Legislature(1997 - 1998)

04/03/1998 01:23 PM House JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 195 - COMMON LAW LIENS                                                      
Number 0220                                                                    
CHAIRMAN GREEN said the committee would hear SB 195, "An Act                   
relating to common law liens, to remedies, costs, and fees imposed             
for the registration, filing, or recording of certain nonconsensual            
common law liens, and to penalties for recording common law liens."            
DOUG WOOLIVER, Administrative Attorney, Alaska Court System, came              
before the committee to testify.  He informed the committee the                
reason the Alaska Court System asked the legislature to introduce              
this legislation is to address the problem of the filing of common             
law liens against people's property.  He stated the liens are                  
"bogus," they have no legal merit whatsoever, and they never have              
had, but they can cloud title to your property.  If you try to sell            
your house and a lien has been recorded against it, you still have             
to get the lien removed and, typically, that requires a lawsuit.               
Number 0350                                                                    
MR. WOOLIVER explained that last year in Anchorage, in retaliation             
for a zoning enforcement action, a person recorded liens against               
the property of Mayor Mystrom, all the members of the Anchorage                
Municipal Assembly, all the zoning enforcement officers that were              
involved in the enforcement action, and the neighbor who called in             
the zoning violation.  He indicated there was a subsequent case                
several months later of another person doing the same thing, only              
they just recorded against the zoning officers again.                          
MR. WOOLIVER said SB 195 attacks this problem in four different                
ways.  First, it makes it clear in statute that common law liens,              
as defined in the statute, are invalid so that title companies,                
banks, et cetera, isn't confused as to whether or not there is any             
merit to them.                                                                 
Number 0410                                                                    
CHAIRMAN GREEN interjected and said if the legislation makes common            
law liens improper, some of the law that we have came from common              
law and asked, "Does that trace with that, for example, workmen's              
lien and those sorts of things?  Are they--perhaps it's in other               
places in statute, so it doesn't negate then."                                 
MR. WOOLIVER replied that is correct.  He said, "We have in our                
statute a statute ... I think it's entitled Improvement on                     
Channels, (ph) ... which was what a common law lien used to be."               
He indicated Alaska does not have common law liens because we have             
an extensive statutory scheme that governs the recording of liens.             
He gave an example of what a common law lien used to be:  if he did            
some work on your buggy and it's in his shop and you refused to pay            
him for it, he would have the right to keep your buggy until you               
paid for it.  He said a common law lien used is a person's right to            
possess property that he or person has improved in some fashion,               
until payment is made.  Mr. Wooliver informed the committee there              
is a lien statute that covers that.  He said there are other types             
of liens such as mechanics' liens, materialmen's liens, and                    
fishermen's liens, which are all covered by statute, none of which             
are affected by this bill.                                                     
Number 0510                                                                    
MR. WOOLIVER said in addition to making these liens clearly                    
unlawful and meritless, there is also a provision to have either a             
court or an attorney file a paper to be recorded, to make it clear             
to others, that this previous lien is invalid under the Alaska                 
Statutes.  Hence, a loan officer or a title company doesn't have to            
make their own legal decisions as to whether or not this lien is a             
common law lien or not.  He said the legislation also provides for             
costs and actual attorney's fees if a person goes to court to have             
a lien removed.  In addition, it also makes it a Class A                       
misdemeanor to record this type of lien.  He noted that according              
to the Department of Law, some troopers have had liens recorded                
against them, and judges and magistrates have been threatened with             
liens as well.  He indicated it is beginning to be a problem in                
Alaska and it is a very big problem in several states outside of               
Number 0600                                                                    
REPRESENTATIVE JEANETTE JAMES pointed out that liens can be filed              
on someone's property and they won't know that it's happened unless            
they are looking for it, or for some reason, have to check.  She               
asked if someone took a lien in to be recorded, would the                      
recorder's office take it.                                                     
MR. WOOLIVER replied in the affirmative.  He indicated the                     
legislature changed the statute a few years ago regarding                      
recorders' offices.  He said the recorder's office will not be a               
gate; they are not going to review all of the various liens to                 
check if they are valid or invalid.  They don't have the training              
to do that.  And the obvious response by people recording these                
liens is to make them look more legitimate or to make them more                
complicated.  The recorder will accept liens.  It's very easy to               
record on property and it has always intended to have been easy to             
do because a lot of these prejudgment-type of liens, such as                   
mechanics liens, are filed by ordinary people and they are supposed            
to be simple.  He said that fortunately, a lot of the people who               
record these liens like to call the person and tell them what                  
they're doing, or send them a notice, but they don't have to.  He              
referred to the case in Anchorage, stating that the only reason                
they discovered it was because Assemblyman Mark Begich was in the              
middle of a business transaction and the whole deal fell apart                 
because he discovered this lien, and it stopped the whole project              
he was working on.  Because of that incident, they found out all               
these other liens as well.  Mr. Wooliver said it would be common a             
person wouldn't know about it until he or she went to borrow money             
against a piece of property or went to sell.                                   
Number 0720                                                                    
REPRESENTATIVE JAMES asked how the bill would work, stating,                   
"Someone files a lien against your property and you don't know it's            
there, and then all of a sudden you have this transaction going                
through and then here's this lien."  She asked what the process is             
to get rid of the lien.                                                        
MR. WOOLIVER replied that almost all of these liens are recorded               
against public officials, usually in retaliation for some official             
action they have taken.  He explained that the first step in the               
process is whoever is reviewing your title should see that the lien            
is already invalid under statute, because this bill amends the                 
statute to make it clear that this type of lien has no merit                   
whatsoever.  Step one is they should be able to completely ignore              
it and it won't have any affect on whatever transaction you're                 
trying to do.  He said if a person is a public official, an                    
attorney would be able to file a statement to be recorded along                
with the lien indicating the lien is invalid under statute.  If                
you're not a public official and this lien is on your property,                
again it's already invalid, which is stated in the statute, so it              
shouldn't cause a problem.  But if it does cause a problem, you                
have an opportunity to go to court and can get an ex parte order               
issued stating the person has 20 days to show up and argue that                
this lien is in fact valid.  And if they don't do that, then the               
court signs a statement indicating the lien is invalid and you're              
awarded costs and attorney's fees for having done that.  Those                 
would be the steps you would go through.  Mr. Wooliver added that              
hopefully a person wouldn't have to go to court because the title              
company would see that the lien, on its face, is invalid.                      
Number 0860                                                                    
REPRESENTATIVE BRIAN PORTER referred to page 3, line 17 of SB 195,             
stating that he is not familiar with why the term "grantee" would              
be used, pointing out that the other person purportedly benefitted             
by the claim.  He said if that's not the person that filed the                 
lien, then they wouldn't have the authority to take it back.                   
MR. WOOLIVER said that that language was added by the Legislative              
Legal and Research Division when the bill was drafted.  He stated              
that if a lien is recorded by a person to benefit someone else,                
that other person could file an affidavit indicating the lien is               
not to benefit them.  He said the lien itself is also invalid                  
anyway under the other provisions of the Act.                                  
CHAIRMAN GREEN referred to Mr. Wooliver's example of a buggy and               
asked:  If the person who made the bolts that held the wheel on the            
buggy, would that be one of these grantees other than the person               
that may have filed?                                                           
MR. WOOLIVER said he does not believe so.                                      
REPRESENTATIVE PORTER said a person could receive punitive damages,            
and he asked if that would be as a result of filing a tort case                
against the person that filed the lien.                                        
MR. WOOLIVER replied in the affirmative.  He said a person who                 
wanted to get damages from someone would have to sue them as a tort            
case.  He indicated that under this legislation, a person will get             
court costs and actual reasonable attorney's fees, if the person               
has to go to court at all to get an ex parte order, but any other              
damages will have to be obtained through a law suit.                           
Number 0994                                                                    
REPRESENTATIVE PORTER referred to page 3, starting at line 17,                 
subsection (b), and asked what the function of that subsection is.             
REPRESENTATIVE CON BUNDE asked, "I'm wondering if this is casting              
a wider net so that I file a lien, not in my name, but in your                 
name, to get around my responsibility, and then if Representative              
Green comes to you as you're the grantee ... and you refuse to                 
release him from that lien, even though I filed what should have               
been an inaccurate lien, is that ..."                                          
MR. WOOLIVER said he is not very familiar with this particular                 
provision, but there are lots of angles that the common law courts             
use.  He stated, "It is my understanding that I can record a lien              
for the benefit of somebody else, I'm in 'cahoots' with the other              
person, that person didn't actually record the lien, but does                  
benefit from it, and that person could be required to release the              
lien since they are the beneficiary of that lien."  He told the                
committee he is not sure how often something like this happens, if             
at all, but that is the loophole that this provision is trying to              
Number 1080                                                                    
REPRESENTATIVE ERIC CROFT asked if SB 195 is based on any model                
legislation from other states.                                                 
MR. WOOLIVER replied there are several other states that have                  
similar types of provisions, which they have looked at, but this               
isn't modeled directly after any particular one.                               
REPRESENTATIVE CROFT referred to the mechanics' lien Mr. Wooliver              
described earlier, and he said those types of liens are statutorily            
defined, and they would continue and would not be affected by this             
MR. WOOLIVER replied that is correct.                                          
REPRESENTATIVE BUNDE stated they know what would happen if someone             
were to file a common law lien after this legislation passes, but              
he asked what would happen before it passes.  He asked if someone              
filed a lien against him, what hoops would he have to jump through             
to get that lien released.                                                     
MR. WOOLIVER replied that typically he would have to go to court               
and try to sue the person to have it released.  He said it is a                
difficult process that takes time that, which is complicated by the            
fact that a lot of the people who are recording this type of lien              
don't accept the jurisdiction of the court, and they won't accept              
service of process because they don't accept anything with a zip               
code on it.  He said then you end up in a horrendous problem just              
trying to go through a court proceeding against some of the                    
inherence to this approach.                                                    
Number 1223                                                                    
REPRESENTATIVE BUNDE asked what that might cost.                               
MR. WOOLIVER referred to the Municipality of Anchorage's case and              
said he had talked to the attorney who represented the city and he             
was told they spent several hours on the case, but he did not know             
how much something like this would cost.  In addition to the cost              
of going through this, most people won't find out about it until               
they are in the middle of trying to do something else.  And then               
there are the costs of not being able to sell their house or not               
being able to go forward with their business plans.                            
Number 1330                                                                    
TOM LAKOSH testified via teleconference from the Anchorage LIO.  He            
informed the committee he is a professional carpenter and stated               
that he can see a circumstance where he would not have the                     
opportunity to keep someone's cabinets, if they decided not to pay.            
He asked the committee to put in specific language that would                  
address the issue that mechanics' liens are accepted from the                  
nonconsensual clause because if someone tried to stiff him on his              
wages, costs, or materials for work he did on someone's home or job            
site, that they wouldn't consent to the lien after that.                       
Number 1420                                                                    
CHARLES MCKEE testified via teleconference from the Anchorage LIO.             
He said, "I see a similarity in this common law lien - especially              
when a legislative body got upset - with $5 million that Congress              
was supposed to give us during statehood, then they went ahead and             
dissolved the mental health land trust of a million acres, so that             
was essentially a common law lien against the congressional act."              
He indicated he had filed a constructive notice under Article 1,               
Section 8 with the Alaska Public Utilities Commission because they             
are issuing licenses to telecommunication companies without                    
researching whether they have (indisc.) property rights to do so.              
Number 1554                                                                    
REPRESENTATIVE CROFT referred to page 1, Section 1, stating that a             
lien means judicial or statutory so that the mechanics and                     
materialmen would fall under that statutory and this wouldn't                  
affect them at all.                                                            
Number 1591                                                                    
REPRESENTATIVE NORMAN ROKEBERG made a motion to move SB 195 out of             
committee with individual recommendations and attached zero fiscal             
note(s).  There being no objection, SB 195 was moved from the House            
Judiciary Standing Committee.                                                  

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