Minnesota Mechanics’ Liens

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Who is entitled to a mechanics’ lien?

Whoever 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 machinery1

The process to obtaining a mechanics’lien

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The Contractor

YOU ARE DEFINED AS A “CONTRACTOR” UNDER MINNESOTA LAW IF:

1.You enter into a contract with the owner of the property; AND

2.You will contract with a subcontractor to provide labor or skill; OR

3.You will contract with a material supplier to provide materials2

A CONTRACTOR MUST PROVIDE THE FOLLOWING NOTICE:

“(a) Any person or company supplying labor or materials for this improvement to your property may file a lien against your property if that person or company is not paid for the contributions.

(b) Under Minnesota law, you have the right to pay persons who supplied labor or materials for this improvement directly and deduct this amount from our contract price, or withhold the amounts due them from us until 120 days after completion of the improvement unless we give you a lien waiver signed by persons who supplied any labor or material for the improvement and who gave you timely notice.”3

REQUIREMENTS OF THE CONTRACTOR’S NOTICE:

The notice shall be included in the written contract with the owner;

You must provide the owner a copy of the written contract;

If no written contract, the contractor’s notice must be delivered personally or by certified mail to the owner within 10 days after the work is agreed upon;

The notice must be in writing a capital letters that are in a 10-point or greater font4.

NOTICE IS NOT REQUIRED: To any corporate contractor of which the owner of the

improved real estate is an officer or controlling shareholder;

To any contractor who is an officer or controlling shareholder of a corporation which is the owner of the improved real estate; or

To any corporate contractor managed or controlled by substantially the same persons who manage or control a corporation which is the owner of the improved real estate 5.

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The Subcontractor

YOU ARE DEFINED AS A “SUBCONTRACTOR” UNDER MINNESOTA LAW IF:

1. You contribute to the improvement of real property; AND

2. You ARE NOT under direct contract with the owner of the property6.

A SUBCONTRACTOR MUST PROVIDE THE FOLLOWING NOTICE:

“This notice is to advise you of your rights under Minnesota law in connection with the improvement to your property.

Any person or company supplying labor or materials for this improvement may file a lien against your property if that person or company is not paid for the contributions. We (insert your name and address) have been hired by your contractor (insert name of contractor) to provide or for (type of service or material) this improvement. To the best of our knowledge, we estimate our charges will be (value of your service or material) .

You have the right to pay us directly and deduct this amount from the contract price, or withhold the amount due us from your contractor until 120 days after completion of the improvement unless your contractor gives you a lien waiver signed by me (us).

We may not file a lien if you paid your contractor in full before receiving this notice.”7

REQUIREMENTS OF THE SUBCONTRACTOR’S NOTICE:

The subcontractor’s notice must be delivered to the owner within 45 days after the subcontractor first provided labor, skill or materials to the property;

The subcontractor’s notice must be delivered by personal delivery or certified mail;

The written notice must be in least 10-point capital letters8.

IDENTIFICATION OF THE PROPERTY OWNER BY THE SUBCONTRACTOR

Upon the request of the subcontractor, a contractor shall provide the subcontractor or material supplier with the name and address of the owner within 10 days of the initial request.

A contractor who fails to provide the requested information, is

liable to the subcontractor for any damages or expenses incurred by the subcontractor or material supplier because of the contractor's failure to provide the information, including attorney fees and costs9.

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When the LienAttaches

WHEN DO MECHANICS’ LIENS TAKE EFFECT?

Mechanics’ liens take effect from the time of the first visible item of material or labor is furnished upon the property from the beginning of the improvement and is superior to any mortgage or other encumbrance not recorded at the time of the improvement unless you have actual notice of the mortgage or encumbrance10.

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Preserving your Lien

PRESERVING YOUR LIEN – STEP ITHE STATEMENT OF MECHANICS’ LIEN

Your lien ceases 120 days after you perform your last day of work, furnish the last item of skill, material or machinery unless:

• You deliver a copy of a Mechanics’ Lien Statement either personally or by certified mail to the owner of the property or the person who entered into the contract with the contractor;

• You record the Mechanics’ Lien Statement with the county recorder or, if the property is torrens, the registrar of titles, of the county in which the property is located11.

THE STATEMENT OF MECHANICS’ LIEN

Your Mechanics’ Lien Statement must be verified before a notary upon oath and shall include:

(1) A notice of intention to claim and hold a lien, and the amount of the lien;

(2) The amount that is due and owing to you for your labor, skill, material, or machinery furnished, and a description of the improvement that you completed or a description of the materials supplied12;

THE STATEMENT OF MECHANICS’ LIEN (CON’T)

(3) Your name, and the name of the person for which the work was performed or furnished for;

(4) The dates when the first and last work was performed or materials that were supplied;

(5) A description of the property to be liened, describing the property with reasonable certainty (should be the legal description);

(6) The name of the owner of the property when the mechanics’ lien statement is completed13;

THE STATEMENT OF MECHANICS’ LIEN (CON’T)

(7) Your mailing address;

(8) An acknowledgement by you that a copy of the Mechanics’ Lien Statement must be served personally or by certified mail within the 120-day period on the owner or the person who entered into the contract with the contractor; and

(9) Include a statement that the pre-lien notice was given14.

To preserve your lien rights, you must commence an action to foreclosure your mechanics’ lien within one year of your last day of work or last day you provided materials for the project15.

PRESERVING YOUR LIEN – STEP IIFORECLOSURE OF THE MECHANICS’ LIEN

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Statutory Authority

1. Minn. Stat. §514.01 Mechanics, Laborers and Material Suppliers2. Minn. Stat. §514.011, Subd. 1 Notice3. Minn. Stat. §514.011, Subd. 1 Notice4. Minn. Stat. §514.011, Subd. 1 Notice5. Minn. Stat. §514.011, Subd. 1 Notice6. Minn. Stat. §514.011, Subd. 2 Subcontractor to Give Notice7. Minn. Stat. §514.011, Subd. 2 Subcontractor to Give Notice8. Minn. Stat. §514.011, Subd. 2 Subcontractor to Give Notice9. Minn. Stat. §514.011, Subd. 3 Material suppliers, may request information10. Minn. Stat. §514.08 Statement; Notice; Necessity for Recording; Contents11. Minn. Stat. §514.08, Subd. 1 Notice Required12. Minn. Stat. §514.08, Subd. 2. Statement by lien claimant; requirements13. Minn. Stat. §514.08, Subd. 2. Statement by lien claimant; requirements14. Minn. Stat. §514.08, Subd. 2. Statement by lien claimant; requirements15. Minn. Stat. §514.12, Subd. 3. One-year limitation.

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