Mechanic’s Lien Statutes are to be Liberally Construed: New Tennessee Court of Appeals Opinion Allows Valid Lien Claim in the Face of “Non-Prejudicial” Defects

Once upon a time, a mechanic’s and materialmen’s lien lawsuit was akin to walking a tight-rope. In order to have a valid lien claim, you had to comply with each and every deadline, notice, and other requirement of the statute. Just one mistake rendered the lien claim ineffective.

The Tennessee lien statutes (Tenn. Code Ann. § 66-11-101 et. seq.) were revised in 2007. A notable change was that, under Tenn. Code Ann. § 66-11-148, the statutes were to be “liberally construed” in the lien claimant’s favor and that “[s]ubstantial compliance” with the lien laws is “sufficient for the validity” of lien claims.

The recent case of Tri Am Construction, Inc. v. J & V Development, Inc. (Aug. 30, 2011) is the first case to discuss this new statute on liberal construction. In that case, the claimant: failed to file its Complaint under oath; didn’t add claims against the Deed of Trust trustee; didn’t have an attachment issued; and used a defective notary acknowledgment.  All of these would have been fatal errors under the old statutes.

Under the new statute, however, the Court overlooked all of these defects, finding that the errors were “nonprejudicial” and fell within the scope of the liberal construction of the statutes.

I ask the obvious question: If a court is to overlook these defects, exactly what defects would be considered “prejudicial” and would prevent a valid lien claim?

I don’t know. Here, the exceptions appear to eliminate the rule. Surely, a court would dismiss a late-filed lien claim. Right?