Lange Industries, Inc. v. Hallam Grain Co.
507 N.W.2d 465 | Nebraska Supreme Court | 1993
What This Case Means for Subcontractors
Lange Industries built a $510,000 grain elevator for Hallam Grain but left various defects. Hallam refused to pay the final $56,203 balance and filed counterclaims for the defects. The Nebraska Supreme Court ruled that Lange substantially performed the contract despite the defects, allowing Lange to foreclose its mechanic's lien and collect most of the owed money. The court reduced the payment by only $1,464 for one specific design flaw in the dump pit. This means contractors can still collect payment even when work isn't perfect, as long as the owner is using the facility.
Key Takeaways
- •Substantial performance doctrine protects your lien rights—minor defects don't eliminate your right to payment, only reduce it by the cost to fix them
- •Owner's continued use of the completed work (like operating the grain elevator) does not waive your right to collect or foreclose your lien
- •Document all defects and their repair costs carefully; the court will only deduct the actual cost to fix specific problems, not inflated damage claims
Lange substantially performed its obligations under the Lange-Hallam agreement in a workmanlike manner.
Frequently Asked Question
Can I still collect payment and foreclose my lien if the owner says my work has defects?
Yes. If you substantially performed the contract in a workmanlike manner, you can collect payment and foreclose your lien even if defects exist. The owner can only deduct the actual cost to repair specific defects—not inflated damage claims. The owner's continued use of your work does not eliminate your lien rights.
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