Samuel D. Gregory | Butler Snow
There are specific statutory rules governing liens. In Mississippi, for example, construction liens must be filed within 90 days of when work was last performed or labor, material, or services were provided. Then, a payment action to enforce the lien must be filed within 180 days or else the lien is void. What can sometimes be overlooked is that a lis pendens must also be filed with the payment action. The Mississippi Supreme Court recently held that timely filing a lis pendens is necessary to enforce a lien. And despite introducing legislation during the 2022 session to curtail the harshness of the Supreme Court’s decision, the bill never made it out of committee. Thus, a lis pendens remains vitally important. And since many states have similar statutory lien schemes, knowing one state’s interpretation can benefit practitioners elsewhere.
Why is a lis pendens important?
The purpose of a lis pendens is to put the world on constructive notice that there is a pending claim that could impact or impair the title to property. Mississippi construction liens are required to state in all caps: “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.” Thus, without a lis pendens advising that a payment action had been filed, a third party could check the land records and believe a lien had expired on its terms. And if the third party took some action in reliance on that belief, such as purchasing or taking a security interest in the property, there would be a huge mess to untangle if the payment action was later successful.
When should a lis pendens be filed?
Mississippi’s lien statute says that a “lis pendens notice shall be filed with the commencement of the [payment] action with a copy to the owner and contractor.” Miss. Code. Ann. § 85-7-405(1)(c)(i). Last fall, the Mississippi Supreme Court interpreted the word “with” literally and reversed and rendered judgment in favor of two property owners because the lis pendeses were filed a few months after the payment actions. See KD Oak Grove, LLC v. Warren & Warren Asphalt Paving, LLC, 324 So. 3d 1134, 1136 (Miss. 2021).
Some viewed the holding in KD Oak Grove to be overly harsh because there was no evidence that anyone was injured as a result of the lis pendens being untimely. Again, the purpose of a lis pendens is to put the world on notice of the pending claim. No third parties were affected by the lack of a lis pendens and the owners in KD Oak Grove were necessarily aware of the payment actions because they were parties. Thus, the lien claims were dismissed based on a technicality.
In response to KD Oak Grove, the Mississippi legislature proposed an amendment to Section 85-7-405(1)(c)(i) that would require a lis pendens to be filed within 90 days of filing a payment action. See 2022 Miss. S.B. No. 2465. Further, the proposed amendment would have specifically said that failure to file the lis pendens “shall not invalidate the claim of lien.” Id. Senate Bill 2465 never came to fruition, however, because it died in committee.
Takeaways
Following KD Oak Grove, the rule in Mississippi (absent a future statutory amendment) is that a lis pendens must be filed “with” a payment action or else the lien will become invalid. The KD Oak Grove opinion is also notable because it is at least the second case where the Mississippi Supreme Court adopted a strict and literal interpretation of Mississippi’s lien statutes that were enacted in 2014. See Land Holdings I, LLC v. GSI Servs., LLC, 265 So. 3d 147, 151 (Miss. 2019) (interpreting “work” to mean any work, including warranty work). Thus, anyone who is confronted with a lien issue would do well to take a close and literal look at the statutory language.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.