Delaware Business Lawyer Blog

The first thing you need to know is that there are 3 nationwide credit reporting agencies, Equifax, Experian and Trans Union. All 3 companies are required by federal law to give you a free copy of your credit report once a year. To obtain your free copy, don't contact the companies directly. That won't work. Instead, you can go to one central website, call a toll-free number (877-322-8228), or send in a written request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Keep in mind that you can make one request for a free report to each of the 3 companies each year. So rather than making a request for reports from all 3 at the same time, you can spread your requests out over the course a year.

The statement of claim has to include the following information:

(1) The correct legal name of the person or company entitled to the mechanics lien;

(2) The name of the owner of the structure you want to have your lien against;

(3) You must include the name of the contractor, and you must state whether your contract was with the owner of the structure you named in item (2) or with the contractor;

(4) You must state the dollar amount of your claim. If this amount is determined by a contract, then a copy of the contract together with all modifications or amendments must be attached to the statement of claim. If the amount is not fixed by a contract, you must describe in a Bill of particulars the nature and kind of the labor done or materials furnished or construction management services provided;

(5) The time when the doing of the labor or the furnishing of the materials was commenced;

(6) The time when the doing of the labor or the furnishing of the material or the providing of the construction management services was finished. In this regard if you are a contractor (as opposed to a subcontractor or a supplier) the date of the completion of the structure, including a specification of the act or event upon which you are relying for the date of completion. On the other hand, if you are a subcontractor or a supplier, the date of completion of the labor performed or of the last delivery of materials furnished, or both, as the case may be, or a specification of such other act or event upon which you are relying for such date;

(7) The location of the structure along with a legal description of the property that the structure sits on;

(8) That the labor was done or the materials were furnished or the construction management services were provided on the credit of the structure;

(9) The amount of your claim and that neither this amount nor any part thereof has been paid to you;

(10) The time of recording of a first mortgage, or a conveyance in the nature of a first mortgage, upon such structure which is granted to secure an existing indebtedness or future advances provided at least 50% of the loan proceeds are used for the payment of labor or materials, or both, for such structure.

You are required to attach to the statement of claim a sworn affidavit that the facts set forth in the statement of claim are true and correct.

If you’re filing a claim for labor or materials against 2 or more structures that are owned by the same person, you must include a statement of how much you are claiming is owed to you on each structure.

If the contract is with a tenant rather than the owner of the structure, your statement of claim must include a statement that the owner gave his written consent to the furnishing of the work or the materials.

One of the most important things to keep in mind is that your documents must be filed within a certain period of time. It can’t be filed too early, and it can’t be filed too late. The time requirements are different depending on whether you’re a (1) contractor or (2) a subcontractor or supplier.

Contractors
If you’re a contractor who has a contract with the owner of a structure and you’ve either furnished both labor and material or you’ve provided construction management services in connection with the furnishing of labor and material, you’re required to file your statement of claim within 180 days after the completion of the structure. Your claim will be considered timely if it’s filed within 180 days of any one of the following 9 qualifying events:

(1) The date of purported completion of all the work called for by the contract itself

(2) The date when the statute of limitations commences to run in relation to the particular phase or segment of work performed pursuant to the contract, to which phase or segment of work the statement of claim relates, where such date for such phase or segment has been specifically provided for in the contract itself;

(3) The date when the statute of limitations commences to run in relation to the contract itself where such date has been specifically provided for in the contract itself;

(4) The date when payment of 90% of the contract price, including the value of any work done pursuant to contract modifications or change orders, has been received by the contractor;

(5) The date when the contractor submits his final invoice to the owner or reputed owner of such structure;

(6) With respect to a structure for which a certificate of occupancy must be issued, the date when such certificate is issued;

(7) The date when the structure has been accepted, as provided in the contract, by the owner or reputed owner;

(8) The date when the engineer or architect retained by the owner or reputed owner, or such other representative designated by the owner or reputed owner for this purpose, issues a certificate of completion; or

(9) The date when permanent financing for the structure is completed.

Subcontractors and Suppliers
If you’re a subcontractor or supplier, then you must file your claim within 120 days from the completion of the labor performed or from the last delivery of materials furnished. Your claim will be considered timely if it’s filed within 120 days of either of the following 2 events:

(1) the date final payment including all retainage is due to you, or

The reason why it's necessary to have the contract address attorney's fees is because of the general rule in Delaware that the losing party will not be ordered to pay the winning party's attorney's fees unless the payment of these fees is authorized by a Delaware statute or by a contract between the parties.

You're a Delaware business owner. A customer wants to obtain your services or buy your merchandise. You negotiate terms, including price. You tell the customer that one of the terms you want is an agreement that if he doesn't pay your bill and you have to sue him to obtain payment, he will reimburse you for the attorney's fees you incur.

If the customer refuses to agree to pay your attorney's fee, what message is he sending you? Is he already thinking that he may not pay your bill? On the other hand, if he knows he's going to pay you on time, why would he be afraid to agree to pay your attorney's fees? And if does refuse, why would you want to do business with someone who's letting you know there may be a problem with payment?

If the debtor owns significant assets in another state, or is working in another state, the usual procedure is to register the Delaware judgment in that other state. Let’s say, for example, the debtor owns real estate in Maryland. The courts in Maryland look at the Delaware judgment as a foreign judgment (a judgment from another state). Maryland, like many other states including Delaware, has adopted the Uniform Enforcement of Foreign Judgments Act. Under that Act, I can register with the court in Maryland an exemplified copy of the Delaware judgment, and it will have the same effect as if I had originally obtained the judgment in the Maryland courts.

Using the same example, once the Delaware judgment is registered in Maryland, the procedures available in Maryland for collecting on a judgment can be used. This includes “attachment” and “garnishment.” Attachment means that we ask the Sheriff’s office to levy on the debtor’s business equipment and real estate and to sell them at a public sale. Garnishment involves the Court seizing the debtor’s bank accounts, or requiring the debtor’s employer to deduct money from the debtor’s pay check. It also includes taking control of the debtor’s accounts receivable.

The subpoena requires the debtor to bring with him to the deposition whatever items I specify, such as bank statements, tax returns, deeds, accounts receivable, checkbooks, and other records I believe will help discover what assets the debtor has, and where those assets are located. The reason I ask about accounts receivable is that I can then send out "attachment documents" that require the people who owe money to the debtor to instead send those payments to us.