Securing Payment For Contractors, Subcontractors And Material Suppliers
A frequent question we hear from clients is, “I performed work or supplied materials for the improvement of real property and did not get paid; now what?”
It is not uncommon for contractors or suppliers to be left out in the cold after finishing their work. Fortunately, with an experienced civil litigation attorney, you may be able to secure payment in the real property for which you supplied materials, skill or labor through a mechanic’s lien.
A “mechanic’s lien” is the general term for a lien against real property by a licensed professional who has contracted and/or supplied materials and labor to improve a property.
Mechanic’s liens arise out of statute, and the requirements must be strictly followed in order to secure your lien. For contractors to be eligible to secure liens, they must be licensed.
There are four basic steps to perfect and foreclose a mechanic’s lien. Careful adherence to these requirements is critical to protect your rights.
- Pre-lien notice: For residential projects on property less than a certain number of square feet, notice must be given to the owner by all parties providing labor and/or materials before commencing work or supplying materials. There are some exceptions in statute to providing notice, and unless one of the exceptions apply, failure to serve a pre-lien notice upon the owner invalidates a mechanic’s lien.
- Statement: A mechanic’s lien statement must be filed 120 days or sooner after the most recent improvement has been made on the property. The lien statement must be sworn under oath. If the amount of the mechanic’s lien is intentionally overstated, the entire lien becomes unenforceable, not just the amount of the overstatement. Precedent shows that courts take a dim view on the overstatement of a lien, getting the amount owed correct is of critical importance. All the information that Minnesota law requires should be included, such as the names of the claimants, the amount due and a description of the premises to be charged. In the case of abstract property, the mechanic’s lien should be recorded as a statement in the relevant county recorder’s office. For a Torrens property, the county registrar of titles is the correct place to record the statement. The lien must be served upon the owner as a statement.
- Commencement of foreclosure: Foreclosure of the lien must be commenced within one year of when the last provision of labor, skill or material was provided. This timeline is strictly construed. To foreclose, a lis pendens notice must be filed with the county record or the registrar of titles, depending on the type of property: abstract or Torrens, as described above. The lis pendens notice lets future buyers, mortgagees and other interested parties know about the mechanic’s lien and foreclosure action because of the lien. This lien is only enforceable against a true buyer or mortgagee if the lis pendens notice was filed within a year of the provision of the last instance of labor, skill or material.
- Foreclosure: Action must be initiated in court to foreclose the lien. If successful at trial, the lien claimant can request a foreclosure sale. If this foreclosure sale is granted and the property is then sold as required, the lien holder interest holders are entitled to the proceeds from the sale based upon their priority of interest.
Protecting Your Business
If someone refuses to pay you for your services, our Minnesota civil litigation attorneys can help in recovering what is yours. Mechanic’s liens are powerful tools that can be used to obtain long-awaited payments. However, the statutory requirements must be strictly adhered to or you risk losing the lien.
The attorneys at Messick Law, PLLC, have a wide range of experience in handling mechanic’s lien cases, from contractor wages to hefty material bills left unpaid. Our lawyers have years of experience as litigators, are AV Rated and have been recognized as Rising Stars by SuperLawyers.com.
It is not uncommon for contractors or suppliers to be left without payment after finishing their work. Learn more about our civil litigation services; better yet, contact Messick Law, PLLC today to discuss how you can protect your business for future nonpayment, or to discuss an ongoing payment dispute.
For Answers And Direction
Get in touch with our Minnesota civil litigation attorneys to help you through the legal processes associated with a mechanic’s lien.
Call 651-505-2655 or email us.