Minnesota’s Prelien Notice Deadline is 45 Days, Not 72
What happens when your preliminary notice is late? In Minnesota, you may lose your mechanic’s lien rights. One lien claimant served its Minnesota prelien notice 27 days too late and the court invalidated its mechanic’s lien.
Preserving Mechanic’s Lien Rights in Minnesota Starts with a Prelien
If you are a subcontractor or material supplier furnishing to a private project in Minnesota, you should serve the prelien notice upon the owner as soon as possible to trap funds, but within 45 days from first furnishing materials or services.
If you are a contractor who contracts with subcontractors or material suppliers to provide labor or materials, you should include the notice within the written contract with the owner and serve a copy of the contract upon the owner. If no written contract exists, you should serve notice upon the owner within 10 days of agreeing to work on the project.
It’s possible a notice may not be required in Minnesota. For example, the notice may not be required if the project is on non-agricultural land and the project is not wholly residential and is more than 5,000 usable square feet or is to provide or add more than 5,000 total usable square feet of floor space, or a wholly residential project has more than four family units.
The lien deadline in Minnesota is within 120 days from your last furnishing and if you need to proceed with suit, you should need to do so within 1 year from your last furnishing. Did you know Minnesota can be a full paid balance lien state or an unpaid balance lien state? If the 45-day notice is not required, the lien is enforceable for the full amount owed, regardless of payments made by the owner. If the 45-day notice is required, the lien is enforceable for the unpaid portion of the contract at the time the 45-day notice is served.
You can review Minnesota’s statute in full here.
Timberwall Landscape & Masonry Products, Inc. (Timberwall) was hired by DRMP Concrete LLC (DRMP) to provide materials for a retaining wall at the Klochkos’ residence. Timberwall began furnishing April 26, 2018. Between March 2018 & May 2018, the Klochkos issued payments to DRMP, and DRMP issued payments to Timberwall; unfortunately, the DRMP payments to Timberwall were returned for insufficient funds.
On July 7, 2018, Timberwall served a prelien notice upon the Klochkos and within the notice, Timberwall stated “[t]o the best of [Timberwall’s] knowledge, [Timberwall] estimate[s] our charges will be $1 plus other good and valuable consideration.” Then, on July 17, 2018, Timberwall filed a mechanic’s lien for $26,161.30 and by September 2018, Timberwall had proceeded with its foreclosure action.
Raise your hand if you know where Timberwall went wrong.
To be fair, if you read the first paragraph, you know what Timberwall did wrong, but for the sake of the story: Timberwall served a prelien notice 72 days from first furnishing, which was untimely in accordance with statute.
The Klochkos argued Timberwall’s lien was invalid because Timberwall failed to timely serve its notice. Timberwall then argued its lien was valid because it made a “good faith effort” to comply with Minnesota’s statute. The court sided with Klochkos.
“Timberwall provided its notice 72 days after its first delivery of materials, and Timberwall does not claim that it tried to provide pre-lien notice within the statutorily mandated 45-day period. Nor does the record reflect any effort on the part of Timberwall to comply with this mandate. The lack of any record evidence reflecting that Timberwall sought to provide pre-lien notice within the statutorily mandated 45-day period supports the district court’s determination that Timberwall failed to make a good-faith effort to comply with the statutory pre-lien notice requirements.”
Because Timberwall failed to serve its notice timely, it lost rights to the mechanic’s lien and was unable to recover payment through the lien process.
The lesson here? Serve your preliminary notices on time, every time.