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How to File a Minnesota Preliminary Notice

How to File a Minnesota Preliminary Notice

June 8, 2020

Serving a preliminary notice is typically the first step in protecting your lien rights. Most states require potential lien claimants like subcontractors to serve a valid preliminary notice before a mechanics lien can be recorded.

In Minnesota, almost every construction party has to serve a preliminary notice if they want to keep their lien rights intact. Whether a payment dispute has arisen or not, serving a preliminary notice early on in the project must be done to ensure that you can file a mechanics lien if payment delays come up.

This guide walks you through the process of serving a Minnesota preliminary notice and answers your basic questions about this important document.

Who must serve a preliminary notice in Minnesota?

General contractors, subcontractors and material suppliers have to serve a preliminary notice in Minnesota. The preliminary notice requirement applies whether you have a direct contract with the property owner or not.

However, Minnesota laws also have the following exceptions to the preliminary notice rule:

  • Parties who also substantially own or control the real estate property
  • Parties who are working on a wholly residential property with more than four dwelling units
  • Parties who are working on a property that is not agricultural and not wholly residential, and who meet one of the following criteria:

a. your work is to provide or add more than 5,000 total usable square feet of floor space

b.  your work is an improvement to real property where the existing property contains more than 5,000 total usable square feet of floor space

c. you work on a property which contains more than 5,000 square feet and the work does not involve the construction of a new building or an addition to or the improvement of an existing building

If you are unsure whether you fit the exception or not, it is always best to err on the side of caution and serve a Minnesota preliminary notice anyway. The gains that you can have for protecting your lien rights outweigh the potential risk of losing your lien rights altogether.

When must you serve a Minnesota preliminary notice?

The deadline for serving the Minnesota preliminary notice depends on whether you have a direct contract with a property owner or not.

If you are a prime or general contractor with a direct contractual relationship with the owner, you have to serve a Minnesota preliminary notice as part of the written contract that you have with the property owner. If you have no written agreement with the property owner, you must serve the Minnesota preliminary notice within 10 days after the work has been agreed upon.

For those who do not have a direct contract with the owner, you must serve the Minnesota preliminary notice within 45 days of the first day when you furnished labor or materials to the property.

Consequences of not serving a Minnesota preliminary notice

A valid Minnesota preliminary notice must be served on time if you want to preserve your right to file a mechanics lien. If you do not serve a Minnesota preliminary notice on or before the designated deadline, you essentially forfeit your lien rights. This means that you may not record a mechanics lien to recover payment in the event that your client does not pay up.

It is therefore very important that you serve a valid Minnesota preliminary notice on time.

How to serve a Minnesota preliminary notice

How to serve a Minnesota preliminary notice

1. Prepare the Minnesota preliminary notice form

The first step in serving the Minnesota preliminary notice is to prepare the document itself. Minnesota prescribes a specific format for the preliminary notice, and the details that must be included in the form are different depending on your role in a project.

General Contractor

If you are a general contractor or someone who has a direct contract with a property owner, your Minnesota preliminary notice form must include the following 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.”

Note that those statements must be included in your written contract with the property owner. If you have no written contract with the property owner, copy those statements and add other basic pieces of information such as your name and address, the name and address of the property owner, the property location (e.g. street address, legal property description), and the type of services that you are or will be providing to the project.

Note that the Minnesota preliminary notice must be in at least 10-point bold font type if printed, or in all capital letters if typewritten.

Subcontractors, material suppliers and other lower-tier parties

If you do not have a direct contractual relationship with the property owner, you need to prepare the following information:

  • Your name and address
  • The name and address of the party who hired you
  • A description of the services you are or will be providing to the project
  • The estimated value for your services

Note that the Minnesota preliminary notice must also include certain statements, as reflected in the following template:

“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 …………………………………………………
or ………………………………. for

(type of service)
(material)
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).

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

Note that the template provided above is the prescribed format for the Minnesota preliminary notice, as specified under Minn. Stat. 514.011. It is best practice to simply use the template and stick with this format instead of modifying it with additional details.

As with the preliminary notice for general contractors, your preliminary notice must also be in at least 10-point bold type if printed, or in all capital letters if typewritten.

2. Serve the Minnesota preliminary notice on the property owner

General contractors

General contractors must serve the Minnesota preliminary notice as part of the written contract, and a copy of the contract must be provided to the property owners. Service may be done in person during the signing of the contract.

If there is no formal written contract with the property owner, the preliminary notice in Minnesota must still be served within 10 days after the work is agreed upon. Service may be done in person or via certified mail with return receipt requested.

Subcontractors, material suppliers and other lower-tier parties

Those who have no direct contract with the property owner must serve a Minnesota preliminary notice via personal delivery or certified mail with return receipt requested. Note that the preliminary notice must be served on the property owner within the 45 days of work. Serving the preliminary notice at a later date will forfeit your lien rights over that specific project.

If you are serving the Minnesota preliminary notice via personal delivery, it is best practice to get the recipient to sign an acknowledgment of receipt. If you are delivering the preliminary notice via certified mail, ensure that you go for the return receipt option.

Best practices when serving a preliminary notice in Minnesota

1. Request for important information if needed

If you are a subcontractor or material supplier, you can write the general contractor a formal request for information in order to get hold of the name(s) and address(es) of the property owner(s) or their agent(s). Doing this as soon as you secure work on a project is best practice as it ensures that you know where to send the preliminary notice.

Note that in Minnesota, general contractors must respond to requests for information within 10 days of receiving them. General contractors may be subject to penalties if they do not adhere to this rule.

2. Serve the preliminary notice on the first day of work if possible

General contractors must serve the preliminary notice as part of the written contract; however, lower-tier parties have 45 days from their first day of work to serve the Minnesota preliminary notice. If possible, serve the preliminary notice on the first day to fulfill the requirement right away.

Remember that failing to file a Minnesota preliminary notice on time will nullify your lien rights. Do not risk the chance of losing your lien rights and instead make it a habit to serve the preliminary notice as early as you can.

3. Do not forget to file a mechanics lien if payment issues arise

Remember that the preliminary notice is simply a notice that informs a property owner about their payment rights as well as your own lien rights. If payment disputes arise, your best remedy is still to record a mechanics lien, which is not the same as a preliminary notice.

Filing a mechanics lien in Minnesota requires a different set of procedures, so make sure that you also understand and follow those very important rules.

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