Furnisher of labor, materials or services to owner, owner’s agent, contractor or at least first- or second-tier subcontractor. (The limit as to tiers of subcontractors has not yet been determined, though a recent case limited it to the parties just listed. [Kraus-Anderson Const. Co. v. Superior Vista LLC, Not Reported in N.W.2d, 2010 WL 2650481 (Minn.App.,2010)]) NOTE that a residential contractor or remodeler who is knowingly unlicensed will not have lien rights. [326B.845] Suppliers who deliver materials to the property or who specifically manufacture items are generally protected. [Stravs v. Steckbauer, 161 N.W. 259 (Minn. 1917)] Engineers, surveyors and architects are also covered, as are unions’ employee benefit trust funds. [514.01; Hedlund Engineering Services, Inc. v. Hampton Arden Hills, L.L.P., 2003 WL 22436038 (Minn.App.) (unpublished opinion); Korsunsky Krank Erickson Architects, Inc., v. Walsh, 370 N.W.2d 29 (Minn.1985); Twin City Pipe Trades Service Ass’n, Inc. v. Peak Mechanical, Inc., 689 N.W.2d 549 (2004)] Note that trade fixtures, unlike fixtures, are not lienable. These are items that are attached by a tenant for trade purposes that may be removed during the tenancy. Movie screens, speakers & lenses will be considered trade fixtures. [Bright Star Systems Corp. v. MN Theaters 2006, LLC, Not Reported in N.W.2d, 2013 WL 3155473 (Minn.App. 2013)]
1. Who May Have A Lien?
Private:
Public:
Furnisher of labor, services, materials or equipment at least to general or first-tier subcontractor. Employee benefit trust funds are eligible to bring a claim against the payment bond. An unreported case interpreting an older version of the statute held that suppliers to sub-subcontractors may bring a claim against the bond. It is unclear whether that would still be allowed. Suppliers to suppliers are not covered, unless the supplier receiving the materials can be considered a subcontractor for the purposes of the act, which the court will interpret liberally. [574.26; Minnesota Laborers Health and Welfare Fund v. Granite Re, Inc., 844 N.W.2d 509 (Minn.2014); Tamarack Materials, Inc. v. NewMech Companies, Inc., Not Reported in N.W.2d, 1993 WL 121255 (Minn.App. 1993); Weyerhaeuser Co. v. Twin City Millwork Co., 291 Minn. 293, 191 N.W.2d 401 (1971)]
2. What Is The Lien Against?
Private:
Structure and land upon which it is situated. [514.01] NOTE that the total of the liens cannot exceed the contract amount plus change orders, less payments made before receiving any preliminary notices, and excluding payments made to discharge liens or pursuant to lien waivers. [514.03]
Public:
Contractor’s payment bond, cashier’s check, or letter of credit. [574.26, 574.261] If contract is less than $5,000, contractor may post certified check or cashier’s check. If contract is under $50,000, contractor may provide irrevocable bank letter of credit. Also, for all natural resource development projects, a bond is required if the project exceeds $100,000. If the project is for less, the person providing the security has discretion as to the type of security it will provide. If the contract exceeds $100,000 and the public body fails to require a payment bond, then the public body is liable to claimants. The claimant, however, must show that the contractor was insolvent when it defaulted on its obligation to the claimant. [574.26, 574.261, 574.264; Collins Elec. Systems, Inc. v. Redflex Traffic Systems, Inc., Not Reported in N.W.2d, 2008 WL 933488 (Minn.App. 2008)] If the contract is for less than $100,000 and the public body does not require a bond, the public body is not liable if the contractor fails to pay its suppliers. [Goodin Co. v. City of Prior Lake, 2015 WL 1013947, Not Reported in N.W.2d (Ct.App. 2015)] In addition, if the payment bond is not provided, the construction contract may be found to be invalid. [City of Minneapolis v. Redflex Traffic Systems, Inc., Slip Copy, 2013 WL 3323671 (D. Minn. 2013)]
3. Who Must Give The Preliminary Notice?
Private:
NOTE that there are 2 different notices, one given by the general contractor, the other by all other claimants.
These notices are required in all circumstances EXCEPT the following:
Where work is on nonagricultural and wholly or partially nonresidential property, AND (a) it is intended to provide or add more than 5,000 square feet of usable floor space; or (b) it is an improvement to existing property containing more than 5,000 usable square feet of floor space; or (c) it is an improvement to existing property containing 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. [514.011] BUT NOTE that where the improvement is made for a tenant and the leased space is less than 5,000 square feet, even if the entire property owned by the landlord exceeds 5,000 square feet, the preliminary notice exception does NOT apply, and preliminary notices MUST be given. [Wallboard, Inc. v. St. Cloud Mall, LLC, 758 N.W.2d 356 (Minn.App. 2008)]
Public:
A preliminary notice is not required.
4. To Whom Is The Preliminary Notice Given?
Private:
To the owner or owner’s agent. [514.011]
Public:
Not applicable.
5. When Must Preliminary Notice Be Given?
Private:
GENERAL CONTRACTOR’S NOTICE:
Include notice in written contract. If contract is oral, then written notice must be received within 10 days after work of improvement is agreed upon. If contract will be written but has not been signed, then written notice with the required language must be received within 10 days after the start of the project, and the notice must be incorporated into the final contract. [514.011; Begbie v. Lessard. 1999 WL 410290 (Minn. Ct. App., June 22, 1999) (unpublished); Brainerd Contr., Inc. v. Silvernale, 1997 WL 360617 (Minn. Ct. App., July 1, 1997) (unpublished)]
ALL OTHER CLAIMANTS:
Notice must be received within 45 days of claimant’s first furnishing labor or material. NOTE, HOWEVER, that the sooner this notice is given the better, as the combined amount of all liens is limited to the amount of the general contract, less any sums paid prior to the owner receiving any preliminary notices. Note also that this notice is not required of someone contracting directly with the owner. [514.011; 514.03]
Public:
Not applicable.
6. Contents of Preliminary Notice.
Private:
GENERAL CONTRACTOR:
Please contact Levy von Beck and Associates for form information, in at least 10-point bold type if printed, or in capital letters if typewritten; AND copy of written contract with subs or suppliers. IT IS VERY IMPORTANT THAT THE FORM BE IN BOLD TYPE. Printed on a computer is considered printed rather than typewritten. [514.011; Wong v. Interspace-West, Inc., 701 N.W.2d 301 (2005)]
ALL OTHER CLAIMANTS:
Please contact Levy von Beck and Associates for form information, in at least 10-point bold type if printed, or in capital letters if typewritten. IT IS VERY IMPORTANT TO FOLLOW THE LANGUAGE SET OUT IN THE FORM, AND IT IS VERY IMPORTANT THAT THE PRINT BE IN BOLD TYPE. [514.011, Schor at 24.03[D]]
Public:
Not applicable.
7. How Must Preliminary Notice Be Given?
Private:
GENERAL CONTRACTOR:
Included in written contract with owner, if any; if none, then personally delivered or by certified mail. Though the consequences of refusal of delivery aren’t clear, it is best to ensure it is actually timely received, as failure to provide the notice deprives the claimant of lien rights. [514.011]
ALL OTHER CLAIMANTS:
Personal delivery or certified mail. It is best to ensure that the notice is actually received, although the statute does provide that a claimant will not lose its lien for failure to strictly comply with this subdivision if a good faith effort is made to comply, unless the owner or another lien claimant proves damage as a direct result of the failure to comply. It is safest just to make sure the notice is received. [514.011]
Public:
Not applicable.
8. Who Must Give Interim Notice?
Private:
An interim notice is not required.
Public:
An interim notice is not required.
9. Who Must Give Final Notice?
Private:
All Claimants.
Public:
All Claimants.
10. To Whom Is Final Notice Given?
Private:
-County Recorder of the county where premises are located (if, however, the property is “registered”, then the notice must instead be given to the registrar of titles in the county where the property is located).
-Owner
-Where owner is a limited liability company, service must be upon the company’s registered agent, manager, or the secretary of state; service upon the owner’s daughter at the owner’s home is not proper service. [Keystone Bldg. Sys., Inc. v. Skarphol Constr. Group, 2004 WL 1098712 (Minn. Ct. App. 2004) (unpublished)].
-General contractor
-Subcontractor (where claimant is supplying a sub). [514.08; Schor at §24.03[A] and [E]; Keystone Bldg. Sys., Inc. v. Skarphol Constr. Group, 2004 WL 1098712 (Minn. Ct. App. May 18, 2004) (unpublished decision).]
Public:
BOND:
-Surety at the surety’s address as stated in the bond, so be sure to obtain a copy of the bond. Using the address listed in the contract or subcontract will not suffice.
-Contractor on whose behalf bond was issued, at the contractor’s address as stated in the bond. Using the address listed in the contract or subcontract will not suffice.
BUT NOTE, where the contractor files a bond that does not state both the contractor’s and the surety’s addresses, then the claimant is not required to provide the surety or the contractor with written notice of its claim. It is recommended, however, to give the notice anyway. [574.31; Safety Signs, LLC v. Niles-Wiese Const. Co., Inc., 840 N.W.2d 34 (Minn. 2014)]
CASHIER’S CHECK OR LETTER OF CREDIT:
Commissioner of Administration, and the Commissioner of Finance. [574.261]
11. When Is Final Notice Given?
Private:
Within 120 days after claimant’s last delivery. Note that service occurs when the notice is mailed, not received, though it is always safest to complete service before the deadline. NOTE ALSO that substantial punch-list or finishing work can extend the deadline for filing. [514.08; Eischen Cabinet Co. v. Hildebrandt, 683 N.W.2d 813 (2004); Kraus-Anderson Const. Co. v. Superior Vista LLC, Not Reported in N.W.2d, 2010 WL 2650481 (Minn. App. 2010)] NOTE that punch list and repair work may qualify as the last work performed for purposes of calculating the filing deadline. [Bright Star Systems Corp. v. MN Theaters 2006, LLC, Not Reported in N.W.2d, 2013 WL 3155473 (Minn.App. 2013)]
Public:
BOND:
MAILED within 120 days after claimant’s last delivery. [574.31;Safety Signs, LLC v. Niles-Wiese Const. Co., Inc., 820 N.W.2d 854 (Minn.App.2012) (review granted Nov. 27, 2012)] Per case law, the parties may agree to increase (but not decrease) the time for giving notice, but that language must be in the bond itself. If it is in the contract or subcontract only, then the bond itself must expressly incorporate the terms of the contract in order to effectuate the increased time provision. In addition, while explicit language in the bond itself can increase the time for giving notice, if the bond is simply silent on the notice deadline, then the statutory time period will control. [574.31; Bemidji Blacktop, Inc. v. Stamson and Blair, Inc., Not Reported in N.W.2d, 2001 WL 345511 (Minn. App.2001)); Nelson Roofing & Contracting, Inc. v. S.W. Moore Co., 245 N.W.2d 866 (Minn. 1976); API Elec. Co. v. North American Specialty Ins. Co., Not Reported in N.W.2d, 2012 WL 1914126 (Minn.App.,2012)]
CASHIER’S CHECK OR LETTER OF CREDIT:
Received within 120 days of last delivery. [574.261]
12. How Is Final Notice Given?
Private:
-Filed with county recorder
-Personal service or certified mail to owner or his agent. Per case law, service is complete upon mailing, not receipt. [514.08; Eischen Cabinet Co. v. Hildebrandt, 683 N.W.2d 813 (2004)] Note that where owner is a limited liability company, service must be upon the company’s registered agent, manager, or the secretary of state; service upon the owner’s daughter at the owner’s home is not proper service. [Keystone Bldg. Sys., Inc. v. Skarphol Constr. Group, 2004 WL 1098712 (Minn. Ct. App. 2004) (unpublished)]. Note also that service does not have to be by an uninterested party; service is proper if a party to the lien personally delivers the notice to the owner or agent. [Eclipse Architectural Group, Inc. v. Lam, 814 N.W.2d 692 (Minn. 2012)]
Public:
BOND:
Personal delivery or certified mail. The consequences of refusal of delivery (especially by the contractor) are not clear, thus ensuring actual receipt is recommended.) [574.31]
CASHIER’S CHECK OR LETTER OF CREDIT:
Deliver to or file with the Commissioner of Administration and the Commissioner of Finance. [574.261]
13. Contents of Final Notice
Private:
Please contact Levy von Beck and Associates for form information.
-A notice of intention to claim and hold lien
-Amount of lien (Note that the total of the liens cannot exceed the contract amount plus change orders, less payments made before receiving any preliminary notices, and excluding payments made to discharge liens or pursuant to lien waivers. [514.03])
-Statement that amount is due and owing for labor or materials furnished to the project
-Description of labor or materials furnished
-Name or other identity of improvement for which materials were furnished
-Name and mailing address of claimant
-Name of person for whom materials or labor were furnished
-First and last dates of delivery
-Description of the premises sufficient for identification (see end of this section regarding liens on multiple lots)
-Name of owner
-Statement that claimant acknowledges that copy of claim must be served personally or by certified mail on the owner or his agent within 120 days after last delivery
-Statement that preliminary notice was given, if required
-Claim must be verified by claimant or other person having knowledge of the facts stated. Per case law, the claimant’s attorney can sign the verified statement based on information received from the claimant.
NOTE – Where claim is against two or more buildings on one lot or against adjoining lots for work under one contract, claimant may file one claim or may file several, designating the amount due on each improvement. If the claimant files one blanket lien, then it must be enforced in one action against all of the property subject to the lien, though the value of the lien is spread pro rata against the whole area improved. [514.08, 514.09, Krengel v. Haslam, 137 NW 11 (Minn. 1912); Premier Bank v. Becker Development, LLC, 785 N.W.2d 753 (Minn.2010)]
Public:
BOND:
Please contact Levy von Beck and Associates for form information. Neither the statute nor the case law indicates whether anyone other than the claimant may sign the claim. Note that where a claimant has actual knowledge or should have known that a payment it received was for labor or materials supplied on a public project, the claimant must apply that payment to that project. [574.31, 574.32]
CASHIER’S CHECK OR LETTER OF CREDIT:
-Names of parties involved (recommend that this includes contracting body, general, sub to whom material furnished, and claimant).
-Nature of claim and amount due.
Neither the statute nor case law discusses who can sign this notice. [574.261]
14. Time to Start Suit / Foreclose?
Private:
Within one year of claimant’s last delivery as recorded in lien statement; but note that if owner requests in writing that claimant furnish an itemized and verified account of the person’s lien claim, the amount, and the person’s name and address, then suit cannot be started until ten days after the statement is furnished. [514.07]
NOTE that service of all of the owners must also be accomplished within this one-year time period. [Ryan Contracting, Inc. v. JAG Investments, Inc., 634 N.W. 176 (Minn. 2001)] It may, however, be possible to enforce a lien against a mortgagee that had obtained a mortgage, but had not recorded it prior to the lien claimant filing suit. [Mavco, Inc. v. Eggink, 739 N.W.2d 148 (Minn.,2007)]
Note – Notice of lis pendens must be filed with county recorder when beginning action [514.12], and a verified itemized bill must accompany the action. [514.13]
NOTE that where a claimant has perfected a blanket lien on a piece of property, it may be permissible to foreclose the entire lien amount on less than all the property subject to the lien, provided that the equities do not unfairly burden one owner or property over other owners or properties. [Premier Bank v. Becker Development, LLC, 767 N.W.2d 691 (Minn.App.2009.)
Public:
BOND:
Within one year of last delivery by claimant, as stated in its notice of claim. This time can be extended (but not shortened) for a year, however, by (1) written stipulation between the claimant and the surety before the one year period expires, or (2) notice sent by the claimant to the surety, at least 90 days before the 1 year deadline expires, sent via certified mail, and not objected to in writing by the surety within 30 days of receiving that notice. NOTE that if the express language of the bond provides for a longer time in which to file a bond claim, the deadline in the bond will control. Also, if the contract or subcontract itself includes language expanding the time to file a bond claim, that time period will also control, but only if the bond itself expressly incorporates the terms of the contract. NOTE ALSO that the deadline for bringing suit will be tolled as to both the principal and the surety where the principal fraudulently conceals a possible of action. The tolling will continue until such time as the claimant (in this case a health and welfare plan) discovers, or has reasonable opportunity to discover, its cause of action. [574.31; Bemidji Blacktop, Inc. v. Stamson and Blair, Inc., Not Reported in N.W.2d, 2001 WL 345511 (Minn. Ct. App.), Schor at §24.02[B]; Minn. Laborers Health & Welfare Fund v. Granite Re, Inc. 844 N.W.2d 509 (2014)]
CASHIER’S CHECK OR LETTER OF CREDIT:
Within 120 days after last item of labor or materials are supplied to project. (That is, the last item overall, not the last item supplied by the claim taken within 30 days of giving final notice. [574.261]