instances where construction law differs for those who provide rental equipment to a construction project. Many states, like California, Connecticut & Florida, specifically include rental equipment within their statute, allowing providers of rental equipment to secure mechanic’s lien rights as long as they follow the same guidelines set forth by statute for any labor and/or material supplier securing rights.
Other states may not specify rental equipment within their statute, but case law has supported the inclusion of rental equipment (Arkansas, Ahern v. Salter, 2014). And then, there are those states that do not provide protection for the rental equipment supplier within their statutes or their case law.
Know the Statute Specific Requirements For Rental Equipment
We already know that mechanic’s lien statutes in each state are different – “like snowflakes, no two states are alike” – so it should come as no surprise when I say “You should always double check statute before serving your preliminary notice or filing a mechanic’s lien.”
Although no two states are alike, some states do have things in common. Can you name two states that have separate requirements for those that are providing rental equipment? Louisiana & Missouri!
According to The National Lien Digest, you should serve the notice upon the owner within 15 business days from the first use of the rental equipment. Persons who use rented machinery or equipment in performing work should file the lien within 6 months after the indebtedness shall have accrued. Persons who rent machinery or equipment to others should file the lien within 60 days after the date the last rental machinery or equipment was removed from the project.
Lessors of Equipment: at the time of entering the contract, obtain the lessee’s signature on a notice to be served upon the owner and the prime contractor within 10 days from when the equipment is first placed on the project site.
In other states, like Illinois, rental equipment liens are allowed on commercial projects, but are not allowed on a single-family residence, or a multi-family residence of fewer than 12 units in a single building.
Case law (Griffin Dewatering Corp. v. B.W. Knox Construction Corp., 2001 WL 541476) confirmed there are no provisions under Delaware statute to protect those who provide rental equipment.
Know Your Last Furnishing Date
Even if service of the rental equipment is a part of the contract, the date the service was received is not used to determine the last furnishing date. Typically, the owner is only responsible for the work that was performed to improve his property, therefore the last furnishing date would be the last date the equipment was used on the job, not the date the equipment was picked up or serviced
Know that Multiple Liens May be Required
If you supply multiple pieces of equipment to a property, there is a chance that a separate lien will be required for each piece of equipment. Attorneys have conflicting opinions as to whether or not a separate contract for each piece of equipment requires separate liens or whether one lien is sufficient, and it is quite possible that two attorneys in the same state will have differing opinions.
My advice: know that it is a possibility & always make sure you use a construction oriented attorney.
Even though each state does not specifically call out rental equipment within their statute, it does not automatically mean you won’t be entitled to secure mechanic’s lien rights. It’s best to serve a notice on every project – make sure you follow statute parameters – and when in doubt, seek a legal opinion.