Filing a mechanics lien is the best way to recover your payment from delinquent clients. A mechanics lien warns potential buyers and financiers about the outstanding debts related to a property, so owners are more likely to settle payments just to get rid of a lien attached to their property.
A properly filed mechanics lien is important if you want your mechanics lien to work. In Minnesota, as in many states, there are certain rules and regulations that you must follow for your mechanics lien to be valid and enforceable.
This guide will walk you through the steps in filing a Minnesota mechanics lien, from protecting your lien rights to enforcing your mechanics lien before it expires.
Who can file a Minnesota mechanics lien?
Parties who perform construction work towards a property’s improvement have the right to file a mechanics lien in Minnesota. This includes general contractors, subcontractors, and material suppliers. Engineers, architects, and consultants also have lien rights in.
Preliminary notices in Minnesota
As a construction participant, you are required to serve a preliminary notice in Minnesota. There are two important notices in the state, and you must serve either of them depending on your role in a project.
General Contractor’s Notice
General contractors are required to serve a General Contractor’s Notice. This must be included in the contract or, if served separately, must be delivered to the property owner within 10 days after the contract was agreed upon.
This preliminary notice is a simple document that contains the followings statements:
“(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.”
The statements above must be written in 10-point bold type if printed. If typewritten, it must be encoded in capital letters.
Subcontractors and material suppliers’ preliminary notice
Parties who have no direct contractual relationship must serve a preliminary notice within 45 days of their first day of work. This notice must include the following information:
- Your name and address
- The name of the contractor who hired you
- A description of the type of services or materials that you provide to the project
- A reasonable estimate of the amount that you will charge your client
Minnesotan statutory laws say that your notice must be in the following format:
“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 ……………………………….. (name and address of subcontractor)
have been hired by your contractor …………….. (name of your contractor)
to provide ………….. (type of service) or ………….. (material) for
this improvement. To the best of our knowledge, we estimate our charges will be ………………………… (value of service or material).
If we are not paid by your contractor, we can file a claim against your property for the price of our services.
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).
Note that all the statements included above must be included in your Minnesota preliminary notice. If printed, it must be typed in 10-point bold type. If typewritten, it must be encoded in all capital letters.
All preliminary notices may be served either through personal delivery or through registered or certified mail with return receipt requested.
What happens if you fail to serve a Minnesota preliminary notice?
Failing to serve the preliminary notices in Minnesota will result in the revocation of your lien rights. This rule applies to both the General Contractor Notice as well as the regular preliminary notice that the subcontractors and material suppliers must deliver.
If you do not serve the preliminary notices within the required time periods, you will not be allowed to exercise your lien rights.
How to file a Minnesota mechanics lien
1. Prepare the Minnesota mechanics lien form
If you have duly served the mandatory preliminary notices and your lien rights have been protected, the next thing to focus on is preparing your Minnesota mechanics lien form. According to state laws, your mechanics lien must include the following information:
- a notice of intention to claim and hold a lien
- the amount of lien
- the name and address of the claimant (your information)
- the name of the party who hired you
- the name of the property owner
- the dates of your first and last day of work
- a description of the property location that is sufficient for identification
- an acknowledgment that a copy of the mechanics lien must be served personally or by certified mail on the owner or the owner’s authorized agent or the person who entered into the contract with the contractor
Minnesota mechanics lien notarization
You must have your mechanics lien notarized before filing. Do not sign your documents until you are in the presence of an authorized notary officer.
2. Record the mechanics lien in the local county clerk’s office
Once your mechanics lien form is ready, you may now have it recorded in the clerk’s office in the county where the property is located. You must file your mechanics lien within 120 days of your last day of work, which corresponds to the last day when you furnished labor or materials to a property.
Filing a mechanics lien beyond this 120-day deadline will result in the invalidation of your lien. Minnesota takes these deadlines seriously so you are well-advised to file your mechanics lien way before this 120-day period elapses.
3. Serve a copy of the mechanics lien to the property owner
Another important step is to serve a copy of your mechanics lien on the property owner or their agent within the same 120-day period. You are even required to acknowledge this step on the actual Minnesota mechanics lien form.
Serving the copy of the mechanics lien may be done either by personal delivery or by certified mail with return receipt requested. Make sure to keep a copy of your mailing documents or a signed acknowledgment of receipt to ensure that you have proof of compliance to this requirement.
4. Enforce/release the mechanics lien
Once you have duly filed your mechanics lien and you have served a copy of the lien document on the property owner, you will either get your payment or you won’t.
If the mechanics lien works and a property owner or your contactor releases your payment, the next step will be to release the mechanics lien. There are no specific rules and regulations in Minnesota regarding the release of a mechanics lien. Generally, you go to the same county clerk’s office where you filed the lien and you file a cancellation of lien.
While canceling a lien is not a required procedure in Minnesota, it is considered a good business practice to do so once a lien or payment claim has been duly satisfied.
If the mechanics lien does not work and nobody has reached out to you in regards to your payment, your next step is to enforce the mechanics lien. Enforcing a mechanics lien means initiating a foreclosure lawsuit against a property. You may recover your payment from the sale of the property if you win the foreclosure lawsuit.
Note that your mechanics lien in Minnesota is valid for only 1 year after your last day of work. This means that you must initiate the foreclosure action before this 1-year period. Otherwise, your mechanics lien will expire and it may no longer be enforceable.
Also, be aware that you may file a Notice of Intent to Foreclose before you officially launch a foreclosure lawsuit. This notice informs a property owner of your intention to engage them in a lawsuit, and it may be enough to encourage them to produce payment.
Important deadlines when filing a Minnesota mechanics lien
Best practices when filing a Minnesota mechanics lien
1. Serve the required preliminary notices promptly
Protecting your lien rights begins with serving the preliminary notice within the allowable time frame. You are therefore encouraged to check this requirement off of your to-do list and serve the preliminary notices right away, preferably way before the 10-day or 45-day deadlines.
If you’re a general contractor, the most convenient way to comply with this rule is to include the General Contractor Notice in the contract. If you’re a subcontractor or a material supplier, make sure that you have all the required details and a working template that you can easily fill out and serve right away.
2. Serve a copy of the mechanics lien soon after filing
A copy of the mechanics lien must be served on the property owner within 120 days of your last day of work, which is the same time frame for filing the mechanics lien itself. The easiest way to go about these requirements is to just serve a copy of your mechanics lien soon after you record it in the county clerk’s office.
Waiting a long time before serving a copy of the mechanics lien may cause you to completely forget about this requirement. Note that if you fail to serve a copy of the lien on the owner, your mechanics lien will be questioned and will be declared invalid.
3. Keep copies of all your mailing and service documents
It is always important that you keep track of all the paperwork, including your mailing documents that prove your compliance with the statutory requirements. Make sure that you ask for a return receipt when you serve a notice by certified mail, or always ask for a signed acknowledgment receipt if you deliver your notices in person.
Keeping track of all these documents will prove practical in the event that your mechanics lien gets questioned in court.