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Hall of Claims - February 2016

Posted by Madeline Fortino

2/15/16 12:02 PM

Hall of Claims February 2016

Our monthly review where we recognize amazing customer service and diligence from the greatest in recording, statute, and lien best practices...along with the lackluster. Take a look at who wins gold, and who needs a little practice.

This month we examine two different states with unusual recording practices: one is our MVP for recording claims swiftly with a limited amount of time. The other drops the ball by rejecting liens based on overly-rigorous recording procedures. We recognize the recorders of Texas for processing such a large volume of liens around the 15th of each month. We also take a look at certain dismal recording standards for Arizona that leave many liens rejected for unjust reasons, which can hurt the lien rights of even the most careful claimant.

THE BEST: TEXAS

We talk a lot about Texas for having some of the most strict recording deadlines, calculated by a defined amount of months after the debt is accrued. The 15th of each month is an important deadline in Texas lien law - for both monthly notices, as well as mechanics liens. A mechanics lien on non-residential work must be “filed by 15th day of the 4th calendar month after the day on which the debt accrued (3rd month if the project is residential).” This makes the 15th (and the days preceding) one of the busiest times for Texas county recorders, and it is rare to find a lien recorded in an untimely manner for most of these counties.

This is namely because so many Texas counties allow for e-recording. As one of the biggest states, Texas also has the most vast amount of counties: 254 total. Only around 50 allow for e-record, but they are some of the most popular and largest counties, with seriously swift recording times. Of the four most populated counties (all of which allow for e-recording): Dallas County has an expected turnaround time of 10 minutes to 4 hours; Harris County has an expected turnaround time of 10 minutes to 3 hours; and Travis County has an expected turnaround time of immediate to 3 hours; and Bexar County has an expected turnaround time of 5 minutes to 2 hours. And all of this data was pulled from February 15th, 2016 - the deadline day.

However, not all Texas counties happen to allow for e-recording. The counties that do not offer e-recording often have very quick and friendly phone support, and can easily look up if your lien has been recorded, rejected, or where it has been sent back to. Most of these counties record same day as the lien is received, so if your lien is sent overnight, it will most likely be recorded on the same business day it is received by the county. Overall, Texas counties continue to offer excellent support and recording, even with a very heavy statute burden on their shoulders.

THE WORST: ARIZONA

On paper, Arizona seems an ideal state to record a mechanics lien with. Many of their counties offer e-recording, and most have swift turnaround times. Of the three most populated counties (all of which allow for e-recording): Maricopa County has an expected turnaround time of 30 minutes to 10 hours; Pima County has an expected turnaround time of 10 minutes to 3 hours; and Mohave County has an expected turnaround time of immediate to 2 hours. It might seem like an echo of Texas’s great e-recording capabilities, and on most accounts Arizona recorders are fantastically quick and helpful. However, there’s one glaring problem that has made this state one of the hardest to work with: recording standards that prohibit any illegible shading or not reproducible text.

This may sound like a perfectly reasonable request to keep all pages of the document legible, however, when the state requires exhibits (such as the written contract or invoices), this principle is much more complicated. When asked about their rigorous standards, recorders have cited ARS 11-480(A)(2) in the past. That provision states that "Each instrument shall be an original or a copy of the original and shall be sufficiently legible for the recorder to make certified copies from the photographic or micrographic record". Many Arizona recorders use a process of scanning and storing documents via micrographic film, which can distort the document if text is not abundantly spaced out. This makes the use of diagrams, drawings, sketches, hand writing, and charts unusable on a recorded document such a mechanics lien. If any kind of “not reproducible” image is found on an exhibit (perhaps a diagram of work done on the property), the document is not eligible for recording and is promptly rejected. Recorders in the past have been unwilling to bend the rules even if the document that is not reproducible is an exhibit, and have even suggested to re-draft documents such as these. If a document is clearly legible and a faithful representation of the contract, it is not necessarily reasonable to reject a document solely based on the way it will look if the recorder minimizes it to be stored in their own system.

This practice of using micrographic film to store documents such as mechanics liens has kept many valid documents from being recorded, and has resulted in many claimants to discard pages of their exhibits because they cannot otherwise get the document recorded. Arizona counties should rethink using micrographic film as the only means of storing document images, mainly because it can negatively affect an otherwise acceptable lien from being recorded. While it might be a big change for their process, it would overall improve their recording procedures to be more fair.

BUT IT'S NOT ALWAYS ABOUT BEING THE BEST...

As Alan Turing said, "We can only see a short distance ahead, but we can see plenty there that needs to be done." Thanks to all of the counties who see what needs to be done, even in a short amount of time, and make progress with their own standards to make the construction payment industry fair!

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Topics: county recorders