• 18-44-504 Religious and Charitable Organizations, Payment Bonds
  
• (a) No contract in any sum exceeding one thousand dollars ($1,000) providing for the repair, alteration, or erection of any building, structure, or improvement shall be entered into by any church, religious organization, charitable institution, or by any agency of the foregoing, unless the contractor shall furnish to the party letting the contract a bond in a sum equal to the amount of the contract.
• (b) The bond shall be filed in the office of the clerk of the circuit court in the county in which the property is situated. Any person or his assigns to whom there is due any sum for labor or material furnished may bring an action on the bond for the recovery of the indebtedness. No action shall be brought after six (6) months from the completion of the church, hospital, orphanage, charitable institution, or benevolent institution. If the bond is not filed as provided in this subsection, any person performing labor or furnishing material, except the principal contractor, shall have a lien upon the property for the unpaid amount of the claim.

• Arkansas law requires that for residential property the “Important Notice to Owner” be given to the owner, or his authorized or registered agent, before the commencement of work. However, the owner only has to receive one notice, so if another subcontractor or supplier gave the required notice, then it will apply to all lien claimants. Also, the notice need not be given if the contractor supplied a performance or payment bond OR if the transaction was a direct sale to the property owner. Also, if there are four or more residential units, then the notice requirement does not apply. Arkansas statute (18-44-108) which allows a supplier to “apply at any time to the contractor or a subcontractor” for certification that the owner has received a preliminary notice. If the contractor or subcontractor refuses or fails to comply within 5 business days, he can be fined or subjected to a suit to enforce the statute. Constance G. Clark, Davis, Clark, Butt, Carithers & Taylor, PLC

Notice Speed Bumps

• First and Last Furnishing Dates are required on all NTOs.
• Residential real estate – 
  
  • Notice to Owner by contractor: Notice provisions apply to real estate containing four (4) or fewer units.
  • It is the duty of the residential contractor to give the owner the notice, set out by code, on behalf of all potential lien claimants under his or her contract prior to the supplying of any materials or fixtures before the commencement of work.
• If before commencing work or supplying goods a subcontractor, material supplier, laborer, or other lien claimant gives notice under this section, the notice shall be effective for all subcontractors, material supplies, laborers, and other lien claimants notwithstanding that the notice was given after the project commences as defined under § 18-44-110(a)(2). 
  
  • If the notice relied upon by a lien claimant to establish a lien under this subchapter is given by another lien claimant after the project commences, the lien of the lien claimant shall secure only the labor, material, and services supplied after the effective date of the notice.
  • A residential contractor who fails to give the notice required by this subsection is guilty of a violation pursuant to § 5-1-108 and upon pleading guilty or nolo contendere to or being found guilty of failing to give the notice required by this subsection shall be punished by a fine not exceeding one thousand dollars ($1,000).
• MLBS highly recommends that subcontractors and suppliers on residential property provide the above Pre-Construction Notice to Owner prior to furnishing then follow the statutorily required notice and filing requirements for commercial property.
• Pursuant to Arkansas Code §18-44-115(b) the 75 –day notice for commercial projects must contain all of the following:

General description of labor/materials provided;
Amount due;
Name name/address of claimant;
Name/address of person who failed to pay claimant;
Sufficient description of job site so it can be identified;
Required statutory notice language, which must be in all caps and bold, as follows:
"NOTICE TO PROPERTY OWNER:

IF BILLS FOR LABOR SERVICES, OR MATERIALS USED TO CONSTRUCT OR PROVIDE SERVICES FOR AN IMPROVEMENT TO REAL ESTATE ARE NOT PAID IN FULL, A CONSTRUCTION LIEN MAY BE PLACED AGAINST THE PROPERTY. THIS COULD RESULT IN THE LOSS, THROUGH FORECLOSURE PROCUEEDINGS, OF ALL OR PART OF YOUR REAL ESTATE BEING IMPROVED. THIS MAY OCCUR EVEN THOUGH YOU HAVE PAID YOU CONTRACTOR IN FULL. YOU MAY WISH TO PROTECT YOURSELF AGAINST THIS CONSEQUENCE BY PAYING THE ABOVE NAMED PROVIDER OF LABOR, SERVICES OR MATERIALS DIRECTLY, OR MAKING YOUR CHECK PAYABLE TO THE ABOVED NAMED PROVIDER AND CONTRACTOR JOINTLY."

Foreclosure Speed Bumps

• Priority: All mechanic's and materialmen's liens, once perfected by filing, relate back to the date of commencement of work or repair to the improvement.  All properly filed mechanic's and materialmen's liens are on equal footing.  No one has priority over another. If a sale of the property is ordered and the proceeds are insufficient to pay off all existing liens, then the proceeds are distributed on a pro rata basis.
• Per Arkansas Code §18-44-128, the court (a judge or jury) can allow a "reasonable attorney's fee" if payment of the claim is not made within 20 days. The reasonable attorney fee will only come in if an action is instituted. This occurs "if the contractor, subcontractor, laborer, or material supplier is required to sue for the enforcement of his or her claim," as noted in § 18-44-115(f)(3). Additional relief would be awarded as a matter of legal and factual proof provided by the claimant as to 1) its damages (the amounts owed, plus applicable interest allowed by law) 2) to foreclosure its lien, according to Karen Hart, Esq., partner with Bell Nunnally.
• Key takeaways: Said Hart, "To get 'reasonable' attorneys' fees, which are never guaranteed in the course of litigation, you must provide the appropriate and required notices as per the statute and file a lien as required by the statute. It may be a jury or judge that is deciding the case, depending on whether the one or more of the parties demand a jury, the procedural posture of the case, [etc]. Noticeably absent from the statute are 'expenses' – we would have to look at AR Case law to determine if expenses are rolled into the definition of a "fee." The claimant must be "successful" on their claim to be entitled to their reasonable attorneys' fees. So, if the claimant does not win on its claim, there is no entitlement. The claimant is entitled to other relief that they can prove they should be awarded -- eg, the amount due on the account as against the GC and foreclosure of their lien as against the owner's property."
• Warning: As Hart noted, critical about this provision is that the owner, if the prevailing party, can get its fees from the original claimant. To wit, losing in such a case can cost the claimant not only time spent with no reward but also an order to pay the bill for the owner's "reasonable"attorneys' fees.

Oil And Gas

• Lien for Improvement of Oil or Gas Well-Lien arises for performing labor or furnishing materials, machinery, or supplies for the construction; maintenance and repair of any oil, gas or water well; mine or quarry; or pipeline. Lien extends to the land, plant, building and appurtenances and is established in the same manner and the same time as a mechanic's lien. If labor or material is supplied to a leaseholder, the lien does not attach to the underlying fee title to the land. However, any lien, encumbrance or mortgage upon the land, or any leasehold interest, existing at the time of the inception of the lien for work or materials for oil, gas and water wells; mines or quarries; or oil or gas pipe lines shall not be affected by the oil, gas, water, mine or quarry lien [§18-44-202].