The Lien Deadline and the Leased Pump
Ironworks Supply furnished #5 rebar to Northgate Construction for a 40,000-square-foot warehouse. The last delivery was March 15. Northgate did not pay the $48,000 invoice. Ironworks had given the owner a timely preliminary notice when it started supplying. On May 20, Northgate's project manager promised in writing that payment would be made "by June 30" if Ironworks did not file a lien. Ironworks relied on that promise and filed its lien statement with the clerk of the district court on June 20. The 90th day after March 15 was June 13. Ironworks also leased a concrete pump to Northgate under a 12-month equipment lease; Northgate missed two lease payments, and Ironworks wants to file a UCC financing statement to protect its interest in the pump.
1. Was Ironworks' mechanics lien timely? Explain the effect of Northgate's promise to pay.
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The lien was not timely. North Dakota requires a mechanics lien statement to be filed within 90 days after the last furnishing of labor or materials. The last delivery was March 15, and the 90th day was June 13. Ironworks filed on June 20, seven days late. A promise to pay does not toll or extend the statutory lien deadline. Even a written promise from the project manager does not change the filing date, and reliance on that promise is not a defense. The lien is therefore invalid, and Ironworks is left with an unsecured contract claim against Northgate. It should still preserve the invoice, delivery tickets, and correspondence, but it cannot use the late lien to encumber the property.
2. Where should Ironworks file a UCC financing statement for the leased concrete pump, and what must it show?
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Ironworks should file a UCC financing statement with the North Dakota Secretary of State, which is the central filing office for UCC records. It should not file with the county recorder or the clerk of district court. The financing statement should identify the debtor, the secured party, and the collateral with enough specificity to cover the concrete pump, such as "one concrete pump, serial number [insert]." If the lease is a true lease, Article 9 may not apply, but if it is a security interest disguised as a lease, filing protects Ironworks' priority. If Ironworks wants purchase-money priority, it should file before the debtor receives possession or within 20 days after. The UCC filing is separate from the mechanics lien and does not cure the missed lien deadline.
3. What should Ironworks have done differently to protect both the rebar receivable and the pump?
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Ironworks should have calendared the 90-day lien deadline from the last delivery date and filed the lien statement before June 13, regardless of any promise to pay. It should have sent a notice of intent to file a lien and kept proof of the timely preliminary notice. For the pump, it should have determined whether the lease was a true lease or a security agreement and filed a UCC financing statement at the outset, before delivering the equipment. It also should have monitored the lease payments separately from the rebar account. Relying on the project manager's June 30 promise was especially risky because the promise came after the lien period had already begun running and did not stop the clock.