Does OR COVID-19 Emergency Extensions Give Time to Notice, Perfect, and Foreclose Construction Liens?
In response to the ongoing delays and uncertainty caused by the COVID-19 pandemic, Governor Brown signed House Bill 4212 into law in June 2020. The law contains a number of remedial measures affecting the functioning of local governments, judicial proceedings, and a host of ministerial acts of the State. Section 7 of HB 4212 addresses the time limits to bring legal claims and give notice of a claim. Of specific interest to the construction industry is the affect this extension may have on a contractor’s, supplier’s, or design professional’s right to notice, perfect, and foreclose on a construction lien.
Section 7 of HB 4212 extends the statutes of limitations for civil actions during the declared state of emergency issued by Governor Brown related to COVID-19 and provides those bringing lawsuits with more time to give notice and file their claims in court. The language of the extension is broad, applying to the commencement of virtually any civil action. Section 7 also contains a catch-all extension applying to the “giving notice of a civil claim established by statute.” Section 7(2)(d). In other words, the time for commencement, as well as providing notice, is effectively tolled during the time of the declaration, and continues to be tolled for an additional 90 days once the declaration of emergency (and any extensions to the declaration) expires. While the tolling of the time limits apply for as long as there is a declared emergency, the relief provided by Section 7 does eventually expire on December 31, 2021. HB 4212, Section 8. For example, if the statute of limitations for a breach of contract claim were to expire during the time of the declared state of emergency, Section 7 of HB 4212 gives the person with the claim an additional 90 days once the declaration is no longer in effect to file the claim or until December 31, 2021, whichever is earlier.
When applied to the construction lien context, however, the language of Section 7 is less clear. The procedure for creating and enforcing a construction lien is contained in ORS 87.001 et seq. As construction litigators are aware, there are several steps a contractor, supplier, or design professional needs to take in order to notice, perfect, and foreclose on a construction lien, each with their own specific deadlines. Generally, these deadlines include the initial notices of right to lien to the owner (at the beginning of or during construction, ORS 87.021), perfecting a claim of lien by filing with the county recorder (75 days after completing work, ORS 87.035), providing notice of the perfected lien to the owner and any mortgagee (20 days after recording, ORS 87.039), delivering a notice of intent to foreclose to the owner and any mortgagee (10 days before filing a lawsuit to foreclose, ORS 87.057), and, finally, initiating the foreclosure lawsuit by filing in court (120 days after perfecting the lien, ORS 87.055). Lien foreclosure actions are also given priority in court cases to expedite resolution. ORS 87.060(7).
The problem with the broad language of HB 4212, Section 7(2)(d), and the extension for “giving notice of a civil claim established by statute,” as applied to Chapter 87, is that there is no single “notice” that needs to be given, and the purpose of many of the notice provisions is to allow an owner or mortgagee to take action to either avoid unauthorized work (such as unapproved tenant improvements) or at least monitor the work, the workers, and materials used, and intervene or mitigate disputes before they create a cloud on the title or problems with the financing. Further, the fast track filing and resolution requirements for construction liens are intended to expedite the clearing of title disputes and promote certainty in marketable title. None of these intentions are furthered by extending the time limits for construction liens.
Regardless, the language of HB 4212 could be interpreted as to extend all of the notice, recording or filing requirements for construction liens. It could also be interpreted to apply only to the noticing and filing of the foreclosure action in court, which seems to be the broad, overall purpose of the extensions to court statutes of limitations in the bill. Notability, the language of HB 4212 specifically uses the term “claim,” not “lien.”
Litigants and lienholders facing an impending deadline would be wise to err on the side of caution and not rely on the extension provided in Section 7. To lienholders whose deadline(s) have expired, the broad language of the extension is your ally. It appears likely that there will be litigation over the scope and legislative intent of the broad extension contained in Section 7(2)(d). As always, when faced with the prospect of a construction lien, either as a contractor, supplier, design professional, or owner or other lienholder, it is best to consult an attorney experienced in complexities of construction law.
We encourage you to visit Schwabe’s COVID-19, CARES Act, and PPP Portal resource pages for additional information as it becomes available.
- William OhleShareholder
- Jonathan StammAssociate