Written Notice of Nonpayment - Corporation or LLC
Note: This summary is not
intended to be an all-inclusive discussion of Minnesota'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?
Minnesota law permits
any party who performs engineering or land surveying services with respect
to real estate, or contributes to the improvement of real estate by performing
labor, or furnishing skill, material or machinery for any of the purposes
hereinafter stated, whether under contract with the owner of such real
estate or at the instance of any agent, trustee, contractor or subcontractor
of such owner, to have a lien upon the improvement. M.S.A. §514.01
How long does a party have to claim a lien?
A lien claimant
must file a statement of Lien within one hundred twenty (120) days of the
completion of work or forfeit his/her claim of lien. M.S.A. §514.08(1).
By what method is a lien filed in this state?
A statement of Lien
must be filed with the county recorder within one hundred and twenty (120)
days of the completion of work. A copy of the statement must be served
personally or by certified mail upon the owner or his agent. M.S.A.
§ 514.08.
How long is a lien good for?
Minnesota requires a
lien claimant to bring a legal action to enforce the lien within one (1)
year of the date of the last labor, skill, or material provided.
M.S.A. § 514.12.
Are liens assignable?
Minnesota statutes on
construction liens do not specifically speak to whether liens may be assigned
to other parties.
Does this state require or provide for a notice
from contractors and subcontractors to property owners?
Yes. Minnesota
law provides for a series of notices between contractors, subcontractors
and property owners. First, a contractor must provide the form
language contained in M.S.A. §514.011 advising the property owner
of his rights and the possibility of a lien. If there is a contract,
this notice must be included with the contract. If not, it must be supplied
separately.
Second, in order
for a subcontractor to be eligible to claim a lien, the subcontractor must
have provided notice to the property owner within forty-five (45) days
of the beginning of work. The form of this notice is contained in
statute §514.011(2) and advises the property owner of the right
to pay subcontractors directly.
Third, Minnesota statutes
provide for a subcontractor to demand that the contractor provide the
name and address of the property owner. Failure of the contractor
to provide this information renders the contractor liable for any damages
the subcontractor suffers as a result of the refusal. M.S.A. §514.011(3)
Finally, a subcontractor
who has not been paid may provide notice of the non-payment directly to
the property owner. M.S.A. §514.02(2).
Does this state require or provide for a notice
from the property owner to the contractor, subcontractor, or laborers?
Yes. Property
owners may, within fifteen days of the completion of the contract, demand
that any party having a lien furnish the owner with an itemized account
of the lien, the total amount due, and the full name and address of the
lien claimant. Lien claimants may not enforce their lien through
legal action until this information is provided.
Also, Minnesota statutes provide
for a notice from the property owner to the contractor advising that a
subcontractor has not been paid. M.S.A. §514.02(2).
Does this state require a notice prior to starting
work, or after work has been completed?
No. Minnesota
statutes do not require a Notice of Commencement or a Notice of Completion
as required in some other states.
Does this state permit a person with an interest
in property to deny responsibility for improvements?
Yes. Minnesota
statutes permit a party with an interest in property being improved to
serve notice on the parties improving the property that the interested
party will not be responsible and will not be subject to a lien.
This notice must be provided by certified mail, personal service, or posting
on the property within five (5) days of discovery that the work is taking
place by the party in interest. M.S.A. §514.06.
Is a notice attesting to the satisfaction of a
lien provided for or required?
No. Minnesota
statutes do not provide for or require that a lien holder who has been
paid produce or file a notice to that effect. However, please see
MN-10-09 Release of Lien as an example of a form that could be used by
a lien holder to provide a property owner with documentation that the lien
has been satisfied after payment in full.
By what method does the law of this state permit
the release of a lien?
As stated above,
Minnesota statutes have no specific provision for the release of a lien,
other than the automatic dissolution that occurs if a lien statement is
not filed within one hundred twenty (120) days of the completion of work,
or if suit to enforce the lien is not brought within one (1) year.
Does this state permit the use of a bond to release
a lien?
No.
Minnesota law does not have a provision under which a bond may be filed
for the purposes of releasing a lien.
