Clyde “Trey” Copeland will discuss Mississippi’s new Construction Lien Law from the drafter’s perspective, focusing on topics and issues within the statute that affect the land title and title insurance industry. The discussion will focus on those issues most important to the title insurance industry and will emphasis and encourage audience participation.
On October 10, 2013, the US Fifth Circuit Court of Appeals declared that the Mississippi Stop Notice Statute, §85-7-181, created an unconstitutional attachment, and affirmed an earlier holding by the United States District Court for the Northern District of Mississippi that the statute was invalid and no longer enforceable. Noatex Corp. v. King Construction of Houston, LLC, No. 12-60385) (5th Cir.2013). The statute allowed a subcontractor by letter to bind funds in the hands of the owner due to the general contractor, and to have the funds paid over directly to the sub or into court. The stop notice could attach the funds without the filing of a notice with the Clerk, without an affidavit, without notice to all parties affected, and without a hearing. The Fifth Circuit found the statute to be “profound in its lack of procedural safeguards”, and facially unconstitutional.
As a result, a void was created that resulted in subcontractors and materialmen not having any way to secure the payment for labor and materials incorporated into a construction project. With this backstop, several construction industry trade organizations and private attorneys began to collaborate on a resolution to the dilemma caused by the Noatex decision. The result of this collaboration was the introduction of S.B. 2622 before the Mississippi Senate, which was eventually passed out of the Mississippi State Legislature on March 21, 2014.
S.B. 2622, or the Revised Mississippi Lien Law was the result of collaboration between the residential and commercial construction industries, enjoying the support of over eight separate trade associations representing general contractors, homebuilders, trade subcontractors, materialmen, equipment lessors, road builders and the banking industry. As a result, Mississippi adopted a broad and sweeping lien bill that, for the first time in its 150 year history, granted lien rights to first and second tier subcontractors and material suppliers, as well as consulting engineers and land surveyors, not in privity with the property owner.