STS Update: Mississippi Lien Bill Heads to Governor

March 25, 2014

A new bill awaiting the signature of Mississippi Governor Phil Bryant will expand lien rights to subcontractors in that state.

After previously passing the Senate and then overcoming some minor hurdles in the House, both halves of the state legislature advanced a final version of Senate Bill 2622 out of conference committee late last week. Once the bill is signed into law, subcontractors working in Mississippi will immediately have access to the lien rights that have previously only applied to general contractors, or any party with a direct contract with the owner of a project.

The enactment of SB 2622 would bring an end to a saga that began with the Mississippi Supreme Court's declaration last fall that the state's stop notice statute was unconstitutional. Before SB 2622 emerged, stop notices were one of the only payment protections for Mississippi subcontractors. After it was voided by the state Supreme Court's ruling, advocates scrambled to enact a new lien statute, the result of which is now SB 2622.

Some objections to the bill came from the general contractor community but Chris Ring of NACM's Secured Transaction Services (STS) thought opponents to the bill were missing the point entirely. "Who does the vast majority of lending on these projects?" Ring asked previously when SB 2622 was introduced. "Banks obviously lend on these, but they're obviously being funded on the credit that subcontractors and materials suppliers provide as well. If you strip away their rights that they have on the money they're lending, that just means that less private jobs are going to be started in Mississippi. That's what owners and GCs should be extremely worried about."

In the end, however, only one state Senator voted against the measure. Governor Bryant's signature is expected soon, and will mercifully end Mississippi's reign as the only state in the country without a lien law that applied to subcontractors.

To learn more about NACM's STS, click here.

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