In an earlier blog post, we discussed a Fifth Circuit Court of Appeals opinion, Noatex Corp. v. King Constr. of Houston, LLC, 732 F.3d 479 (5th Cir. 2013), which found Mississippi’s Stop Notice Statute unconstitutional. The ruling was particularly harsh because Mississippi did not allow subs and suppliers the right to record a lien. After the ruling, the only apparent recourse for subs and suppliers that had not been paid for work completed was to sue those with whom they had a contract for breach of contract. We questioned how the Fifth Circuit’s ruling would affect Mississippi’s lien laws. Now we know. The Mississippi Legislature decided to fast-track a bill to completely re-write Mississippi lien law.
On April 11, 2014, the Governor of Mississippi signed into law Senate Bill 2622, and thus created an entirely new statutory scheme for construction lien laws, effective immediately, applicable to public, private and residential construction in Mississippi. Senate Bill 2622 as sent to the Governor can be accessed here. The new law can also be found at Mississippi Code § 85-7-401, et seq. of the Mississippi Code of 1972.
Mississippi’s new statutory scheme is modeled on Georgia’s lien statute. It resolves the issue created by the holding in Noatex Corp. by granting subs and suppliers lien rights, but it does much more than that. Mississippi’s lien statute contains a vast array of new requirements for filing a claim of lien, perfecting liens, contesting liens, and waiving lien rights that all project participants must understand and carefully follow to enforce and defend against a construction lien. For example, owners and prime contractors seeking to secure lien waivers are now required to use statutory forms with mandatory language in the Interim Waiver and Release Upon Payment Form, or the Waiver and Release Upon Final Payment Form, as applicable. See Miss. Code Ann. § 85-7-433.
Incredibly, the new Mississippi lien laws became effective the same day they were signed into law and seem to apply to existing contracts. As a result, owners, contractors and others may not have sufficient time to implement procedures to protect against subs and supplier liens, such as inserting lien waiver requirements in contracts that previously did not need such requirements. It will be interesting to see if owners challenge the effect of this law as an impairment of pre-existing contract rights.