Construction Law: A Mechanic’s Lien Can Help if a Client Won’t Pay
If you are a contractor who is having a difficult time getting a client to pay for your services, you are not alone. Unfortunately, this is an all too common situation. That said, Minnesota does provide remedies for contractors to utilize in collecting earned payment for construction projects. One is a mechanic’s lien.
The construction industry, made up of owners, lenders, architects and engineers, contractors and subcontractors, material suppliers, sureties, and insurers, is one of the largest production industry in the United States. But with that comes complexity and sometimes even the most savvy business person can have difficulty navigating the specifics of it all. Don’t worry. At Edina’s Morris Law Group, we help our clients in the construction industry build and maintain their businesses – and their livelihood. Our construction law attorneys use their expertise to represent developers, lenders, contractors, architects, engineers, landlords, tenants, general contractors, construction managers, subcontractors, and specialty contractors in matters ranging from non payment to contractual enforcement and beyond.
Edina Construction Law Attorneys
Whether it is early in the dispute resolution process or it is time to file a lawsuit against other parties, Morris Law Group can help you find the best avenue and bring home the best results for you and your company. For more information or to arrange a free consultation, call us today at 952.832.2000 or visit morrislawmn.com.
Mechanic’s Lien
The most common option to recover unpaid amounts from clients is a mechanic’s lien. With this type of action, one can recover payment from whomever the client was, whether a building owner, another contractor, or a private property owner. As a contractor, it is important to understand the mechanic’s lien process on the front end and have procedural measure in place during the contracting and work phases in order to best secure your rights in a mechanic’s lien action.
A mechanic’s lien provides special protection to contractors, subcontractors, suppliers, and others who work on a construction project. If any of these persons are not paid for the services or materials they have provided on a construction project, the property may be subject to a mechanic’s lien. The property eventually may be subject to foreclosure to enforce the lien. Minnesota’s mechanic’s lien law can be found in Minnesota Statutes Chapter 514.
Pre-lien notice
One of the most important aspects of ensuring that a mechanic’s lien is valid is pre-lien notice. If the pre-lien notice requirements are not met, there will be no lien. The purpose of pre-lien notice is to protect owners from liens that were unknown to them and to give property owners fair notice of those working for the benefit of the owner. No matter whom the contract is with, the owner of a property has the right to pay contractors directly and pursue the liable party after the fact.
Generally, a pre-lien notice is required of every contractor who enters into a direct contract with an owner for improvement to real property and has or will contract with subcontractors or material suppliers to provide labor, skill, or material for the improvement. The notice must be included in the written contract with the owner or, if there is no written contract, must be given by separate notice delivered personally or by certified mail within 10 days after the work is agreed upon.
The requirement for form and substance of the pre-lien notice is different for contractors and subcontractors. The specifics of each can be found in Minnesota Statute section 514.011 Subd. 1-2. It is very important to follow the statute exactly in order to protect your lien rights. This notice should be included in any contract with an owner, or should be separately sent via certified mail to the owner if you are acting as a subcontractor. Doing this as a matter of course immediately when contracting with a new party is a habit that all parties who provide labor, skill, or material for an improvement should implement immediately.
Exceptions
Minnesota Statute Section 514.011 also includes exceptions to the notice requirement:
-Notice is not required where the contractor is managed or controlled by substantially the same persons who manage or control the owner of the improved real estate.
-Notice is not required in connection with an improvement to real property consisting of or providing more than four family units when the improvement is wholly residential in character.
– The notice required by this section shall not be required to be given in connection with an improvement to real property which is not in agricultural use and which is wholly or partially nonresidential in use if the work or improvement:
(a) is to provide or add more than 5,000 total usable square feet of floor space; or
(b) is an improvement to real property where the existing property contains more than 5,000 total usable square feet of floor space; or
(c) is an improvement to real property which contains more than 5,000 square feet and does not involve the construction of a new building or an addition to or the improvement of an existing building. (See statute for definitions.)
Once the property owner has been provided pre-lien notice and the lien claimant still has not been paid, the lien claimant may then commence the process of obtaining a lien on the property by filing and serving a mechanic’s lien statement. In Minnesota, the statement can be found as a free form-document through the Department of Commerce. Among other information, the mechanic’s lien statement must include a property description, the first and last dates of work, and the amount of the lien. The form provides thorough instruction as to completion and filing of the form. Most importantly, though, a copy of the lien statement must be served personally or by certified mail on the owner, the authorized agent of the owner, or the person authorizing the work, within 120 days of the last work completed by the lien-filer.
If you find yourself or a business partner in a non-payment situation, call Morris Law Group for a free consultation on the matter. We are here to help you and protect your business interests! The sooner you take action in these situations, or even if you are worried about the potential of non-payment, contact Morris Law Group to get a plan in place and have peace of mind moving forward.
There are many facets of construction law, all of which can create hardships for new contractors or those who have worked in the field for years. The construction law attorneys at Morris Law Group are highly experienced in many different areas of litigation, including trials and appeals in both state and federal courts; alternative dispute resolution; and contract review, drafting, and compliance. We also handle construction and mechanics liens; the competitive bidding process; the delay, suspension and acceleration of work claims; design and defect claims; and negligence and malpractice claims. The bottom line is we are here to help protect your business and your interests. Call Morris Law Group or a free consultation: 952.832.2000.
About Morris Law Group
Integrity and trust is the foundation of our practice. Our passion for client success is matched only by our experience, our reputation for excellence, and our deep understanding of each and every client’s individual needs.
At Morris Law Group, we don’t just counsel our clients. We invest in them.
We’ve been serving the Edina and Twin Cities communities since 2002. Our attorneys provide personalized legal services to clients seeking help in real estate, business development, commercial litigation, and other matters.
Our experienced Edina attorneys – Founder Richard L. Morris, Lillian Ballard, and Nicholas Henry – believe that relationships matter, whether a client is trying to navigate a purchase agreement, get a business off the ground, or dissolve a partnership. Our lawyers appear regularly in state and federal court, in administrative hearings, and in various alternative dispute resolution forums, including mediation and arbitration.
Morris Law Group is the Minnesota law firm for all of your real estate and business legal needs. We advocate for our clients with professionalism, empathy, and with a results-driven approach.
Let’s get started today. For more information or to book a free consultation, call 952.832.2000 or visit morrislawmn.com.