What is a Mechanic’s Lien?
A mechanic’s lien is a simple, cost-effective tool that helps contractors, subcontractors, designers, and materials suppliers get paid for their work. A lien is an ownership right in property, and a property subject to a lien generally cannot be sold or refinanced until the lien either expires or is satisfied. The lien holder can also bring a court action to obtain a judgment based on the lien or, in some cases, an order allowing a sale of the property to pay the debt. To qualify for a lien, the materials or work must create a permanent improvement to the property and a very specific set of requirements must be met to ensure a lien will be valid and enforceable.
Examples of Lienable Work
- Irrigation/Sprinkler Installation
- Patio Installation
- Retaining Wall Installation
- Electrical/Lighting Installation
- Design Work
- Materials Supply
Examples of Non-Lienable Work
- Snow Plowing
- Fertilizer/Herbicide Application
- Systems Maintenance
Generally, a party seeking a lien must give the property owner written notice that a lien may be filed if that party is not paid for his or her work. For general contractors, notice must be included in a written contract, or, if there is no written contract, must be delivered to the homeowner separately within 10 days after the work is agreed upon. Subcontractors must give their own specific notice within 45 days of the time the subcontractor first furnishes labor or materials for the job.
Minnesota has very specific requirements for the format and content of pre-lien notices. If you do not provide the homeowner with proper notice, you will not have the right to a lien against the property. Check with an attorney to ensure that you have a proper notice clause in your contract.
Timing for Liens
To be valid, a lien must be both served on the property owner and filed in the records of the county the property is located in within 120 days after the last significant material or labor is furnished for the job.
Once recorded, a mechanic’s lien remains active for a period of one year from the last day of significant work on the job. During that year the creditor may choose to bring a court action to convert the lien into a judgment or, in some cases, to obtain an order allowing the creditor to foreclose on the property and sell it to pay off the lien.
Guidance and information from an attorney is important for companies hoping to take advantage of mechanic’s lien rights. An experienced attorney can help determine if your services, your pre-lien notice, the types of properties you work on, and other elements of your particular situation meet the strict requirements of Minnesota law. The attorney can then ensure that all necessary documents are properly drafted, served, and filed to preserve your mechanic’s lien rights.