Can I Lien for Unexecuted Change Order Work?
Obtaining a signed change order can be harder than doing the actual changed work. As a result, you may get to the end of a job with a number of change orders that have yet to be signed. Not a good place to be for sure.
Signed COs are lienable.
This is a tricky question and is subject to some debate. But the most conservative answer is that you should only lien for work that is contained in a change order fully executed by all parties.
So, can you lien for those unexecuted COs? It depends.
What if you have other documentation (letters, emails, text messages, clouded drawings, …) which supports your position, showing that the owner or contractor approved the change or modification? This should suffice to satisfy the requirement that the owner or contractor consented to the change. Therefore, most practitioners recommend liening for amounts that fall into this category (remembering that if you don’t lien within the 90 day deadline, you cannot lien for it later).
What about verbal directives? This is much more difficult. Verbal confirmations only are difficult to prove and should not be the basis to consider your change order “approved” for the purpose of including it in your lien. You may still be able to sue under your contract to collect these amounts, but including them in your lien could subject you to a claim for fraudulent lien or slander of title.
What about extended overhead or delay claims?
It is important to note that only permanent improvements to the real property can be the basis for the amounts noted in your lien. Therefore, amounts related exclusively to delays or extended general conditions are not lienable, unless they are memorialized in a change order signed by all parties. Without a fully executed change order, even with other documentation, amounts related to delays should not be included in your lien amount.
Even if you can’t lien, footnote the claim.
That said, it is common practice to footnote in the lien those additional amounts which are not lienable. For example, you may have $20,000 in work and materials for which you have no signed change order or documentation as well as $30,000 in delays and extended general conditions, again, without a signed change order. Therefore, you should exclude those amounts from the amount claimed in your lien but you could include a footnote at the bottom of the lien that reads “In addition to the lien amount above, the lienor is owed an additional $50,000 for work, materials, delays and extended general conditions.” This serves as a bright red flag to the owner and contractor that you are not giving up on those amounts.
Liening without the benefit of executed or approved documentation is surely risky, so lien carefully.