Minnesota’s mechanic’s lien statute has strict procedural requirements.
In the world of residential and commercial construction projects, everyone involved should have a basic understanding of the mechanic's lien, also sometimes called a construction lien. A contractor, subcontractor, architect, engineer, surveyor, material or labor supplier, and other similar party may be eligible for a mechanic's lien - a legally protected financial interest in improved real estate - when valuable work is done on buildings or land for which the lien holder has not been paid.
Historically, the mechanic's lien was created to encourage urban development. People were hesitant to work on construction projects if they were not assured of payment, so they were given legal interest in the property's enhanced value.
Mechanic's liens are created by state statute and vary from state to state, but one thing they have in common is their complexity, particularly concerning notice and deadline requirements. Minnesota's mechanic's lien laws are no different, so it is important that anyone involved in a construction project, whether a professional retained to work on the project or the property owner itself, consult with an experienced construction law attorney early in the project In addition, holders of other kinds of liens or interests in the real estate should also retain counsel to understand their legal remedies against mechanic's liens.
Here is a high level overview of how the Minnesota mechanic's lien scheme usually works:
- With a few exceptions, a contractor or subcontractor that wants to preserve the right to a mechanic's lien in a given project to improve private (not public) property must give a specific and timely pre-notice to the property owner.
- The lien attaches if labor, skill, materials or machinery are used for building, remodeling, repairing or removing buildings and other fixtures; making improvements to land like clearing, soil work, landscaping or drainage projects; and working on sidewalks, curbs, sewers, pipes and similar items; and in a few other kinds of work, depending on the circumstances.
- The lien grows only from a construction contract with the owner, the general contractor or a subcontractor. The total of all mechanic's liens combined on a given project is limited to the amount of the main contract (from which eligible subcontracts may flow).
- Against the property owner, the lien attaches when the "first item of material or labor is furnished" on site and is senior to any other unrecorded claim (unless the lien holder has received notice of another claim). Against other parties with interests in the real estate like mortgage companies or buyers, if they have no notice or notice is not recorded, the lien attaches when the improvement is "actual and visible."
- The lien lasts 120 days after work is finished unless a specific lien statement is given to the owner and publicly recorded.
- If the lien holder still has not been paid or is unable to negotiate a settlement of the matter, it can file a complaint in state court to foreclose on the property, subject to strict notice, filing, deadline and other procedural requirements. The lien claimant must bring into the suit all property owners, other mechanic's lien holders and any other holder of an interest in the property, such as the holder of a mortgage.
From offices in the western Twin Cities metro, the law firm of Burns & Hansen, P.A., represents parties asserting or challenging mechanic's liens throughout the metropolitan area and the entire state of Minnesota.