Chapter 076
2013 -- S 0507 SUBSTITUTE A
Enacted 06/07/13
A N A C T
RELATING TO
PROPERTY - COMMERCIAL REAL ESTATE BROKER LIEN ACT
Introduced By: Senators McCaffrey, and Lynch
Date Introduced: February 28, 2013
It is enacted by the
General Assembly as follows:
SECTION 1. Title 34 of the General Laws entitled
"PROPERTY" is hereby amended by
adding thereto the following chapter:
CHAPTER
49
COMMERCIAL
REAL ESTATE BROKER LIEN ACT
34-49-1.
Short title. – This chapter shall be known and
may be cited as the "Commercial
Real Estate Broker Lien
Act."
34-49-2.
Definitions. – As used in this chapter, the
following words shall have the
following meanings:
(1) "Commercial
real estate" means any real estate other than: (i)
Real estate containing
one to four (4) residential units; (ii) Real estate on
which: (A) No buildings or structures are
located; and (B) Which is zoned for single-family residential
use; or (iii) Single-family residential
units such as condominiums, townhouses, or homes singly or
in a subdivision when sold, leased,
or otherwise conveyed on a unit by unit basis, even
though these units may be a part of a larger
building or parcel of real estate containing more than four
(4) residential units.
(2)
"Compensation" means fees, commissions, and any and all other
compensation which
may be due a real estate broker for performance of
licensed services as defined in section 5-20-1
et seq.
(3) "Real
estate" and "real estate broker" are as defined in section
5-20.5-1 et seq.
34-49-3.
Broker's lien. – (a) Any
real estate broker shall have a lien upon commercial
real estate or any interest in that commercial real estate
which is the subject of a purchase, lease
or other conveyance to a buyer or tenant (which
transferee includes without limitation subtenant
and assignee) of an interest in the commercial real
estate, in the amount of compensation that the
real estate broker is due for licensed services, which compensation
shall include without
limitation, brokerage fees, consulting fees, and management
fees:
(1) Under a written
instrument which is executed either by the owner of an interest in the
commercial real estate or by the owner’s authorized agent; or
(2) Under a written
instrument executed by a prospective buyer or prospective tenant or
its respective authorized agent.
The lien shall be
available to the real estate broker named or referred to in the agreement
or instrument signed by the owner, buyer, or tenant (or
their respective agents) and not to an
employee or independent contractor employed by or affiliated
with the real estate broker.
(b) A lien under this
chapter shall attach to the commercial real estate or any interest in
the commercial real estate upon:
(1) The real estate
broker being entitled to compensation under a written instrument
signed by the owner, buyer, tenant, or their authorized
agent, as applicable; and
(2) Except as
provided in subsections (c), (d), (e), or (f) below, the real estate broker
recording a notice of lien in the land evidence records for the
municipality in which the
commercial real estate or any interest in the commercial real
estate is located, prior to the
recording of an actual instrument of conveyance or transfer of
legal title to the commercial real
estate against which the real estate broker claims a lien by
the party from whom compensation is
claimed. The lien shall attach as of the date of the
recording of the notice of lien and does not and
shall not relate back to the date of the written agreement.
If a notice of lien is recorded after the
date of recording of an instrument conveying or
transferring legal title to the commercial real
estate from the party from whom compensation is claimed,
then such notice of lien shall not
constitute a lien on the interest in commercial real estate held
by the transferee.
(c) Except as
provided in subsections (d), (e), or (f) when payment to a real estate broker
is due in installments, a portion of which is due only
after the conveyance or transfer of the
commercial real estate or interest therein, any notice of lien
for those payments due after the
transfer or conveyance may be recorded at any time which is
subsequent to the transfer or
conveyance of the commercial real estate or interest therein or
which time is within ninety (90)
days of the date on which the payment is due. Such notice
of lien shall only be effective as a lien
against the transferor’s interest in the commercial real
estate to the extent funds are owed to the
transferor by the transferee, but the lien shall be effective as
a lien against the transferee’s interest
in the commercial real estate without limitations described
above in this section. A single claim
for lien recorded prior to transfer or conveyance of the
commercial real estate or interest therein
claiming all compensation 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 compensation are received, the real estate broker
shall provide partial releases
therefor, thereby reducing the amount due the real estate
broker under its lien.
(d) In the case of a
lease (which shall also include a sublease or assignment of lease), the
notice of lien must be recorded not later than ninety (90)
days after the tenant occupies the leased
premises. Provided, however, that if the landlord serves
written notice of the intended execution
of the lease by personal service on the real estate
broker entitled to claim a lien, at least ten (10)
days prior to the date of the intended execution of the
lease, the notice of lien must be recorded
before the date indicated in such notice for the execution
of the lease. The lien shall attach as of
the recording of the notice of lien and does not and
shall not relate back to the date of the written
agreement.
(e) If a real estate
broker may be due any compensation excluding compensation due
upon execution of the initial lease, such as compensation
arising from and including, but not
limited to, the exercise of an option: (1) To expand leased
premises; (2) To renew or extend a
lease; or (3) To purchase commercial real estate; which
compensation is due, pursuant to a
written agreement or instrument signed by the then owner or
tenant (collectively “future
commissions”), then the real estate broker may record its notice
of lien at any time after execution
of the lease or other written agreement which contains
such rights, but not later than ninety (90)
days after the occurrence of the act or event on which the
future commission is claimed. An
action to enforce a lien to collect future commissions must
be commenced within two (2) years of
the act or event for which the future commission is
claimed.
(f) In the event that
the commercial real estate is sold or otherwise conveyed prior to the
date on which a future commission is due, if the real
estate broker has recorded a valid notice of
lien prior to the sale or other conveyance of the
commercial real estate, then the purchaser or
transferee shall be deemed to have notice of and shall take
title to the commercial real estate
subject to the notice of lien. Provided, however, that if a
real estate broker claiming a future
commission fails to record its notice of lien for future
commission prior to the recording of a deed
conveying legal title to the commercial real estate to the
purchaser or transferee for consideration,
then such real estate broker may not claim a lien on the
commercial real estate, and any notice of
lien recorded subsequent to the recording of such deed
shall not constitute a lien on the
commercial real estate and shall be null and void and of no
effect.
(g) If a real estate
broker claims compensation based on a written instrument executed by
a prospective buyer or tenant or agent as described in
subdivision (a)(2) of this section, then the
notice of lien shall attach upon the prospective buyer or
tenant purchasing or otherwise accepting
a conveyance or transfer of the commercial real estate
or interest therein and the recording of a
notice of lien by the real estate broker in the land evidence
records in which the commercial real
estate, or any interest in the commercial real estate is
located, within ninety (90) days after the
recording of the deed or other instrument for the purchase or
other conveyance or transfer to the
buyer or within ninety (90) days of such tenant occupying
the leased premises in the case of a
lease or sublease transaction. The lien shall attach as of
the date of the recording of the notice of
lien and does not and shall not relate back to the date of
the written agreement.
(h) The real estate
broker shall, within ten (10) days of recording its notice of lien, either
personally serve, deliver to, or mail a copy of the notice of
lien by registered or certified mail,
return receipt requested, to the owner of record or to the
agent of the owner of record at: (1) The
address of the owner stated in the written instrument on
which the claim for lien is based; or (2) If
no such address is given, then to the address where the
real estate tax bill(s) are sent for the
commercial real estate on which the claim of the lien is based;
or (3) To the address of the
property. Mailing of the copy of the notice of lien is
effective when deposited in a
mailbox with postage prepaid.
(i)
A real estate broker may bring suit to enforce a lien in the superior court for
the county
where the commercial real estate is located by filing a
complaint and sworn affidavit that the
notice of lien has been recorded.
(j) A real estate
broker claiming a lien shall, within two (2) years after recording the
notice of lien, commence proceedings by filing a complaint
and recording a notice of lis pendens
in the land evidence records in the municipality in
which the commercial real estate is located.
Failure to commence proceedings as required herein
within two (2) years after recording the
notice of lien shall extinguish the lien.
(k) A real estate
broker claiming a lien based upon an option or other right to purchase or
lease shall, within two (2) years after the transfer or
conveyance of the commercial real estate
under the exercise of the option to purchase or lease,
commence proceedings by filing a
complaint and recording a notice of lis
pendens in the land evidence records in the municipality
in
which the commercial real estate is located.
(l) Failure to
commence proceedings within the time limits set forth herein shall
extinguish the lien.
(m) A complaint under
this section shall contain a brief statement or description of the
agreement, contract, or instrument on which the notice of lien
was filed, the date when the
agreement, contract or instrument was made, a description of
the services performed, the amount
of compensation due and unpaid, a description of the
commercial real estate which is subject to
the notice of lien, and other facts reasonably necessary
to describe the rights of the parties. The
plaintiff shall make all interested parties of whose interest
the plaintiff real estate broker is
notified or has knowledge defendants to the action, and shall
issue summons and provide service
as in other civil action. When any defendant resides
outside or has left the state, or on inquiry
cannot be found, or is concealed within the state so that
process cannot be served on that
defendant, the plaintiff shall cause a notice to be given to
that defendant, or cause a copy of the
complaint to be served upon that defendant in the manner and
upon the same condition as in other
civil actions. Failure of the plaintiff to provide proper
summons or notice shall be grounds for
judgment against the plaintiff and in favor of the defendant
which is not properly served with
summons or notice. All liens claimed under this chapter shall
be foreclosed as provided in chapter
34-27.
(n) The notice of
lien shall state the name of the claimant, the name of the legal title
owner of the commercial real estate, a legal description of
the commercial real estate upon which
the lien is claimed, the amount for which the lien is
claimed, and the number of the real estate
broker’s license. The notice of lien shall recite that the
information contained in notice is true and
accurate to the knowledge of the signator.
The notice of lien shall be executed by the real estate
broker or by a person authorized to execute on behalf of the
real estate broker and shall be
verified. A notice of lien substantially in the following form
shall be deemed to comply with the
foregoing requirements:
NOTICE OF COMMERCIAL
REAL
ESTATE BROKER LIEN
LAND EVIDENCE RECORDS
XXX
Broker-Claimant,
vs.
XXX,
Owner
Notice is hereby given that the undersigned
Broker-Claimant, whose real estate license number is
_______________, and whose business address is
____________________________, makes the
following statement and claims a Commercial Real Estate Broker
Lien under the law entitled
"Commercial Real Estate Broker Lien Act,” chapter
34-49 states:
(1)
_____________________, _________________,
Lot Number, ________________________ and which is
legally described on Exhibit A attached
hereto is improved with a commercial building. The record
owner of the Property (“Owner”) is
______________________ and
_________________________ as Tenant/Sublessor.
(2) There is a
written agreement to which the Tenant/Sublessor of
the Property, is a party
by which Tenant/Sublessor is
obligated to pay Broker-Claimant a commission.
(3) That the
Broker-Claimant by its sponsored licensee(s) provided services for said
Tenant/Sublessor and is in
compliance with Broker-Claimant’s obligations under a written
agreement to which Tenant/Sublessor
is a party;
(4) That the amount
of the commission or fee to which Broker-Claimant is entitled is
$_____________; and
(5) Broker-Claimant
now claims a lien on the Property and all improvements thereon and
against all persons interested therein in the sum of
____________________________________
and 00/100 ($__________ ).
By: _____________________________
Its Authorized Agent
STATE OF
COUNTY OF
________________
___________________ as agent for
____________________________, being
first duly sworn on his/her oath, deposes and states that
he/she has read the foregoing Lien Notice
for Commercial Real Estate Broker Lien and knows the
contents thereof and that all the
Statements therein contained are true and accurate to
the knowledge of the undersigned.
Subscribed and sworn
to before me this
_____ day of
___________, _______.
________________________________________
Notary Public
My commission
expires:
Prepared by: ATTY
FIRM
ADDRESS
PHONE
Return to: ATTY
FIRM
ADDRESS
PHONE
(o) Whenever a notice
of lien has been filed with the office of the applicable land
evidence records and a condition occurs which would preclude
the real estate broker’s right to
compensation under the terms of the written instrument on which
the lien is based, the real estate
broker shall provide to the owner of record of the
commercial real estate, within ten (10) days
following written demand by such owner of record, a recordable
written release or satisfaction of
the notice of lien.
(p) Upon written
demand of the owner, hence, or other authorized agent of the owner or
lienee, which demand shall be served on the real estate
broker claiming the lien requiring suit to
be commenced to enforce the lien or answer to be filed
in pending suit, a suit shall be commenced
or answer filed within thirty (30) days after actual
receipt thereof or the lien shall be extinguished.
Service of such written demand may be made by
registered or certified mail, return receipt
requested, or by personal service.
(q) Whenever a notice
of lien has been recorded with the land evidence records and such
claimed commission has been paid to the real estate broker
claiming the lien, or where there is
failure to institute a suit to enforce the lien within the
time provided by this chapter, the real estate
broker shall acknowledge satisfaction or release of the
notice of lien in writing, on written
demand of the owner within five (5) days after payment or
within five (5) days of expiration of
the time in which the complaint was to be filed.
(r) If the real
estate broker and the party or parties from whom the commission is
claimed agree to alternative dispute resolution (“ADR”), the
claim shall be heard and resolved in
the forum on which these parties have agreed. The court
before which the lien enforcement
proceeding is brought shall retain jurisdiction to enter
judgment on the award or other result made
or reached in ADR on all parties to the foreclosure. The
real estate broker’s notice of lien shall
remain on record and the enforcement proceeding shall be
stayed during the pendency of the
ADR process.
(s) The cost of
proceedings brought under this chapter including in trial, appellate courts,
and ADR proceedings including reasonable attorneys’ fees,
costs, and prejudgment interest, costs,
and fees shall be equitably apportioned by the court or
ADR tribunal among the responsible
parties.
(t) Except for a
waiver or release of lien provided in consideration of payment of the fee
claimed by the real estate broker, or pursuant to subsections
3(o) and 3(q) above, and waiver of a
real estate broker’s right to lien commercial real estate
under this chapter, or any other waiver or
release of lien shall be void.
(u) The foregoing
provisions of this subsection shall not limit or otherwise affect claims
or defenses or other remedies a real estate broker,
owner, or any other party may have in law or in
equity.
34-49-4.
Priority. – Prior recorded liens, mortgages, and
other encumbrances shall have
priority over a real estate broker’s lien. Such prior recorded
liens, mortgages, and encumbrances
shall include, without limitation, a mechanic’s lien claim
that is recorded prior to the real estate
broker’s notice of lien.
34-49-5.
Escrow of disputed amounts. – (a) Except as otherwise provided in this
section, whenever a claim for lien has been filed with the
appropriate land evidence records, and
an escrow account is established either from the
proceeds from the transaction, conveyance, or
any other source of funds in an amount computed as one
hundred fifty percent (150%) of the
amount of the claim for lien, then the lien against the real
estate shall be extinguished and
immediately become a lien on the funds contained in the escrow
account. Upon creation of such
escrow, the lien claimant shall be required to provide and
record a release of lien against the real
estate within five (5) business days. In the event that the
lien claimant fails to provide or record a
release of lien, then the escrowee
is hereby authorized to either: (1) Execute and record a release
of lien; or (2) Pay into the registry of the superior
court in the county where the land is located an
amount equal to one hundred fifty percent (150%) of the
amount claimed in the notice of lien; or
(3) In lieu of cash, deposit in the registry of the
court the bond of a surety company licensed to do
business in this state in the amount of one hundred fifty
percent (150%) of the amount claimed in
the notice of lien. On proper proof of payment or deposit
and on motion of the owner or lessee or
tenant, any justice of the superior court shall enter ex
parte, an order discharging and releasing the
notice of lien and dismissing the cause as to the owner or
lessee or tenant and as to all persons
having any title, claim, lease, mortgage, attachment, or
other lien or encumbrance, and upon entry
of the order, the property shall be as if no notice of
lien was recorded. Provided, however, that
with respect to the escrowed funds and/or surety bond,
proceeds the real estate broker’s lien
attaches to such escrowed funds and/or surety bond proceeds
whichever applies;
(b) The requirement
to establish an escrow account or election to take measures described
in subdivision (a)(2) or (a)(3) above, shall not be
cause for any party to refuse to complete or
close the transaction.
SECTION 2. This act shall take effect upon passage and shall
apply to claims for
compensation based on written instruments executed on or
subsequent to the effective date.
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LC01759/SUB A/2
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