Nebraska Supreme Court Strengthens Lien Claims

In an opinion issued this March, the Nebraska Supreme Court strengthened contractors’ rights to file liens to protect their interests in property upon which they performed work. The case was Nore Electric v. S&H Holdings, 316 Neb. 197 (2024). In that case, the Court held that an owner could not transfer its ownership interest free of contractors’ lien interests during a period following a notice of termination. Under Nebraska law, following a notice of termination, contractors have the right to file liens if they have not been paid for their work.The owners in this case attempted to leave contractors high and dry by arguing Nebraska’s Construction Lien Act (NCLA) only applied to property still owned by the contracting owners. The argument went that once they made the transfer, the contractors could no longer file valid liens due to language contained within the NCLA.The Court disagreed, finding that providing owners with such a workaround would frustrate the purpose of construction liens in Nebraska. As we know, the purpose of the NCLA is to provide a remedy to contractors to be paid for the work they perform. The Court held that the liens attach to the real estate in question, not to the owner or only to the property of the owner. This means that any party seeking to take ownership of property in Nebraska does so subject to any future construction lien. “To read the NCLA otherwise would completely remove the protection given to contractors by the Legislature and negate the rationale behind the creation of construction liens.”Ultimately, as this case shows, construction liens remain ripe for litigation, though courts in Nebraska continue to rightly show a willingness to protect the rights of contractors. Property owners have attorneys looking to make creative use of Nebraska statutes like those representing the owners in this case. Involving an experienced construction attorney at the earliest possible stage of any dispute, or potential dispute, gives contractors the best chance to optimize their chances of justly collecting for the work they performed. Andrew Wilkinson is a construction attorney with Lamson Dugan & Murray, LLP. If you have any questions, Andrew’s e-mail is awilkinson@ldmlaw.com.