DIVISION
3 PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 507 LIENS
PART II MECHANIC’S AND MATERIALMAN’S LIEN
507-41 Definitions
507-42 Liens, Amount of Lien, Interests Subject to Lien
507-43 Application for a Lien, Notice of Lien, Service, Hearing, Expiration,
Notice of Completion
507-44 Notice of Completion Record
507-45 Release Bond
507-46 Priorities, Mortgages
507-47 Foreclosure Proceedings, Parties, Consolidation
507-48 Owner May Hold Back Payment
507-49 Dwellings, Credit Application
HAWAII REVISED STATUTES
DIVISION 3 PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 507 LIENS
PART II MECHANIC’S AND MATERIALMAN’S LIEN
507-41 Definitions
As used in this part, unless a definite meaning clearly appears
from the context:
“Furnishing of materials” includes supplying of: materials
incorporated in the improvement or substantially consumed in construction
operations or specially fabricated for incorporation in the improvement;
building materials used during construction but not remaining in the improvement,
diminished by the salvage value of the materials; transportation to bring
the materials to the site of the improvement; tools, appliances, or machinery
(but not including hand tools), used during the construction but not in
excess of the reasonable rental value for the period of actual use.
The delivery of materials to the site of the improvement or the delivery
of materials other than to the site of the improvement, but upon the written
statement by the general contractor or the contractor’s agents that
the materials are for a particular improvement, shall be prima facie evidence
of incorporation of the materials in the improvement.
“General contractor” means a person who enters into a contract
with the owner for the improvement of real property.
“Improvement” includes the construction, repair, alteration
of or addition to any building, structure, road, utility, railroad, or
other undertaking or appurtenances thereto, and includes any building,
construction, erection, demolition, excavation, grading, paving, filling
in, landscaping, seeding, sodding, and planting, or any part thereof existing,
built, erected, placed, made, or done on real property, or removed therefrom,
for its benefit.
“Labor” includes professional services rendered in furnishing
the plans for or in the supervision of the improvement.
“Lien” means the lien provided in section 507-42.
“Owner” means the owner of the real property or of any interest
therein who enters into a contract for the improvement thereof and who
may be the owner in fee of the real property or of a lesser estate therein,
the lessee for a term of years therein, the person having any right, title,
or interest in the real property which may be sold under legal process,
or a vendee in possession under a contract for the purchase of the real
property or of any such right, title or interest therein.
“Person” includes natural persons, partnerships, corporations,
firms, unincorporated associations, joint ventures, and any other party
recognized at law as a person.
“Visible commencement of operations” means the first actual
work of improvement as part of a continuous operation, or the first delivery
to the site of materials to be used as part of a continuous operation
in the improvement, of such manifest and substantial character as to notify
interested persons that the real property is being improved or is about
to be improved.
507-42
Liens, Amount of Lien, Interests Subject to Lien
Any person or association of persons furnishing labor or material
in the improvement of real property shall have a lien upon the improvement
as well as upon the interest of the owner of the improvement in the real
property upon which the same is situated, or for the benefit of which
the same was constructed, for the price agreed to be paid (if the price
does not exceed the value of the labor and materials), or if the price
exceeds the value thereof or if no price is agreed upon by the contracting
parties, for the fair and reasonable value of all labor and materials
covered by their contract, express or implied.
Where the terms of a lease, contract of sale, or instrument creating a
life tenancy require the improvement of the real property, the interest
of the lessor, vendor, or remainderman in the improvement and the land
upon which the same is situated shall likewise be subject to the lien,
and any provision for forfeiture or other penalty against the lessee,
vendee, or life tenant in case of the filing of a mechanic’s or
materialman’s lien or actions to enforce the same, shall not affect
the rights of lienors.
507-43
Application for a Lien, Notice of Lien, Service, Hearing, Expiration,
Notice of Completion
(a) Requirements. Any person claiming a lien shall apply therefore
to the circuit court of the circuit where the property is situated. Such
“Application For A Lien” shall be accompanied by a written
“Notice Of Lien” setting forth the alleged facts by virtue
of which the person claims a lien. A copy of the Application and Notice
shall be served in the manner prescribed by law for service of summons
upon the owner of the property and any person with an interest therein
and upon the party or parties who contracted for the improvements if other
than the owner of the property or any person with an interest therein.
If any person entitled to notice cannot be served as herein provided,
notice may be given the person by posting the same on the improvement.
The Application shall set forth the amount of the claim, the labor or
material furnished, a description of the property sufficient to identify
the same, and any other matter necessary to a clear understanding of the
claim. If the claim has been assigned, the name of the assignor shall
be stated. The Application shall specify the names of the parties who
contracted for the improvement, the name of the general contractor and
the names of the owners of the property and any person with an interest
therein. The Application may (but need not) specify the names of the mortgagees
or other encumbrancers of the property, if any, and the name of the surety
of the general contractor, if any.
The Application and Notice shall be returnable not less than three nor
more than ten days after service. On the return day, a hearing shall be
held by the court to determine whether probable cause exists to permit
the lien to attach to the property. Any person to whom notice is required
to be given shall be permitted to offer testimony and documentary evidence
on the issue of whether probable cause exists to permit the lien to attach.
If the person who contracted for the improvement from which the requested
lien arises claims a set-off against the lienor or if any person to whom
notice is required to be given otherwise disputes the amount of the requested
lien, the court shall hear and receive all admissible evidence offered
and shall only permit the attachment of a lien in the net amount which
the court determines is the reasonable probable outcome of any such dispute.
The return day hearing may be continued at the order of the court so that
the entire controversy need not be determined on the originally scheduled
return day. The lien shall not attach to the property until the court
finds probable cause exists and so orders. No such order shall be entered
before the Application and Notice have been served on the party contracting
for the improvement, the general contractor and the owner of the property,
and they were given an opportunity to appear at the hearing.
(b) Time for filing. The Application and Notice shall be filed not later
than forty-five days after the date of completion of the improvement against
which it is filed. Where title to the property involved, or any portion
thereof, is registered in the land court it shall be incumbent upon the
lienor to file a certified copy of the Order Directing Lien To Attach
in the office of the assistant registrar of the land court within seven
days after the entry thereof in order to preserve the lienor’s rights
against subsequent encumbrancers and purchasers of the property.
(c) Joint owner. If the fee title to the land involved is held in joint
or common ownership or as an estate by the entirety, service upon one
of the owners of the Application and Notice in accordance with this section
shall be deemed service upon all of the owners. Likewise, if the parties
who contracted for the improvement, if other than the owner of fee title
to the property involved, hold their interest in the premises in joint
or common ownership, or as an estate by the entirety, service upon one
of the parties of the Application and Notice in accordance with this section
shall be deemed service upon all of the parties.
(d) Owner acting through attorney-in-fact. In cases where materials have
been furnished or labor was performed at the request, or upon the order,
of a person acting under a duly executed and acknowledged power of attorney
from the owner and (1) the power of attorney has not been revoked, or
(2) the power of attorney has been revoked subsequent to the furnishing
of materials and labor upon request or order and the owner cannot be found
within the State, service of the Application and Notice upon the person
acting under the power of attorney shall be deemed service upon the owner.
(e) Duration of lien. The lien shall expire three months after the entry
of the Order Directing Lien to Attach unless proceedings are commenced
within that time to collect the amount due thereon by enforcing the same.
(f) Date of completion, notice of. The term “date of completion”
as used in this section means the time when the owner or the general contractor
for the improvement completes the publication of a notice that the improvement
has been completed or has been abandoned and an affidavit of the publication,
together with a copy of the notice has been filed in the office of the
clerk of the circuit court where the property involved is situated; provided
that notice of completion shall not be effective for any purpose unless
prior to the notice there has been substantial completion of the improvement
or the improvement has been actually abandoned; and provided further that
the notice shall not be published by the contractor until after the contractor
has first made written demand upon the owner to publish the notice and
the owner has failed to publish the notice within five days from the date
of the demand. The publication of the notice by the contractor or the
owner shall not be construed as an admission by either that the improvement
has been satisfactorily completed. The notice required herein shall be
published twice, seven days apart, in a newspaper of general circulation,
printed and published in the county in which the property involved is
situated, and the publishing newspaper shall promptly file the affidavit
of publication above mentioned in the office of the clerk.
(g) Failure to file or publish notice. If a valid notice of completion
is not published and filed within one year after the actual completion
or abandonment of the improvement the “date of completion”
shall be deemed to be one year after actual completion or abandonment.
507-44 Notice of Completion Record
The clerks at the circuit courts shall keep in their respective
offices a book called “Notice of completion record” in which
shall be entered a memorandum of each notice of completion filed and the
date of filing, arranged alphabetically in the names of the owners. There
shall also be kept a “mechanics’ lien record” in which
a memorandum of each Application and Notice filed shall be entered, arranged
alphabetically in the names of the claimants and showing the amount of
the lien or claim, the date of filing the Application and Notice, the
date of the entry of the Order Directing Lien To Attach, the date of withdrawal,
discharge or cancellation of the Application and Notice or of a lien which
has been directed to attach, and any other matters deemed necessary.
507-45
Release Bond
Any mechanics’ and materialmen’s lien may be discharged
at any time by the owner, lessee, principal contractor or intermediate
subcontractor filing with the clerk of the circuit court of the county
in which the property is located or with the assistant registrar of the
land court (if registered land is affected), cash or a bond for twice
the amount of the sum for which the claim for the lien is filed, conditioned
for the payment of any sum for which the claimant may obtain judgment
upon the claimant’s claim.
507-46
Priorities, Mortgages
The lien shall relate to and take effect from the time of the
visible commencement of operations for the improvement; it shall rank
equally in priority subject to the provisos hereinafter contained with
all other mechanics’ and materialmen’s liens and shall have
priority over all other liens of any nature, except liens in favor of
any branch of the government and mortgages, liens or judgments recorded
or filed prior to the time of the visible commencement of operation; provided
that all liens for wages for labor performed in the completion of the
improvement, but not exceeding $300 for each claimant, shall have priority
as a class over all other mechanics’ and materialmen’s liens
where claims are filed by
(1) the person who actually performed the labor;
(2) the person’s legal representative in the event of death or incapacity,
or
(3) the director of labor and industrial relations pursuant to chapter
371; and provided further that where a mortgage is recorded prior to the
date of completion, and all or a portion of the money advanced under and
secured by the mortgage is thereafter used for the purpose of paying for
the improvement, the mortgagee shall be entitled, to the extent of the
payments, to priority over liens of mechanics and materialmen, but no
such priority shall be allowed unless the mortgage recites that the purpose
of the mortgage is to secure the moneys advanced for the purpose of paying
for the improvement in whole or in part. Payments made in good faith to
the general contractor for such purposes shall be presumed to have been
used for the purpose of paying for the improvement. Whenever the lien
or claim of lien herein provided is satisfied (other than by the limitations
expressed in section 507-43), a written notice thereof shall, at the expense
of the lienee, be filed with the clerk of the circuit court, which shall
be noted in the mechanics’ lien record, and if title to the land
involved is registered in the land court, it shall also be filed in the
office of the assistant registrar of the court.
507-47
Foreclosure Proceedings, Parties, Consolidation
After demand and refusal of the amount due or upon neglect to
pay same upon demand, the lien may be enforced by action filed in the
circuit court of the circuit in which the property is situated. The demand
may be included in the Application and Notice and when so included it
shall not be necessary to make separate demand upon any other person.
The complaint, in addition to setting forth a claim in the nature of assumpsit,
may pray for the foreclosure of the lien as to which notice has been filed
and may pray for any incidental relief according to the usual practice
of courts of equity and according to this section in enlargement thereof.
The owner or the owner’s assigns on whose property the lien has
attached may file a third-party action against a licensed contractor whom
the owner has paid for improvements as provided for in section 444-28(g).
All proceedings concerning the same improvement shall, unless good reason
otherwise appears, be consolidated for trial and the court may order publication
of notice of the pendency of the action. Any person having or claiming
an interest in any such proceeding or in the property, including other
claimants, lienors, encumbrancers, sureties, indemnitors and the contractors
license board may be joined as parties, may be interpleaded or may be
permitted to intervene, under such orders as the court may enter. Interlocutory
and final decrees for the foreclosure of the liens, for deficiency judgments,
and relief against the parties liable therefore, and fixing the priority
of liens between the mechanics and materialmen as a group and other parties
having liens against or interests in the property shall be made and entered
as near as may be in accordance with the practice on foreclosure of mortgages.
If the property or proceeds realized upon the foreclosure sale are insufficient
to satisfy all mechanic’s and materialmen’s liens filed against
the same, the property or proceeds shall, after satisfaction of liens
for wages for labor entitled to priority under section 507-46, be divided
pro rata among the liens according to the principal amounts of the liens,
without regard to the order or priority in which the respective Applications
and Notices have been filed or the respective actions or interventions
commenced.
The court having jurisdiction of the action to foreclose the lien shall
have all of the powers pertaining to courts of equity, and in addition
may direct the issuance of a writ of attachment or execution upon the
motion of any party against the property of any other party, in the same
manner as is provided in chapter 651 provided that the writ shall only
issue where the claim upon which the motion therefore is based is upon
a contract, express or implied, between the parties. In addition to costs
of the action the court may allow any fee or fees for legal services rendered
by the attorneys for any of the parties, and apportion the same as costs
for payment by and between the parties or any of them, all as to the court
seems equitable in the light of the services performed and the benefits
derived therefrom by the parties respectively.
507-48 Owner May Hold Back Payment
Whenever the work or material for which a lien is filed is furnished to
any contractor for use as set forth in section 507-42, the owner may retain
from the amount payable to the contractor sufficient to cover the amount
due or to become due to the person or persons who filed the lien.
507-49 Dwellings, Credit Application
(a) Anything contained in this part to the contrary notwithstanding, in
connection with any repairs or improvements made or performed on property
which before the repairs or improvements was used primarily for dwelling
purposes, no lien shall exist either for the furnishing of materials to
a general contractor as defined in this chapter or his subcontractor either
of whom was required to be licensed but was not licensed pursuant to chapter
444 or if unreasonable advancement of credit was given by the furnisher
of materials to the general contractor or subcontractor whether such person
is licensed, unlicensed or exempted under chapter 444.
The issue of reasonable advancement of credit shall be decided by the
circuit judge at the return day hearing provided for in section 507-43(c);
provided that if a party affected by the lien does not appear at the return
day hearing, he may raise the issue of unreasonable advancement of credit
at any time prior to the entry of a final or interlocutory decree of foreclosure
in the proceeding brought to enforce the lien under section 507-47. For
the purposes of this section, if the furnisher of materials has secured
a credit application form from the general contractor or the subcontractor
to whom the materials were furnished or has reasonably inquired into the
credit status of the general contractor or subcontractor, the advancement
of credit by the furnisher of materials shall be prima facie reasonable.
The credit application referred to herein shall be current and shall include
at least the following information:
A. For all persons:
1. Name
2. Address
3. Type of business (Example ¾ plumbing subcontractor)
4. Date business started
5. Contractor’s license number
6. Bonding companies generally used
7. Banks used
8. List of current creditors
9. Balance sheet
10. Total of all outstanding construction contracts $ .__________ .
11. Incompleted portion of all contracts $ __________ .
B. In addition, for corporate accounts:
1. Names of officers
2. Authorized capital
3. Paid in capital
C. In addition, for noncorporate accounts:
1. Names of partners, co-venturers, etc.
(b) Anything contained in this chapter to the contrary notwithstanding,
no general contractor as defined in this chapter or his subcontractor
or the subcontractor’s subcontractor who is required to be licensed
pursuant to chapter 444, shall have lien rights unless such contractor
was licensed pursuant to chapter 444 when the improvements to the real
property were made or performed, and no subcontractor or subcontractor’s
subcontractor so licensed shall have lien rights if his work was subcontracted
to him by a general contractor as defined in this chapter or his subcontractor
who was required to be licensed but was not licensed pursuant to chapter
444. |
