Construction professionals frequently deal with payment issues with their clients. One of the best ways to get a property owner to settle a payment dispute is to record a mechanics lien.
A mechanics lien is a record of debt that gets attached to a property’s books. Potential buyers will not invest in a property riddled with outstanding debts, so property owners step in and make sure that the mechanics lien is satisfied and construction professionals get paid for their hard work.
In order to file an effective mechanics lien, you have to abide by the strict rules and requirements enforced by the state you are working in. This guide specifically walks you through the process of filing a valid mechanics lien in the state of North Dakota.
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- Who can file a mechanics lien in North Dakota?
- Preliminary notice in North Dakota
- When do you file a North Dakota mechanics lien?
- How to file a mechanics lien in North Dakota
- Important deadlines to remember when filing a mechanics lien in North Dakota
- Best practices when filing a mechanics lien in North Dakota
Who can file a mechanics lien in North Dakota?
Construction participants such as general contractors, subcontractors, and material suppliers are allowed to record a mechanics lien in North Dakota. Furthermore, parties such as architects, engineers, and other design professionals also have lien rights in the state.
Preliminary notice in North Dakota
Who is required to serve a preliminary notice?
Technically, no construction participant is required to serve a traditional preliminary notice in North Dakota. However, serving a regular preliminary notice will still be beneficial, especially if you are a lower-tier contractor. It helps increase your “visibility” on a project, for example, so property owners can know about you and your payment expectations.
When do you serve a preliminary notice?
You may serve an optional North Dakota preliminary notice at any time before you file a mechanics lien.
What happens if you do not serve a preliminary notice?
There are no lien-related consequences for failing to serve a North Dakota preliminary notice. However, keep in mind that serving a preliminary notice could potentially help you get paid quicker.
When do you file a North Dakota mechanics lien?
The deadline for filing a North Dakota mechanics lien is within 90 days of the date you last provided your services (e.g. labor or materials) to a project. Note that North Dakota allows late filing of a mechanics lien for up to 3 years from the date of first furnishing labor or materials to a project. This late mechanics lien is, however, not applicable to subsequent buyers of a property.
It is best practice to still record a North Dakota mechanics lien within the original 90-day deadline.
How to file a mechanics lien in North Dakota
1. Serve a Notice of Intent to Lien on the property owner
The most critical step before recording a mechanics lien in North Dakota is to deliver a Notice of Intent to the property owner. Missing this step can severely limit the coverage of your mechanics lien. Also, serving a Notice of Intent can potentially convince a property owner to finally release your payment, so make sure that you complete this step.
The Notice of Intent must be served on the owner via certified mail at least 10 days prior to recording the mechanics lien. Since the deadline for filing a mechanics lien in North Dakota is within 90 days of your last day of work, make sure that you serve this pre-lien notice at least 10 days prior to the 90-day deadline.
The only required detail that should be on the Notice of Intent form is a statement clearly saying that you are recording a mechanics lien if payment is not made within the next 10 days. You may also include the following details in your North Dakota Notice of Intent to Lien form:
- Your name and address
- The property owner’s name and address
- A description of the property location sufficient for identification
- A description of the labor and materials you furnished to the project
- The unpaid amount to be claimed with a mechanics lien
Other states do not typically require a Notice of Intent to Lien to be served on the owner, but you should remember that this step is mandatory by law in North Dakota.
2. Prepare your North Dakota mechanics lien form
The North Dakota mechanics lien form needs only the following pieces of information:
- The name and address of the party who hired you
- A description of the property that is sufficient for identification (e.g. legal property description)
- The dates of the first and last days you contributed work to the project
- The amount due
While those are the only required information, it will also help if you include more details in your claim. The following additional details will provide more context to your payment claim:
- Your name and address
- The name and address of the property owner
- A description of the services you provided
Note that North Dakota does not require lien claimants to have a mechanics lien notarized prior to filing.
3. Record the North Dakota mechanics lien
Filing a North Dakota mechanics lien may be done by mail or by personally visiting the recorder’s office of the county where the project is located. Make sure that you call the recorder’s office ahead of time to inquire about the specific rules for filing, including the filing costs that you have to shoulder.
It is crucial to remember that recording a mechanics lien should be done in the recorder’s office in the county where the property in question is located, not where your business is based. Most mechanics liens get rejected simply because they are sent to the wrong county recorder.
Another crucial point to remember is the deadline. To maximize your lien rights, your North Dakota mechanics lien must be filed within 90 days of the last day you contributed work to a project. Be sure that you have also submitted a Notice of Intent to the owner at least 10 days prior to the actual filing date.
Keeping this deadline in mind is important when deciding if you should record your North Dakota mechanics lien by mail or in person. If you are filing a mechanics lien by mail, be sure to do it way before the 90-day deadline so you can work on the corrections in case the recorder’s office returns your mechanics lien due to errors.
4. Enforce/release the North Dakota mechanics lien
If the mechanics lien is successful, your next step is to release and cancel the lien. If, on the other hand, you did not receive your payment, you should enforce your mechanics lien.
Releasing a North Dakota mechanics lien
There are no strict rules on how you should cancel a satisfied mechanics lien. The process for doing so is generally worked out with your client or the property owner, and it can be done by filing a lien release document in the same recorder’s office where the original mechanics lien was recorded.
Enforcing a North Dakota mechanics lien
Enforcing a mechanics lien is done if payment is not made even after a mechanics lien has already been recorded. By enforcing a mechanics lien, you are filing a legal suit to foreclose the property so you can recover payment from the proceeds of the foreclosure sale.
Before enforcing a North Dakota mechanics lien, you must serve a Notice of Intent to Foreclose. If you choose to serve the notice in person, do so at least 10 days prior to initiating the foreclosure lawsuit. If you choose to serve the notice by mail, you should mail out the document at least 20 days prior to filing the lawsuit.
Note that the enforcement lawsuit must be initiated in the district court in the same area where the property is located. A mechanics lien in North Dakota is only enforceable within 3 years of the recordation date. The foreclosure lawsuit and a notice of lis pendens must be recorded within this 3-year period; otherwise, the mechanics lien will expire and no longer be enforceable.
Important deadlines to remember when filing a mechanics lien in North Dakota
Best practices when filing a mechanics lien in North Dakota
1. Remember to serve a Notice of Intent to Lien
Serving the Notice of Intent to Lien is a crucial step – without doing so, you may not record a full mechanics lien in North Dakota. Also keep in mind the deadline for serving this pre-lien notice. The Notice of Intent must be served at least 10 days prior to recording a mechanics lien and no later than 80 days after your last day of work.
2. File a mechanics lien within the 90-day filing period
The deadline for filing a mechanics lien in North Dakota is within 90 days of your last day of work. However, North Dakota allows all lien claimants to record a late mechanics lien up until 3 years following their first day of work. The late mechanics lien is, however, not effective on subsequent purchasers of a property with this deadline, so it is best practice to record a mechanics lien within the original 90-day period.
3. Remember to include all important information
A mechanics lien in North Dakota needs the name and address of the hiring party, the dates of your first and last day of work, a sufficient description of the property, and the amount due. You may include other bits of information as well, but be sure to include the basic details required. Also ensure that the names and addresses are spelled accurately and that the claimed amount is a reasonable value of the payment debt.