Securing Payment fo Contractors, Subcontractors and Material Suppliers
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 “Mechanics’ 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.
Mechanics’ 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 mechanics’ lien. Careful adherence to these requirements is critical to protect your rights.
- Pre-lien Notice. For residential projects on property less than XX 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 mechanics’ lien.
- Statement. A mechanics’ lien statement must be filed within 120 days of the last improvement to the property. The lien statement must be sworn under oath. If the amount of the mechanics’ 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.
The statement must contain all the information required by Minnesota law, including the names of the claimants, the amount due, and a description of the premises to be charged. If the property is abstract property, the mechanics’ lien statement must be recorded in the local county recorder’s office, where the property is located. If it is Torrens property, the statement must be recorded with the county Registrar of Titles. The lien statement must be served upon the owner.
- Commencement of Foreclosure. Foreclosure of the lien must be commenced within one (1) year of the last item of labor, skill or material was furnished. This timeline is strictly construed.
To foreclose, a Notice Lis Pendens must be filed with the county recorder or the Registrar of Titles (depending whether the improved property is abstract or Torrens). The Notice of Lis Pendens puts future purchasers, mortgagees, and others claiming an interest in the subject property on notice of the mechanics’ lien and the foreclosure action. If the Notice of Lis Pendens is not filed within one year from the date of the last item furnished, the lien cannot be enforced against a bona fide purchaser or mortgagee of the property.
- Foreclosure. Action must be initiated in Court to foreclose the lien. If successful at trial, the lien claimant can request a foreclosure sale. If granted, the property will be sold and the proceeds from the sale will be used to pay off the interest holders in the property 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. Mechanics’ liens are powerful tools that can be used to obtain long awaited payments. However, the statutory requirements must be strictly adhered to or risk losing the lien.
Messick Law PLLC has a wide range of experience in handling mechanic lien cases, from contractor wages to hefty material bills left unpaid. Messick Law PLLC has years of experience as litigators, are AV Rated, and recognized as Rising Stars by SuperLawyers.com.
Learn more about our Civil Litigation Services; better yet, Contact Messick Law PLLC today to discuss how you can protect your business for future non-payment, or to discuss an ongoing payment dispute.