Citations Affected:
IC 32-8-3.
Synopsis: No lien contracts. Permits a no lien clause in a construction
contract for property used for religious worship, property auxiliary to
property used for religious worship, and other property that is owned,
operated, managed, or controlled by a tax exempt religious or
educational organization. Makes related changes.
Effective: July 1, 2001.
January 9, 2001, read first time and referred to Committee on Commerce and Consumer
Affairs.
A BILL FOR AN ACT to amend the Indiana Code concerning
property.
SECTION 1. IC 32-8-3-1 , AS AMENDED BY P.L.53-1999, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 1. (a) That contractors, subcontractors, mechanics, lessors leasing construction and other equipment and tools, whether or not an operator is also provided by the lessor, journeymen, laborers and all other persons performing labor or furnishing materials or machinery, including the leasing of equipment or tools used, for the erection, altering, repairing or removing any house, mill, manufactory, or other building, bridge, reservoir, systems of waterworks, or other structures, or for construction, altering, repairing, or removing any walk or sidewalk, whether such walk or sidewalk be on the land or bordering thereon, stile, well, drain, drainage ditch, sewer or cistern or any other earth-moving operation may have a lien separately or jointly upon the house, mill, manufactory or other building, bridge, reservoir, system of waterworks or other structure, sidewalk, walk, stile, well, drain, drainage ditch, sewer or cistern or earth which they may have erected, altered, repaired, moved or removed or for which they may have
furnished materials or machinery of any description, and, on the
interest of the owner of the lot or parcel of land on which it stands or
with which it is connected to the extent of the value of any labor done,
material furnished, or either, including any use of such leased
equipment and tools, and all claims for wages of mechanics and
laborers employed in or about any shop, mill, wareroom, storeroom,
manufactory or structure, bridge, reservoir, system of waterworks or
other structure, sidewalk, walk, stile, well, drain, drainage ditch or
cistern or any other earth-moving operation shall be a lien on all the
machinery, tools, stock or material, work finished or unfinished,
located in or about such shop, mill, wareroom, storeroom, manufactory
or other building, bridge, reservoir, system of waterworks, or other
structure, sidewalk, walk, stile, well, drain, drainage ditch, sewer,
cistern, or earth used in a business.
(b) If the person, firm, limited liability company, or corporation
described in subsection (a) is in failing circumstances, the claims
described in subsection (a) shall be preferred debts whether a claim or
notice of lien has been filed or not.
(c) A provision or stipulation described by this subsection may only
be included in a construction contract for the construction, alteration,
or repair of the following:
(1) A Class 2 structure (as defined in
IC 22-12-1-5
) or an
improvement on the same real estate auxiliary to a Class 2
structure (as defined in
IC 22-12-1-5
).
(2) Property that is:
(A) owned, operated, managed, or controlled by a public utility
(as defined in
IC 8-1-2-1
), municipally owned utility (as
defined in
IC 8-1-2-1
), joint agency (as defined in
IC 8-1-2.2-2
), rural electric membership corporation formed
under
IC 8-1-13-4
, or not-for-profit utility (as defined in
IC 8-1-2-125
) regulated under IC 8; and
(B) intended to be used and useful for the production,
transmission, delivery, or furnishing of heat, light, water, or
power to the public.
(3) Property that is used for religious worship and
improvements on the same real estate auxiliary to property
used for religious worship.
(4) Property that is owned, operated, managed, or controlled
by a religious organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(5) Property that is owned, operated, managed, or controlled
by an educational organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
No provision or stipulation in the contract of the owner and principal
contractor that no lien shall attach to the real estate, building, structure
or any other improvement of the owner shall be valid against
subcontractors, mechanics, journeymen, laborers or persons performing
labor upon or furnishing materials or machinery for such property or
improvement of the owner, unless the contract containing such
provision or stipulation shall be in writing, and shall contain specific
reference, by legal description of the real estate to be improved and
shall be acknowledged as provided in case of deeds and filed and
recorded in the recorder's office of the county in which such real estate,
building, structure or other improvement is situated not more than five
(5) days after the date of execution of such contract. The contract
herein provided for shall be without effect upon labor, material or
machinery supplied prior to the time of the filing with the recorder of
said contract. The recorder shall record such contract at length in the
order of time of its reception in books provided by him for that
purpose, and the recorder shall index the same in the name of the
contractor and in the name of the owner, in books kept for that purpose,
and said recorder shall receive therefor a fee such as is provided for the
recording of deeds and mortgages in his office.
(d) Any person, firm, partnership, limited liability company, or
corporation that sells or furnishes on credit any material, labor or
machinery for the alteration or repair of any owner-occupied single or
double family dwelling or the appurtenances or additions to the
dwelling, to any contractor, subcontractor, mechanic, or anyone other
than the occupying owner or the owner's legal representative shall
furnish to the occupying owner of the parcel of land where the material,
labor or machinery is delivered, a written notice of the delivery or work
and of the existence of lien rights, within thirty (30) days from the date
of first delivery or labor performed. The furnishing of the notice shall
be a condition precedent to the right of acquiring a lien upon the lot or
parcel of land or the improvement on the lot or parcel of land.
(e) Any person, firm, partnership, limited liability company, or
corporation that sells or furnishes on credit any material, labor or
machinery, for the original construction of a single or double family
dwelling for the intended occupancy of the owner upon whose real
estate the construction takes place to any contractor, subcontractor,
mechanic, or anyone other than the owner or the owner's legal
representatives shall furnish the owner of the real estate as named in
the latest entry in the transfer books described in
IC 6-1.1-5-4
of the
county auditor, or if
IC 6-1.1-5-9
applies, the transfer books of the
township assessor with a written notice of the delivery or labor and the
existence of lien rights within sixty (60) days from the date of the first
delivery or labor performed and shall file a copy of the written notice
in the recorder's office of the county within sixty (60) days from the
date of the first delivery or labor performed. The furnishing of such
notice shall be a condition precedent to the right of acquiring a lien
upon the real estate or upon the improvement constructed on the real
estate.
(f) A lien for material or labor in original construction may not
attach to real estate purchased by an innocent purchaser for value
without notice, if the purchase is of a single or double family dwelling
for occupancy by the purchaser, unless notice of intention to hold the
lien is recorded as provided in this chapter prior to the recording of the
deed by which the purchaser takes title.
SECTION 2.
IC 32-8-3-3
, AS AMENDED BY P.L.53-1999,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 3. (a) Except as provided in subsection (b), a
person who wishes to acquire a lien upon any property, whether the
claim is due or not, shall file in the recorder's office of the county at
any time within ninety (90) days after performing labor or furnishing
materials or machinery described in section 1 of this chapter a sworn
statement in duplicate of the person's intention to hold a lien upon the
property for the amount of the claim.
(b) This subsection applies to a person that performs labor or
furnishes materials or machinery described in section 1 of this chapter
related to the following:
(1) A Class 2 structure (as defined in
IC 22-12-1-5
) or an
improvement on the same real estate auxiliary to a Class 2
structure (as defined in
IC 22-12-1-5
).
(2) Property that is used for religious worship and
improvements on the same real estate auxiliary to property
used for religious worship.
(3) Property that is owned, operated, managed, or controlled
by a religious organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(4) Property that is owned, operated, managed, or controlled
by an educational organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
Any person who wishes to acquire a lien upon any property, whether
the claim is due or not, shall file in the recorder's office of the county
at any time within sixty (60) days after performing labor or furnishing
materials or machinery described in section 1 of this chapter, a sworn
statement in duplicate of the person's intention to hold a lien upon the
property for the amount of the claim.
(c) The statement under subsection (a) or (b) must specifically set
forth:
(1) the amount claimed;
(2) the name and address of the claimant and the name of the
owner;
(3) the latest address of the owner as shown on the property tax
records of the county; and
(4) the legal description, street and number, if any, of the lot or
land on which the house, mill, manufactory or other buildings,
bridge, reservoir, system of waterworks or other structure may
stand or be connected with or to which it may be removed.
The name of the owner and legal description of the lot or land will be
sufficient if they are substantially as set forth in the latest entry in the
transfer books described in
IC 6-1.1-5-4
of the county auditor or, if
IC 6-1.1-5-9
applies, the transfer books of the township assessor at the
time of filing of the notice of intention to hold a lien. The recorder shall
mail first class one (1) of the duplicates to the owner named in the
notice within three (3) business days after recordation and post records
as to the date of this action. The notice shall be addressed to the latest
address of the owner as specifically set out in the sworn statement of
the person intending to hold a lien upon the property. The recorder
shall be entitled to a fee of two dollars ($2) to be collected from the lien
claimant for each notice that is mailed.
(d) The statement required by subsection (a) or (b) may be verified
and filed on behalf of a client by an attorney registered with the clerk
of the supreme court as an attorney in good standing under the
requirements of the supreme court.
SECTION 3.
IC 32-8-3-5
, AS AMENDED BY P.L.53-1999,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 5. (a) As used in this section, "lender" refers to:
(1) an individual;
(2) a supervised financial organization (as defined in
IC 24-4.5-1-301
);
(3) an insurance company or a pension fund; or
(4) any other entity that has the authority to make loans.
(b) The recorder shall record the notice, when presented, in the
miscellaneous record book, for which the recorder shall charge a fee in
accordance with
IC 36-2-7-10.
All liens so created shall relate to the
time when the mechanic or other person began to perform the labor or
furnish the materials or machinery. Except as provided in subsection
(c), all liens shall have priority over liens suffered or created thereafter,
except the liens of other mechanics and materialmen, as to which there
shall be no priority.
(c) The mortgage of a lender has priority over all liens under this
chapter recorded after the date the mortgage was recorded to the extent
of the funds actually owed to the lender for the specific project to
which the lien rights relate. This subsection does not apply to a lien that
relates to a construction contract for the development, construction,
alteration, or repair of the following:
(1) A Class 2 structure (as defined in
IC 22-12-1-5
) or an
improvement on the same real estate auxiliary to a Class 2
structure (as defined in
IC 22-12-1-5
).
(2) Property that is:
(A) owned, operated, managed, or controlled by a public utility
(as defined in
IC 8-1-2-1
), municipally owned utility (as
defined in
IC 8-1-2-1
), joint agency (as defined in
IC 8-1-2.2-2
), rural electric membership corporation formed
under
IC 8-1-13-4
, or not-for-profit utility (as defined in
IC 8-1-2-125
) regulated under IC 8; and
(B) intended to be used and useful for the production,
transmission, delivery, or furnishing of heat, light, water, or
power to the public.
(3) Property that is used for religious worship and
improvements on the same real estate auxiliary to property
used for religious worship.
(4) Property that is owned, operated, managed, or controlled
by a religious organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(5) Property that is owned, operated, managed, or controlled
by an educational organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
SECTION 4.
IC 32-8-3-16
, AS ADDED BY P.L.53-1999,
SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 16. (a) This section applies to a construction
contract for the construction, alteration, or repair of a building or
structure other than the following:
(1) A Class 2 structure (as defined in
IC 22-12-1-5
) or an
improvement on the same real estate auxiliary to a Class 2
structure (as defined in
IC 22-12-1-5
).
(2) Property that is:
(A) owned, operated, managed, or controlled by a public utility
(as defined in
IC 8-1-2-1
), municipally owned utility (as
defined in
IC 8-1-2-1
), joint agency (as defined in
IC 8-1-2.2-2
), rural electric membership corporation formed
under
IC 8-1-13-4
, or not-for-profit utility (as defined in
IC 8-1-2-125
) regulated under IC 8; and
(B) intended to be used and useful for the production,
transmission, delivery, or furnishing of heat, light, water, or
power to the public.
(3) Property that is used for religious worship and
improvements on the same real estate auxiliary to property
used for religious worship.
(4) Property that is owned, operated, managed, or controlled
by a religious organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(5) Property that is owned, operated, managed, or controlled
by an educational organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(b) A provision in a contract for the improvement of real estate in
Indiana is void if the provision requires a person described in section
1 of this chapter who furnishes labor, materials, or machinery to waive
a right to a lien against real estate or to a claim against a payment bond
before the person is paid for the labor or materials furnished.
(c) A provision in a contract for the improvement of real estate in
Indiana under which one (1) or more persons agree not to file a notice
of intention to hold a lien is void.
SECTION 5.
IC 32-8-3-18
, AS ADDED BY P.L.53-1999,
SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 18. (a) This section applies to a provider of labor,
materials, or equipment under a contract for the improvement of real
estate that conditions the right of the provider to receive payment on
the obligor's receipt of payment from a third person with whom the
provider does not have a contractual relationship.
(b) This section does not apply to a construction contract for the
construction, alteration, or repair of the following:
(1) A Class 2 structure (as defined in
IC 22-12-1-5
) or an
improvement on the same real estate auxiliary to a Class 2
structure (as defined in
IC 22-12-1-5
).
(2) Property that is:
(A) owned, operated, managed, or controlled by a public utility
(as defined in
IC 8-1-2-1
), municipally owned utility (as
defined in
IC 8-1-2-1
), joint agency (as defined in
IC 8-1-2.2-2
), rural electric membership corporation formed
under
IC 8-1-13-4
, or not-for-profit utility (as defined in
IC 8-1-2-125
) regulated under IC 8; and
(B) intended to be used and useful for the production,
transmission, delivery, or furnishing of heat, light, water, or
power to the public.
(3) Property that is used for religious worship and
improvements on the same real estate auxiliary to property
used for religious worship.
(4) Property that is owned, operated, managed, or controlled
by a religious organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(5) Property that is owned, operated, managed, or controlled
by an educational organization exempt from federal income
taxation under Section 501 of the Internal Revenue Code.
(c) An obligor's receipt of payment from a third person shall not be
a condition precedent to, or in any way limit, or be a defense to the
provider's right to record or foreclose a lien against the real estate that
was improved by the provider's labor, material, or equipment.
SECTION 6. [EFFECTIVE JULY 1, 2001] (a) Except as provided
in subsection (b),
IC 32-8-3-1
,
IC 32-8-3-3
,
IC 32-8-3-5
,
IC 32-8-3-16
, and
IC 32-8-3-18
, all as amended by this act, apply
only to a contract or subcontract for construction, alteration, or
repair of a building or structure that is entered into after June 30,
2001.
(b)
IC 32-8-3-5
, as amended by this act, applies to a mortgage
only if the mortgage was recorded after June 30, 2001.