Mechanics Liens: Minnesota Home Talk Legal Minute, April 19, 2014

My April 19, 2014 Minnesota Home Talk Legal Minute briefly outlined Minnesota’s mechanic’s lien law, and there is only so much that can be said about mechanic’s liens in sixty seconds.  Here, as the late Paul Harvey would say, is the “rest of the story.”

A mechanic’s lien is a remedy created by statute to secure payment for labor, skill, materials or machinery furnished in the improvement of specific real property on behalf of another person.

Under Minnesota’s mechanics lien statute (Chapter 514), 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 machinery for any of the purposes hereinafter stated, whether under contract with the owner of such real estate, at the instance of any agent, trustee, contractor or subcontractor of such owner s all have a lien upon the improvement, and upon the land on which it is situated or to which it may be removed, that is to say, for the erection, alteration, repair, or removal of any building, fixture, bridge, wharf, fence, or other structure thereon, or for grading, filling in, or excavating the same, or clearing, grubbing, or first breaking, or for furnishing or placing soil or sod, or for furnishing and planting of trees, shrubs or plant materials, or for labor performed in placing soil or sod, or for labor performed in planting trees, shrubs, or plant materials, or for digging or repairing any ditch, drain, well, fountain, cistern, reservoir, or vault thereon, or for laying, altering or repairing any sidewalk, curb, gutter, paving, sewer, pipe, or conduit in or upon the same, or in or upon the adjoining half of any highway, street, or alley upon which the same abuts.  Minn. Stat. §514.01.

A mechanic’s lien claimant is not entitled to a mechanic’s lien unless the contribution was made for one of the purposes provided in Minn. Stat. §514.01, and not all persons who furnish labor, skill, materials or machinery are entitled to a mechanic’s lien.

Significantly, homestead property is not exempt from a mechanic’s lien.  Minn. Const. Art. 1 §12; Minn Stat. §510.01.  This is in contrast to a judgment lien which is subject to the homestead exemption set forth in Minn. Stat. §510.01.

Although Minnesota courts strongly favor lien claimants as public policy dictates that property owners pay for work performed to improve their property, in order to assert a mechanic’s lien claim under Minnesota law, subject to certain exceptions set forth in statute, a lien claimant must give notice in the statutorily approved form prior to undertaking work on the property.  Minn. Stat. §514.06 provides that “every person who enters into a contract with the owner for the improvement of real property and who has contracted or will contract with any subcontractors or materialmen to provide labor, skill or materials for the improvement shall include in any written contract with the owner the notice required in this subdivision and shall provide the owner with a copy of the written contract. If no written contract for the improvement is entered into, notice must be prepared separately and delivered personally or by certified mail to the owner or the owner’s authorized agent within ten days after the work of improvement is agreed upon . . .”  If a contractor fails to give pre-lien notice to an owner within the time and manner provided, the contractor is not entitled to a mechanic’s lien.

If the lien claimant has met the notice requirements or is covered by an exception, the lien is perfected through the filing of a mechanic’s lien statement within 120 days of the claimant’s last day of work on the property.  The lien statement must be filed with the County Recorder (or Registrar of Titles, for Torrens property) and served upon the property owner.  If the property owner fails or refuses to pay the lien claimant even after the lien statement is filed and served, the lien claimant has one year after the last day of work to commence an action to foreclose the mechanics lien, and the foreclosure is conducted in the same manner as is the case for a mortgage foreclosure.

An old Minnesota CLE continuing education course on mechanic’s liens was called “Mechanic’s Liens in Minnesota:  a Trap for the Unwary.”  Truer words may have never been spoken.  If you are a contractor or subcontractor it is essential that you consult with any attorney both in regards to including the proper pre-lien notice in your contract and in regards to the required steps to perfect and foreclosure the lien if necessary.