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Notice of Nonliability by Corporation

Note: This summary is not intended to be an all inclusive discussion of South Dakota's construction or mechanic's lien laws, but does include basic provisions.

What is a construction or mechanic's lien?

Every State permits a person who supplies labor or materials for a construction project to claim a lien against the improved property. While some states differ in their definition of improvements and some states limit lien claims to buildings or structures, most permit the filing of a document with the local court that puts parties interested in the property on notice that the party asserting the lien has a claim. States differ widely in the method and time within which a party may act on their lien. Also varying widely are the requirements of written notices between property owners, contractors, subcontractors and laborers, and in some cases lending institutions. As a general rule, these statutes serve to prevent unpleasant surprises by compelling parties who wish to assert their legal rights to put all parties who might be interested in the property on notice of a claim or the possibility of a claim. This by no means constitutes a complete discussion of construction lien law and should not be interpreted as such. Parties seeking to know more about construction laws in their State should always consult their State statutes directly.

Who can claim a lien in this State?

Whoever shall, at the request of the owner or the duly authorized agent or representative of the owner, or of any contractor or subcontractor, furnish skill, labor, services, including light, power, or water, equipment, or materials for the improvement, development, or operation of property as hereinafter specified, shall have a first lien thereon and the appurtenances thereto, prior and superior to all other liens except those of the state or of the United States, and except existing liens, mortgages, or other encumbrances then of record or of which the lien claimant has actual notice, for the price or value of the same, so furnished, subject to the further provisions of South Dakota Lien statutes.

How long does a party have to claim a lien?

The lien shall cease at the end of one hundred and twenty days after doing the last of such work, or furnishing the last item of such skill, services, material, or machinery, unless within such period a statement of the claim therefor be filed with the register of deeds of the county in which the improved premises are situated, or of the county to which such county is attached for judicial purposes, or if the claim be under the provisions of subdivision 44-9-1 (2), with the secretary of state.

How long is a lien good for?

No lien shall be enforced in any case unless the holder thereof shall assert the same, either by complaint or answer, within six years after the date of the last item of his claim as set forth in the filed and entered lien statement; nor shall any person be bound by the judgment in such action unless he is made a party thereto within said six years.

Does this State require or provide for a notice from subcontractors and laborers to property owners?

Yes, several. A subcontractor may serve the property owner with a Statement of Account detailing the amount owed. A contractor may respond by serving the owner with a Notice of Dispute, disputing the amount of the subcontractor's claim. In addition, the time within which to act on a lien may be extended by a subcontractor who files and serves a Notice of Furnishing.

Does this State require or provide for a notice from the property owner to the contractor, subcontractor, or laborers?

The property owner may use a Notice of Nonliability (see below) and may issue a written Demand for Lien Account. Also, an owner may issue a Demand to Commence Suit to a lien claimant. Failure to file suit within thirty (30) days results in the forfeiture of the lien.

Does this State require a notice prior to starting work, or after work has been completed?

Any owner or any person entering into a direct agreement with the owner, or the duly authorized agent or representative of the owner, may file with the register of deeds of the county in which the improved premises are situated a notice of project commencement. The notice shall be filed within thirty days of the commencement of work and shall be accompanied by a filing fee of ten dollars to be deposited in the county's general fund. The register of deeds in each county shall maintain an index of all notices of project commencements.

Does this State permit a person with an interest in property to deny responsibility for improvements?

Yes. Any person who has not authorized the improvement may protect his interests from such liens by serving upon the persons doing the work or otherwise contributing to such improvement, within five days after knowledge thereof, written notice that the improvement is not being made at his instance, or by posting like notice, and keeping the same posted, in a conspicuous place on the premises.

Is a notice attesting to the satisfaction of a lien provided for or required?

Any person who has not authorized the improvement may protect his interests from such liens by serving upon the persons doing the work or otherwise contributing to such improvement, within five days after knowledge thereof, written notice that the improvement is not being made at his instance, or by posting like notice, and keeping the same posted, in a conspicuous place on the premises.