Minnesota Construction or Mechanics Lien Package - Corporation or LLC

Note: This summary is not intended to be an all inclusive discussion of Minnesota’s construction or mechanic’s lien laws, but does include basic provisions. What is a construction or mechanic’s lien? Every State permits a person who supplies labor or materials for a construction project to claim a lien against the improved property. While some states differ in their definition of improvements and some states limit lien claims to buildings or structures, most permit the filing of a document with the local court that puts parties interested in the property on notice that the party asserting the lien has a claim. States differ widely in the method and time within which a party may act on their lien. Also varying widely are the requirements of written notices between property owners, contractors, subcontractors and laborers, and in some cases lending institutions. As a general rule, these statutes serve to prevent unpleasant surprises by compelling parties who wish to assert their legal rights to put all parties who might be interested in the property on notice of a claim or the possibility of a claim. This by no means constitutes a complete discussion of construction lien law and should not be interpreted as such. Parties seeking to know more about construction laws in their State should always consult their State statutes directly. Who can claim a lien in this State? Minnesota law permits any party who performs engineering or land surveying services with respect to real estate, or contributes to the improvement of real estate by performing labor, or furnishing skill, material or machinery for any of the purposes hereinafter stated, whether under contract with the owner of such real estate or at the instance of any agent, trustee, contractor or subcontractor of such owner, shall have a lien upon the improvement. M.S.A. §514.01 How long does a party have to claim a lien? A lien claimant must file a Statement of lien within one hundred twenty (120) days of the completion of work or forfeit his/her claim of lien. M.S.A. §514.08(1). By what method is a lien filed in this State? A Statement of Lien must be filed with the county recorder within one hundred twenty (120) days of the completion of work. A copy of the Statement must be served personally or by certified mail upon the owner or his agent. M.S.A. § 514.08. How long is a lien good for? Minnesota requires a lien claimant to bring a legal action to enforce the lien within one (1) year of the date of the last labor, skill, or material provided. M.S.A. § 514.12. Are liens assignable? Minnesota statutes on construction liens do not specifically speak to whether liens may be assigned to other parties. Does this State require or provide for a notice from contractors and subcontractors to property owners? Yes. Minnesota law provides for a series of notices between contractors, subcontractors and property owners. First, a contractor must provide the form language contained in M.S.A. §514.011 advising the property owner of his rights and the possibility of a lien. If there is a contract, this notice must be included with the contract, if not, it must be supplied separately. Second, in order for a subcontractor to be eligible to claim a lien the subcontractor must have provided notice to the property owner within forty-five (45) days of the beginning of work. The form of this notice is contained in statute §514.011(2) and advises the property owner of the right to pay subcontractors directly. Third, Minnesota statute provides for a subcontractor to demand that the contractor provide the name and address of the property owner. Failure of the contractor to provide this information renders the contractor liable for any damages the subcontractor suffers as a result of the refusal. M.S.A. §514.011(3) Finally, a subcontractor who has not been paid may provide notice of the non-payment directly to the property owner. M.S.A. §514.02(2). Does this State require or provide for a notice from the property owner to the contractor, subcontractor, or laborers? Yes. Property owners may, within fifteen days of the completion of the contract, demand that any party having a lien furnish the owner with an itemized account of the lien, the total amount due, and the full name and address of the lien claimant. Lien claimants may not enforce their lien through legal action until this information is provided. Also, statute provides for a notice from the property owner to the contractor advising that a subcontractor has not been paid. M.S.A. §514.02(2). Does this State require a notice prior to starting work, or after work has been completed? No. Minnesota statutes do not require a Notice of Commencement or a Notice of Completion as in some other States. Does this State permit a person with an interest in property to deny responsibility for improvements? Yes. Minnesota statutes permit a party with an interest in property being improved to serve notice on the parties improving the property that the interested party will not be responsible and will not be subject to a lien. This notice must be provided by certified mail, personal service, or posting on the property within five (5) days of discovery that the work is taking place by the party in interest. M.S.A. §514.06. Is a notice attesting to the satisfaction of a lien provided for or required? No. Minnesota statutes do not provide for or require that a lien holder who has been paid produce or file a notice to that effect. However, please see MN-10-09 Release of Lien as an example of a form that could be used by a lien holder to provide a property owner with documentation that the lien has been satisfied after payment in full. By what method does the law of this State permit the release of a lien? As stated above, Minnesota statute has no specific provision for the release of a lien, other that the automatic dissolution that occurs if a lien statement is not filed within one hundred twenty (120) days of the completion of work, or if suit to enforce the lien is not brought within one (1) year. Does this State permit the use of a bond to release a lien? No. Minnesota law does not have a provision under which a bond may be filed for the purposes of releasing a lien.