Protecting Your Mechanic’s Lien Rights

Surviving the construction industry takes a certain stomach. While the ability to build a career through hard, honest work draws many professionals to the industry, those who have put a few miles on their steel-toed boots know that having to go out of pocket on job after job due to the lack of up-front payments can be far more taxing than the long, hard days spent in the sun. Occasionally, contractors may go without payment entirely — but mechanic’s lien rights are designed to protect against this. Though many contractors may blame the increased need for a mechanic’s lien on the modern state of the construction industry, American construction professionals have been fighting for payment since at least 1791; the American mechanic’s lien is widely attributed to founding father, Thomas Jefferson. In the centuries since its inception, the mechanic’s lien has developed into a powerful tool that contractors can use to enforce payment. By making legal claim to the property itself in the event of non-payment, mechanic’s liens offer construction professionals added security. Still, mechanic’s lien rights are not guaranteed, and there are several boxes contractors must check to ensure these rights are protected. Why a Mechanic’s Lien Matters When contractors go through the process of properly filing a mechanic’s lien, they have the ability to take away the homeowner’s property itself as a means of recouping what they’re owed. Filing a mechanic’s lien when you know that a homeowner is attempting to sell the property or refinance is usually a quick way to be paid. But if the homeowner isn’t planning anything with their property soon, you only have 365 days from your last work date to start the foreclosure process. Sure, some contractors have been paid years down the road with a stale mechanic’s lien, but any good attorney will tell you that a mechanic’s lien is completely worthless on day 366. Tips for Protecting Mechanic’s Lien Rights Pre-Lien Notice In Minnesota and many other states, contractors must provide their contracting party (i.e. a home or property owner) a pre-lien notice. This notice is either included in the contract if you are the general contractor on a residential project, or is sent shortly after work begins if you’re the general on a commercial project (unless an exemption applies) or subcontractor or material supplier, and is the first of several steps to ensuring your mechanic’s lien rights. It’s worth repeating that if you are required to be licensed by the State of Minnesota, you must have the pre-lien notice in your initial contract with the owner. If you’re not required to be licensed, it must be sent within 10 days after work has commenced — or 45 days in the case of subcontractors or suppliers. The notice must be either hand-delivered or sent by certified mail, so be sure to keep record of when it was sent. In the event that a Minnesota contractor does not provide a pre-lien notice, their mechanic’s lien rights are gone. Mind Minnesota’s Deadlines The pre-lien notice is not the only time-sensitive component of the mechanic’s lien filing process, and Minnesota contractors must be mindful of all deadlines to ensure their rights are not forfeited. Both general contractors and subcontractors/suppliers have 120 days from their last day on the job to both file a mechanic’s lien and serve a copy on the homeowner. The foreclosure process must begin within a year of the last day of work. These deadlines cannot be extended, so time is of the essence when attempting to enforce your mechanic’s lien rights. Waiting until the very end of the time period is incredibly risky and has resulted in many mechanic’s liens being invalid because of recording errors, failing to serve the homeowner, or other unknown variables. If you still haven’t been paid by day 90, you should be talking to MNCLS about filing a lien. Protect Your Rights With MNCLS Navigating the mechanic’s lien process can be a challenge for contractors who are just looking to be fairly compensated for their time and labor, and guidance from attorneys who have been in your situation can make a world of difference. To make sure that you are leaving no stone unturned when protecting your mechanic’s lien rights, call on the team at MNCLS.