The New Hampshire mechanic’s lien law, RSA 447:2, allows a lien to those who “perform labor, provide professional design services, or furnish materials” on a construction project. Unlike some states' mechanic's lien statutes (e.g., Massachusetts, Maine), there is no mention of rental of equipment―and equipment rental does not fit comfortably within these three categories.
If a contractor rents equipment from a leasing company to assist him in performing labor or furnishing materials to construct a project, our courts are consistent in allowing the contractor a lien for the full amount he is owed, including his rental costs―even if the contract is “cost plus” and the rental charges are separately identifiable. In such a case the rented equipment is simply an adjunct cost of supplying the “labor” and “materials” mentioned in the statute. But does the leasing company, who performed no labor and furnished no materials, have a lien as well?
Our Supreme Court has yet to speak on the issue. Given the Court’s general reluctance to “consider what the legislature might have said or add language that the legislature did not see fit to include,” Appeal of Local Government Center, 165 N.H. 790, 804 (2014), asserting lien rights may be a difficult sell for the leasing company. The effort isn’t aided by the Legislature’s rejection of House Bill 1759, introduced in 2006, which would have amended the statute to provide a lien to equipment suppliers.
There may, however, be a limited exception for rented equipment temporarily incorporated into the construction. In Osgood v. Kent, 2011 WL 6740411 (D.N.H. Dec. 21, 2011), a mechanic’s lien was upheld for rental costs of temporary shoring and cribbing on a project after the contractor was terminated but forbidden by the owners from removing the shoring and cribbing. In considering the owners’ argument “that a mechanic’s lien does not arise from the rental of equipment that is not consumed or used in construction unless the applicable statute specifically authorizes it,” the Court focused on the language of RSA 447:2 allowing a lien for materials furnished “for consumption or use in the prosecution of such work.” This distinction between “consumption” and “use” persuaded the Court that “where the statute speaks of materials consumed, like concrete poured into a foundation, as well as materials otherwise used, the statute could well contemplate that the category of materials otherwise used would include equipment rented to a property owner.”
Importantly, the Court also distinguished the shoring and cribbing from rental equipment that is not “incorporated into” the work. The Court distinguished several cases, principally Logan Equipment Corp. v. Profile Construction Co., Inc., 585 A.2d 73, 74 (R.I. 1991), in which the rental of excavation equipment was held not to be lienable because not incorporated into the improvement. “Here, of course, the I-beams and cribbing are incorporated – if only temporarily – into Ogontz Hall, which is precisely why the Kents sent Osgood a letter forbidding him from removing his property from their premises. Given the substantial differences between the excavators in Logan and the materials at issue here, and the nature of their respective uses, Logan is no obstacle to a determination that Osgood is entitled to a mechanic’s lien based on the Kents’ continuing use of his I-beams and cribbing.” Bottom line: “In this case, until Osgood’s materials are removed from Ogontz Hall, that leased equipment is incorporated into the improvement . . . Thus, the rental fees for those materials may be secured by a mechanic’s lien.”
Osgood v. Kent is consistent with a prohibition against mechanic’s liens for rented equipment which is not temporarily “incorporated” into a project. In my view, the Court confused “equipment” and “materials,” and could have reached the same result by characterizing the I-beams and cribbing as materials (which are expressly included in our mechanic’s lien statute) rather than equipment (which is not). All things considered, I expect that New Hampshire courts will disallow liens for suppliers of rented equipment unless the Legislature amends the statute.
If a contractor rents equipment from a leasing company to assist him in performing labor or furnishing materials to construct a project, our courts are consistent in allowing the contractor a lien for the full amount he is owed, including his rental costs―even if the contract is “cost plus” and the rental charges are separately identifiable. In such a case the rented equipment is simply an adjunct cost of supplying the “labor” and “materials” mentioned in the statute. But does the leasing company, who performed no labor and furnished no materials, have a lien as well?
Our Supreme Court has yet to speak on the issue. Given the Court’s general reluctance to “consider what the legislature might have said or add language that the legislature did not see fit to include,” Appeal of Local Government Center, 165 N.H. 790, 804 (2014), asserting lien rights may be a difficult sell for the leasing company. The effort isn’t aided by the Legislature’s rejection of House Bill 1759, introduced in 2006, which would have amended the statute to provide a lien to equipment suppliers.
There may, however, be a limited exception for rented equipment temporarily incorporated into the construction. In Osgood v. Kent, 2011 WL 6740411 (D.N.H. Dec. 21, 2011), a mechanic’s lien was upheld for rental costs of temporary shoring and cribbing on a project after the contractor was terminated but forbidden by the owners from removing the shoring and cribbing. In considering the owners’ argument “that a mechanic’s lien does not arise from the rental of equipment that is not consumed or used in construction unless the applicable statute specifically authorizes it,” the Court focused on the language of RSA 447:2 allowing a lien for materials furnished “for consumption or use in the prosecution of such work.” This distinction between “consumption” and “use” persuaded the Court that “where the statute speaks of materials consumed, like concrete poured into a foundation, as well as materials otherwise used, the statute could well contemplate that the category of materials otherwise used would include equipment rented to a property owner.”
Importantly, the Court also distinguished the shoring and cribbing from rental equipment that is not “incorporated into” the work. The Court distinguished several cases, principally Logan Equipment Corp. v. Profile Construction Co., Inc., 585 A.2d 73, 74 (R.I. 1991), in which the rental of excavation equipment was held not to be lienable because not incorporated into the improvement. “Here, of course, the I-beams and cribbing are incorporated – if only temporarily – into Ogontz Hall, which is precisely why the Kents sent Osgood a letter forbidding him from removing his property from their premises. Given the substantial differences between the excavators in Logan and the materials at issue here, and the nature of their respective uses, Logan is no obstacle to a determination that Osgood is entitled to a mechanic’s lien based on the Kents’ continuing use of his I-beams and cribbing.” Bottom line: “In this case, until Osgood’s materials are removed from Ogontz Hall, that leased equipment is incorporated into the improvement . . . Thus, the rental fees for those materials may be secured by a mechanic’s lien.”
Osgood v. Kent is consistent with a prohibition against mechanic’s liens for rented equipment which is not temporarily “incorporated” into a project. In my view, the Court confused “equipment” and “materials,” and could have reached the same result by characterizing the I-beams and cribbing as materials (which are expressly included in our mechanic’s lien statute) rather than equipment (which is not). All things considered, I expect that New Hampshire courts will disallow liens for suppliers of rented equipment unless the Legislature amends the statute.
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