Contractors – Construction Liens – Hawaii
HAWAII CONSTRUCTION LIEN LAW SUMMARY
Note: This summary is not intended to be an all inclusive discussion of Hawaii’s construction lien laws, but does include the basic provisions.
What statues govern the “creation” of a Mechanic’s and Materialman’s Lien on Real Property in Hawaii?
Hawaii Statutes §§ 507-41 through 507-49 govern the creation, recording, notice and filing of Mechanics and Materialmen Liens in Hawaii.
How is the process for claiming a lien commenced?
An individual or business claiming a lien must apply to the circuit court of the circuit where the property is located. The “ Application for Lien” must be accompanied by a written “Notice of Lien.”
The Application must include the following:
a. the names of the parties who contracted for the improvement;
b. the name of the general contractor;
c. the name of the owner(s) and any person or party with an interest therein;
d. the amount of claim;
e. a description of the labor or materials furnished;
f. a description sufficient to identify the property; and
g. any other information needed for a clear understanding of the claim.
The Application for Lien may (not required) include the following:
a. the identity and address of the mortgagees or others holding encumbrances of the property, and
b. the name and address of the surety of the general contractor.
The Notice of Lien must set forth basic facts establishing the basis of the claim. Hawaii Statutes § 507-43(a).
Court Process to Establish the Validity of the Lien.
The Application for Lien and Notice of Lien must be filed no later than forty-five days after the date of completion of the subject improvement. Hawaii Statutes § 507-43(b).
The Application for Lien and Notice of Lien must be returnable (filed with the Court) not less than three, nor more than ten days, after service. On the day of return, the Court will hold a hearing to determine probable cause to permit the lien to attach to the property. The interests of the various parties and claimants will be heard and considered by the Court. No Order Directing Lien to Attach may be entered before service on the contracting party, the general contractor and the owner of the property and they have been given an opportunity to appear at the hearing. Hawaii Statutes § 507-43(a).
The Order Directing Lien to Attach expires three months after entry unless proceedings are commenced within that time to collect the amount due under the lien. Hawaii Statutes § 507-43(e).
Determining the Date of Completion.
The term “date of completion” means the time when the owner or the general contractor for the improvement completes the publication of a notice that the improvement has been completed or has been abandoned and an affidavit of the publication, together with a copy of the notice has been filed in the office of the clerk of the circuit court where the property involved is located.
The above general definition is “conditional”. The Notice of Completion is not effective for any purpose unless there is in fact substantial completion of the project or the project has been abandoned. Also, the general contractor may not publish the Notice of Completion unless the general contractor makes written demand on the owner and the owner fails to publish within 5 days of the demand. Hawaii Statutes § 507-43(f).
If a valid notice of completion is not published and filed within one year after the actual completion or abandonment of the improvement, the “date of completion” shall be deemed to be one year after actual completion or abandonment. Hawaii Statutes § 507-43(g).
Discharge of Lien.
Any mechanic’s or materialmen’s lien may be discharged by the owner, lessee, principal contractor or intermediate contractor filing with the clerk of the circuit court of the county in which the property is located cash or a bond for twice the amount of the sum claimed in the lien filed, conditioned for payment of any sum for which the claimant may obtain judgment upon the lien claim. Hawaii Statutes § 507-45.
Satisfaction of Lien.
Whenever the lien or claim of lien is satisfied (other than by the limitations expressed in Section 507-43), a written notice thereof shall, at the expense of the lienee, be filed with the clerk of the circuit court, which shall be noted in the mechanics’ lien record, and if title to the land involved is registered in the land court and the lien did not attach solely to the interest of the lessee in one or more leasehold time share interests, it shall also be filed in the office of the assistant registrar of the court. Hawaii Statutes § 507-46.