Get Paid, Architects. Don’t Forget About Your Lien Rights
Christopher Toddy, AIA – SFx Regional Representative – February 2017
Introduction
You may have been asked to sign a lien waiver in the recent past. Ever wonder why? Architects assist landowners with zoning changes, planning, construction documents and other architectural services--all of which increase the value of their land. There is a legal distinction that allows those who bring value to a parcel of land to be paid for that value: lien rights. Most, but not all, architects in the United States have lien rights, however, many are not aware of their rights. The Small Firm Exchange (SFx) – a national AIA committee advocating for small architectural firms – is working on a national campaign to bring greater awareness and educate our membership, particularly small firm practitioners who generally have fewer resources to pursue legal action against delinquent billings.
Case Study
In 2005-2006, a small firm was developing drawings on a phased $40 million condo townhouse development project in western Michigan. During initial construction in 2006, the economy started to deteriorate. The owner began defaulting on their financial obligations and the unpaid invoices of the small firm were not a priority. Were it not for lien rights--and the awareness of those rights--the firm would have taken a catastrophic loss. If the same project was in Ohio, where there are no lien rights for professional services, the firm would have gone bankrupt.
Further Investigation
In our current A201 and B-series contracts, it states the architect's responsibilities to manage contractor's lien rights. However, the contract language is silent as to how to manage our own lien rights. Nonetheless, SFx will be advocating that architects work with a local attorney to add contract language spelling out these terms and triggers. This language needs to align with individual State ordinances. When submitting a notice of lien, generally, priority is given to those who began working on the project the earliest, therefore, the architect’s liens need to be managed in a timely fashion.
Closing
SFx has asked AIA National to take a closer look at this important topic. SFx has organized a presentation for the 2017 AIA Conference on Architecture in Orlando this April: FR307 “Getting Paid: Don’t Forget About Your Lien Rights,” a topic relevant for all firm sizes. This summary seminar is organized around three learning areas: understanding what lien rights are, asserting your lien rights in your contract, and managing those lien rights during construction. This is a national discussion of a national legal distinction that is managed by individual State laws. Please attend during the conference and add your voice to what promises to be an informative discussion.