Arizona Court of Appeals Addresses “Owner-Occupant” Lien Protection in Marco Crane & Rigging Co. v. Masaryk

DSC_2010It is well-established that the primary purpose of Arizona’s mechanics’ lien statutes is to protect laborers and materialmen by insuring payment of their accounts. United Metro Materials, Inc. v. Pena Blanca Properties, L.L.C., 197 Ariz. 479, 484, 4 P.3d 1022, 1027 (App. 2000).  But not all laborers and materialmen are protected under the statutes.

With regard to residential work involving “owner-occupants,” for instance, only contractors having a direct contract with the “owner-occupant” have lien rights.  This exception, of which subcontractors that perform residential work are hopefully aware, was the subject of the recent Court of Appeals decision in Marco Crane & Rigging Co. v. Masaryk, 236 Ariz. 448, 341 P.3d 490, (App. 2014).  Specifically, the court was asked to examine whether “owner-occupant” status was lost because an owner transferred title to her home to her limited liability company after the subcontractor’s lien was recorded and a foreclosure lawsuit filed. read more

The Rare Cardinal Change

file0001201427690 A “cardinal change” has nothing to do with the football team, the baseball team, or, for that matter, the bird.  It is, instead, an important legal concept for contractors to understand.  Where applicable, the cardinal change doctrine puts limits on the amount of changed work or extra work that can be ordered under the changes clause of a construction contract.  I recently dealt with the doctrine in connection with my practice.   Here are the basics.

Cardinal Changes Defined. read more

A Lesson on Pay-if-Paid Clauses

pay-if-paid clausesNot too long ago, I litigated a case that turned on the enforceability of a pay-if-paid clause.   The very good attorneys on the other side argued that the clause at issue was enforceable, such that it excused their general contractor client’s failure to pay.  I argued, on behalf of my subcontractor client, that the provision was unenforceable.  The trial court agreed with me on summary judgment, which led to a very favorable settlement for my client.

So what was wrong with the clause the parties were fighting over? Among other things, I argued that it did not comply with the requirements set forth in L. Harvey Concrete, Inc. v. Agro Const. & Supply Co., 189 Ariz. 178, 939 P.2d 811 (App. 1997).  L. Harvey is the seminal Arizona case on pay-if-paid clauses.  It holds that pay-if-paid provisions are enforceable if they meet the following three requirements: read more

Arizona’s Transaction Privilege Tax Simplification Legislation Isn’t So Simple

photoI will preface this post by saying that I am neither an accountant nor a tax attorney.  If you have specific questions or concerns about Arizona’s new transaction privilege tax laws, please talk to your accountant.

Having said that, I hope everyone in the construction industry is aware that, effective January 1, 2015, Arizona’s transaction privilege tax (“TPT”) laws changed substantially for contractors. These changes are the result of a “TPT Simplification Bill,” signed by Governor Brewer in 2013 and amended in 2014. read more

Changes To Arizona’s Anti-Deficiency Statutes That Affect Developers And Spec Home Builders

DSC_1975Arizona Revised Statutes §§ 33-729 and 33-814 are commonly referred to as Arizona’s “anti-deficiency statutes.”  In certain circumstances they prevent a lender from pursuing a borrower for a deficiency when, through a foreclosure or trustee’s sale, a  property is sold for less than the amount owed to the lender. Specifically, borrowers have been exempt from deficiency judgments so long as the following criteria are met:

1)  the property in question is 2.5 acres or less; read more