Montana Order Substituting Bond and Discharging Construction Lien

Note: This summary is not intended to be an all inclusive discussion of Montana’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? A person who furnishes services or materials pursuant to a real estate improvement contract may claim a construction lien to secure the payment of his contract price. M.C.A. § 71-3-523. How long does a party have to claim a lien? A Lien Claim must be filed within ninety (90) days of the final furnishing of material or services or within ninety (90) days of the filing of a Notice of Completion by the property owner. M.C.A. § 71-3-523. What kind of notice is required prior to claiming a lien? Some partied will be required to file a Notice of Right to Claim Lien. A Notice is NOT required by (a) a person who furnishes services or materials directly to the owner at the owner’s request; (b) a wage earner or laborer who performs personal labor services for a person furnishing any service or material pursuant to a real estate improvement contract; (c) a person who furnishes services or materials pursuant to a real estate improvement contract that relates to a dwelling for five or more families; or (d) a person who furnishes services or materials pursuant to a real estate improvement contract that relates to an improvement that is partly or wholly commercial in character. Generally, If required, a Notice of Right to Claim Lien must be filed within twenty (20) days after the date that materials and services began to be provided. These Notices are valid for one (1) year after filing, but may be extended an additional (1) year after the filing of a Continuation Notice. If a Notice of Right to Claim a Lien is required, an unexpired Notice of Right to Claim Lien or Continuation Notice is necessary before a lien may be claimed. M.C.A. § 71-3-531. By what method is a lien filed in this State? A Lien Notice must be filed within ninety (90) days of the final furnishing of services and materials or the filing of a Notice of Completion by the property owner. If a Notice of Right to Claim a Lien is required, the Lien Notice must declare that the Notice was served on the property owner or that a Notice is not required. Montana statute sets out the form for a Lien Notice in M.C.A. § 71-3-536. How long is a lien good for? All actions to enforce a lien must be commenced within two (2) years from the date of the filing of the lien. M.C.A. § 71-3-562. Are liens assignable? Montana statute does not have a provision which states that liens may be assigned to other parties. Does this State require or provide for a notice from contractors and subcontractors to property owners? Yes. Montana law provides for a Notice of Right to Claim a Lien. this Notice is issued by any Lien Claimant to the property owner and serves to put the property owner on Notice that a lien may be claimed against his property. Generally, it must be filed within twenty (20) days after the first material or services are furnished. A copy of the Notice must be sent to the contracting owner by certified mail or delivered personally, and filed with the county clerk within five (5) days of service. This Notice is effective for one (1) year unless extended an additional one (1) year by a Continuation Statement. M.C.A. § 71-3-531. Does this State require or provide for a notice from the property owner to the contractor, subcontractor, or laborers? Montana statute allows a property owner to file a Notice of Completion after (a) the written acceptance by the contracting owner, his agent, or representative of the building, improvement, or structure, or (b) the cessation from labor for 30 days upon any building, improvement, or structure, or the alteration, addition to, or repair thereof. Any party that wishes to claim a lien must do so within ninety (90) days of the filing of this Notice. The Notice of Completion is required to be published once a week for three weeks in a local newspaper and an affidavit attesting to the publication must be attached to the Lien Notice to be filed. M.C.A. § 71-3-533. Does this State permit a person with an interest in property to deny responsibility for improvements? No. Montana statutes do not provide for a Notice of Non-Responsibility as in some other States. Is a notice attesting to the satisfaction of a lien provided for or required? Yes. Montana statute requires a lien claimant who’s lien has been satisfied to acknowledge the satisfaction of that lien or beheld liable for any damages that result from the refusal to do so. enter with the clerk of the circuit court an acknowledgment of that satisfaction. M.C.A. § 71-3-537. By what method does the law of this State permit the release of a lien? Montana statute has no specific provision for the release of a lien, other that by payment in full or by expiration of the statute of limitations after two (2) years. Does this State permit the use of a bond to release a lien? Yes. Montana statute allows a contracting owner to substitute a bond in the amount of one and one half times the amount of the lien claimed. Upon the acceptance of the bond by the county clerk, the lien against the real property shall be discharged and released. M.C.A. § 71-3-551.