A mechanic’s lien is a lien placed on property by a contractor who provides services or supplies to improve real estate, and the homeowner does not pay for the services or supplies, A mechanic’s lien is an effective remedy for a contractor, because a contractor is not required to go to court to file the lien. In most cases, a party must get a judgment before it can file a lien against property.
In order to preserve the right to file a mechanic’s lien, a contractor must serve notice on the homeowner at or near the time the contractor begins work on the property. Notice requirements can be tricky, so a contractor should seek the advice of an attorney.
In Minnesota, a contractor must file a mechanic’s lien within 120 days after completing work on the property. The contractor files a lien by completing and filing a notice of a mechanic’s lien with the county recorder’s office. A filed mechanic’s lien takes priority over subordinate liens. In some cases, a mechanic’s lien can take priority over a previously filed mortgage.
A mechanic’s lien can cloud title to the property, so the homeowner may not be able to sell or refinance the property until the mechanic’s lien is satisfied.
A Contractor has one year from the date that the mechanic’s lien is filed to foreclose the property. If the contractor does not meet the deadline to foreclose the property, the mechanic’s lien will automatically lapse. In most cases, it is not in the best interest to foreclose property to satisfy a mechanic’s lien, The cost of foreclosing property can easily exceed any benefits to the contractor in having the lien satisfied. It is usually in the best interest of both parties to try to arrive at a settlement to satisfy the mechanic’s lien.
The mechanic’s lien law is a rare instance of state law in Minnesota giving a party the right to include the amount of any attorney’s fees in a claim against another party. This can be a huge benefit to a contractor in bringing a mechanic’s lien claim.