Rental equipment lien law challenges unwary contractors

A mechanic’s lien is a means for securing payment to contractors, subcontractors and materials suppliers for construction work. It is attached to real property, as well as buildings and improvements on that property, until payment has been made.

Prior to the revisions to the lien statute in 2005, Missouri’s mechanic’s lien statute did not mention rented or leased equipment. Many contractors, suppliers and subcontractors filed liens which included claims for rental equipment even though the lien statute did not expressly authorize liens for rental equipment.

The right to file a mechanic’s lien in Missouri is solely a creature of statute. There is no common-law right to a mechanic’s lien. Consequently, if a mechanic’s lien right is not granted by the lien statute, then it is not permitted at all.

The failure of the lien statute to provide for rental equipment lien rights prior to 2005 was exploited by the project owner in a case decided by the Missouri Court of Appeals in August 2002. The court held that an equipment supplier could not lien a project because the lien statute in effect at that time did not allow liens for rented equipment.

In that case, Bush Construction Machinery Inc. v. Kansas City Factory Outlets LLC, the supplier/lien claimant had leased a Caterpillar scarper and Caterpillar track loader to an earthwork subcontractor for a new shopping mall. The supplier performed no labor, but merely leased the equipment. The court held that since the Missouri lien statute at the time did not specifically include rented equipment, the court had no choice but to declare the lien invalid.

Many contractors believed that the Bush case was limited to rental equipment suppliers who do not provide any labor or material to the site.

In late 2004, however, prior to the revision of the lien statutes, a different Missouri Court of Appeals denied a subcontractor’s lien entirely because 4 percent of the lien related to rental equipment. In Structure & Design Unlimited Inc. v. Contemporary Concepts Building & Design Inc., the subcontractor/lien claimant provided substantial labor and materials to the project and rented some equipment from a rental equipment supplier. The court relied upon the Bush case for its analysis, but severely expanded the scope of the Bush case to include any lien claimant who includes rental equipment in its lien claim.

Inclusion of nonlienable items in a lien claim may result in invalidating the entire claim unless the claimant can establish that such inclusion was an inadvertent mistake. Because the subcontractor failed to prove that it inadvertently included rental equipment – which this court ruled was not lienable at the time – in its lien, the entire lien claim, 96 percent of which was totally unrelated to rental equipment, was deemed invalid. The ruling by the court in the Structure & Design case should serve as a warning to all contractors who desire to include rental equipment in their lien claims.

The 2005 revisions to the lien statute now allow liens for rented equipment in limited circumstances. The amended laws say that written notice must be provided to the property owner within five business days of the commencement of the use of the rental equipment. The notice must identify the name of the entity that rented the machinery or equipment, provide a description of the machinery or equipment being rented and the rental rate. The statutes prohibit liens for rental equipment except on commercial property for claims in excess of $5,000. Mechanic’s liens that include claims for rental equipment must be filed within 60 days after the date the last of the rental equipment or machinery was last removed from the property.

The five-day notice and 60-day lien filing requirements for rental equipment require contractors, suppliers and subcontractors to take action to preserve lien rights much sooner than notice or lien filing is required for other construction work.

If a contractor, supplier or subcontractor includes rental equipment in a lien and has failed to comply with these notice and filing requirements, it may lose its entire lien even if the rental equipment comprises a small percentage of the contractor’s total claim.

If you have failed to properly preserve your rental equipment lien rights, you should leave your rental equipment claim out of your lien or you may face dismissal of your entire lien.

Michael Textor is a shareholder with Shughart, Thomson & Kilroy, P.C. He focuses his practice on construction law. He may be contacted at

mtextor@stklaw.com.[[In-content Ad]]