The Jensen Litigation Firm, PLLC represents contractors and individuals in mechanic's lien disputes. People hire us to figure out if a lien is valid and to enforce their rights through litigation. If you need an attorney to resolve a mechanic's lien issue, we can help. Contact us now, as mechanic's lien rights are time-sensitive.
What is a mechanic's lien?
Mechanic's liens are a statutory remedy under Minn. Stat. §§ 514.01-.17. They apply to a broad scope of work that involves labor, skill, material, or machinery that improves real estate.
Contractors expect to be paid for work that was done properly. If they are not paid, they may sue the owner for breach of contract. But Minnesota law gives them the mechanic's lien remedy, which is stronger than a breach of contract claim because they can foreclose land to pay off their lien. Mechanic's liens are a common area of dispute and often lead to lawsuits.
Does a contractor or subcontractor have to give pre-lien notice?
A basic question is whether the contractor gave pre-lien notice under Minn. Stat. § 514.011 to the owner, or whether the contractor was excepted from giving pre-lien notice. When in doubt, contractors should give pre-lien notice to the owner or agent as soon as possible.
When a general contractor has a contract with the property owner, there generally needs to be a lien notice provision in the contract. If there is no contract, then the general contractor needs to give notice within 10 days after the work of improvement is agreed upon.
There are exceptions, and a general contractor may not need to give pre-lien notice if there will be no subcontractors or suppliers, the property is a larger residential development, if the contractor owns the land, or under other circumstances.
Subcontractors generally must give notice within 45 days after the first item of labor, but there are exceptions that may be similar to those of general contractors.
How does a contractor “perfect” a lien?
A contractor also needs to perfect its mechanic's lien in order to foreclose it. Generally, this means recording a mechanic's lien statement with the county recorder within 120 days after the last item of work, serving proper notice on the owner, and commencing a court action within a year of the last item of work. Note that it can sometimes be challenging, practically and from a legal standpoint, to determine when the last items of work were provided to the owner. For example, there could be punch-list items that may extend these deadlines, so check with your attorney if you have questions about these issues.
For the most part, if a contractor does this, their lien foreclosure action in district court will proceed. However, if they do not strictly follow the statutory requirements, they may not have a lien to foreclose and will be forced to rely on a breach of contract claim.
How does a contractor foreclose a mechanic's lien?
If the contractor prevails on its lien foreclosure claim, the property will be sold pursuant to Minn. Stat. § 514.15. An applicable redemption period will be set for the owner and, once it runs, the property will be disposed of and the contractor will be paid.
The owner will be entitled to his or her equity in the property, less the contractor's costs of the foreclosure claim. It is important to note that a contractor that prevails may recover its attorney's fees in the mechanic's lien action. Larson-Roberts Electric Co. v. Burdick, 267 Minn. 46, 127 N.W.2d 163 (Minn. 1964).
Why do contractors have to be careful with a mechanic's lien?
Throughout the process, the contractor should be careful to follow the statutory procedures and accurately detail its lien. If the contractor is sloppy, an overstatement may jeopardize the lien altogether.
Further, an unauthorized mechanic's lien recorded against the property may subject the contractor to a slander-of-title claim, which involves: (1) a false statement made concerning the plaintiff's real property; (2) the false statement was published to others; (3) the false statement was published maliciously; and (4) the false statement concerning title caused plaintiff pecuniary loss in the form of special damages. Paidar v. Hughes, 615 N.W.2d 276, 279-80 (Minn. 2000).
Why is it important to hire an attorney to handle a mechanic's lien?
A contractor will likely need to use an attorney to foreclose a mechanic's lien for practical reasons, and because corporate entities generally cannot represent themselves in district court. Also, as discussed above, mechanic's liens require strict statutory compliance or the lien may be lost.
We have the knowledge and experience to handle mechanic's lien claims. Do not hesitate to contact us if:
- You are seeking to perfect a mechanic's lien.
- You are seeking to foreclose a mechanic's lien.
- You are the owner defending a mechanic's lien claim.
- You are a creditor impacted by a mechanic's lien claim.