House Bill 981

AN ACT TO CREATE THE COMMERCIAL REAL ESTATE BROKER LIEN ACT; TO DEFINE CERTAIN TERMS; TO PROVIDE WHEN A REAL ESTATE BROKER SHALL HAVE A LIEN ON COMMERCIAL REAL ESTATE; TO PROVIDE WHEN A LIEN ATTACHES TO COMMERCIAL REAL ESTATE; TO PROVIDE FOR LIEN NOTICE AND CONTENT; TO PROVIDE FOR THE FILING OR A LIEN CLAIM RELEASE OR SATISFACTION; TO REQUIRE A LIEN CLAIMANT TO MAIL A COPY OF NOTICE OF A LIEN TO THE OWNER BY CERTIFIED MAIL; TO PROVIDE FOR THE ENFORCEMENT OF LIENS; TO PROVIDE COMPLAINT CONTENT AND PROCEDURE; TO PROVIDE FOR THE EXTINGUISHING OF LIENS; TO PROVIDE FOR SATISFACTION OR RELEASE OF LIENS; TO PROVIDE FOR THE DISCHARGE OF LIENS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Commercial Real Estate Broker Lien Act."

SECTION 2. The following words and phrases shall have the meanings ascribed herein unless the context clearly indicates otherwise:

(a) "Broker" means a real estate broker licensed pursuant to Section 73-35-1 et seq.

(b) "Broker services" means services for which a license issued by the Mississippi Real Estate Commission is required pursuant to Section 73-35-1 et seq.

(c) "Commercial real estate" means any real property or interest therein, whether freehold or nonfreehold, which at the time the property or interest is made the subject of an agreement for broker services:

(i) Is lawfully used primarily for sales, office, research, institutional, warehouse, manufacturing, industrial, or mining purposes or for multifamily residential purposes involving five (5) or more dwelling units;

(ii) May lawfully be used for any of the purposes listed in paragraph (c) of this section by a duly enacted zoning ordinance or which is the subject of an official application or petition to amend the applicable zoning ordinance to permit any of the uses listed in paragraph (c) of this section which is under consideration by the government agency with authority to approve the amendment; or

(iii) Is in good faith intended to be immediately used for any of the purposes listed in paragraph (c) of this section by the parties to any contract, lease, option, or offer to make any contract, lease, or option.

(d) "Commission" means any compensation which is due a broker for performance of broker services.

(e) "Lien claimant" means a broker claiming a lien pursuant to this act.

(f) "Owner" means the owner of record of any interest in commercial real estate.

SECTION 3. (1) A broker shall have a lien upon commercial real estate in the amount that the broker is due under a written agreement for broker services signed by the owner or signed by the owner's duly authorized agent, if:

(a) The broker has performed under the provisions of the agreement;

(b) The written agreement for broker services clearly sets forth the broker's duties to the owner; and

(c) The written agreement for broker services sets forth the conditions upon which the compensation shall be earned and the amount of such compensation.

(2) The lien under this section shall be available only to the broker named in the instrument signed by the owner or the owner's duly authorized agent. A lien under this section shall be available only against the commercial real estate which is the subject of the written agreement for broker services.

(3) When payment of commission to a broker is due in installments, a portion of which is due only after the conveyance or transfer of the commercial real estate, any notice of lien for those payments due after the transfer or conveyance may be recorded at any time subsequent to the transfer or conveyance of the commercial real estate and within ninety (90) days of the date on which the payment is due. The notice of lien shall be effective as a lien against the owner's interest in the commercial real estate only to the extent funds are owed to the owner by the transferee, but the lien shall be effective as a lien against the transferee's interest in the commercial real estate. A single claim for lien filed prior to transfer or conveyance of the commercial real estate claiming all commissions due in installments shall also be valid and enforceable as it pertains to payments due after the transfer or conveyance; provided, however, that as payments or partial payments of commission are received, the broker shall provide partial releases for those payments, thereby reducing the amount due the broker under the broker's lien.

SECTION 4. A lien authorized by this act attaches to the commercial real estate only when the lien claimant files a timely notice of the lien in the office of the chancery clerk in the county in which the commercial real estate is located. A notice of lien is timely if it is filed after the claimant's performance under the written agreement for broker services and before the conveyance or transfer of the commercial real estate which is the subject of the lien, except that in the case of a lease or transfer of a nonfreehold interest, the notice of a lien shall be filed no later than ninety (90) days following the tenant's possession of the commercial real estate or no later than sixty (60) days following any date or dates set out in the written agreement for broker services for subsequent payment or payments. When a notice of a lien is filed more than thirty (30) days preceding the date for settlement or possession set out in an offer to purchase, sales contract, or lease, which establishes the broker's claim of performance, the lien shall be available only upon grounds of the owner's breach of the written agreement for broker services.

SECTION 5. (1) A lien notice under this act shall be signed by the lien claimant and shall contain an attestation by the lien claimant that the information contained in the notice is true and accurate to the best of the lien claimant's knowledge and belief.

(2) The lien notice shall include all of the following information:

(a) The name of the lien claimant;

(b) The name of the owner;

(d) The amount for which the lien is claimed and whether the amount is due in installments.

(3) The claimant's grounds for the lien, including a reference to the written agreement for broker services that is the basis for the lien.

SECTION 6. If a claim for a lien has been filed with the chancery clerk and a condition occurs that would preclude the lien claimant from receiving compensation under the terms of the written agreement for broker services on which the lien is based, the lien claimant shall file and serve the owner of record a written release or satisfaction of the lien promptly, and in no event more than thirty (30) days after the demand.

SECTION 7. Any lien claimant who files a lien on commercial real estate pursuant to the provisions of this act shall mail a copy of the notice of the lien to the owner of the commercial real estate by certified mail, return receipt requested, or shall serve a copy of the notice of the lien in accordance with the provisions of law for service of process. The lien claimant shall file proof of service with the chancery clerk. The lien is void if the lien claimant does not file and serve the lien as provided in this act.

SECTION 8. A lien claimant may bring suit to enforce a lien which attaches pursuant to the provisions of this act in any court of competent jurisdiction in the county where the commercial real estate is located. The lien claimant shall commence proceedings within eighteen (18) months after filing the lien, and failure to commence proceedings within the eighteen (18) months shall extinguish the lien. If a claim is based upon an option to purchase the commercial real estate, the lien claimant shall commence proceedings within one (1) year of the option to purchase being exercised. A claim for the same lien extinguished pursuant to this section may not be asserted in any subsequent proceeding. A lender shall not be made a party to any suit to enforce a lien under this act unless the lender has willfully caused the nonpayment of the commission giving rise to the lien.

SECTION 9. (1) A complaint filed pursuant to the provisions of this section shall contain all of the following:

(a) A statement of the terms of the written agreement for broker services on which the lien is based or a copy of the written contract or agreement;

(b) The date when the written agreement for broker services was made;

(d) The amount due and unpaid;

(e) A description of the property that is subject to the lien; and

(f) Any other facts necessary for a full understanding of the rights of the parties.

(2) The plaintiff shall file the action against all parties that have an interest of record in the commercial real estate; provided that a lender shall not be made a party to any suit to enforce a lien under this act unless the lender has willfully caused the nonpayment of the commission giving rise to the lien; a foreclosure action for a lien claimed pursuant to this act shall be brought pursuant to the provisions of this act.

(3) Valid prior recorded liens or mortgages shall have priority over a lien under this act.

SECTION 10. If a lien claimant fails to file a suit to enforce the lien or fails to file an answer in a pending suit to enforce a lien within thirty (30) days after a properly served written demand of the owner, lienee, or other authorized agent, the lien shall be extinguished. Service of the demand shall be by registered or certified mail, return receipt requested, or by personal service. The claimant shall file proof of properly served written demand with the chancery clerk. The provisions of this section shall not extend to any other deadline provided by law for the filing of any pleadings or for the foreclosure of any lien governed by this act.

SECTION 11. If a claim for a lien has been filed pursuant to the provisions of this act with the chancery clerk and the claim has been paid in full, or if the lien claimant fails to institute a suit to enforce the lien within the time as provided by law, the lien claimant shall acknowledge satisfaction or release of the lien in writing upon written demand of the owner promptly, and in no event more than thirty (30) days after the demand.

SECTION 12. The costs of any proceeding brought to enforce a lien filed pursuant to this act, including reasonable attorney's fees and prejudgment interest due to the prevailing party, shall be paid by the nonprevailing party or parties. If more than one (1) party is responsible for costs, fees, and prejudgment interest, the costs, fees, and prejudgment interest shall be equitably apportioned by the court among the responsible parties.

SECTION 13. (1) Unless an alternative procedure is available and is acceptable to the transferee in a real estate transaction, any claim of lien on commercial real estate filed under this act may be discharged by any of the following methods:

(a) The lien claimant of record, the claimant's agent, or attorney, in the presence of the chancery clerk, may acknowledge the satisfaction of the claim of lien on the commercial real estate indebtedness, whereupon the chancery clerk shall enter on the record of the claim of lien on the commercial real estate the acknowledgment of satisfaction, which shall be signed by the lien claimant of record, the claimant's agent, or attorney, and witnessed by the chancery clerk;

(b) The owner may exhibit an instrument of satisfaction signed and acknowledged by the lien claimant of record, which instrument states that the claim of lien on the commercial real estate indebtedness has been paid or satisfied, whereupon the chancery clerk shall cancel the claim of lien on the commercial real estate by entry of satisfaction on the record of the claim of lien on the commercial real estate;

(d) By filing in the office of the chancery clerk the original or certified copy of a judgment or decree of a court of competent jurisdiction showing that the action by the claimant to enforce the claim of lien on the commercial real estate has been dismissed or finally determined adversely to the claimant;

(e) Whenever funds in an amount equal to one hundred twenty-five percent (125%) of the amount of the claim of lien on the commercial real estate is deposited with the chancery clerk to be applied to the payment finally determined to be due, whereupon the chancery clerk shall cancel the claim of lien on the commercial real estate;

(f) Whenever a corporate surety bond, in an amount equal to one hundred twenty-five percent (125%) of the amount of the claim of lien on the commercial real estate and conditioned upon the payment of the amount finally determined to be due in satisfaction of the claim of lien on the commercial real estate is deposited with the chancery clerk, whereupon the chancery clerk shall cancel the claim of lien on the commercial real estate; and

(g) By failure to file a written release or satisfaction of a lien when required by this act or to timely file such or take other action required by this act.

(2) If funds in an amount equal to one hundred twenty-five percent (125%) of the amount that is sufficient to release the claim of lien have been deposited with the chancery clerk, or a bond in an equal amount has been secured, the lien claimant shall release the claim for the lien on the commercial real estate, and the lien claimant shall have a lien on the funds deposited with the chancery clerk.

SECTION 14. This act shall take effect and be in force from and after July 1, 2013.